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]

Tuesday, April 13, 1999

• 0909

[English]

The Chairman (Mr. Bill Graham (Toronto Centre—Rosedale, Lib.)): Members, I'd like to get this meeting going.

We have with us this morning five groups of witnesses. I'd like to suggest to the witnesses that if they can keep their interventions to around ten minutes, that will get us through the formal presentations in the first hour. Then we'll have two hours for questions, which is usually the most profitable part of the exchange between members and witnesses.

Thank you very much for coming to help us with our study into the upcoming WTO negotiations, which as you know may well begin in Seattle in November.

• 0910

I'd like to raise just one other matter before I call our first witness. The Ministry of Foreign Affairs has offered to provide a briefing to the committee on the Kosovo situation on a regular basis. I would recommend that we accept the offer, and suggest we choose between 8 a.m. and 9 a.m. on Tuesdays and Thursdays. Those are the only times we can do it. Members may or may not be available to come.

I also recommend that we invite other members of Parliament to join us. It will be our briefing, but if other members of Parliament want to come to get updates, it would be an opportunity. Would that be acceptable to members?

[Translation]

Mr. Turp.

Mr. Daniel Turp (Beauharnois—Salaberry, BQ): Mr. Chairman, I agree with this proposal, but I would like it to be not only representatives of the Department of Foreign Affairs. People from National Defence would have to be present. We had a briefing yesterday, and because there were no representative of National Defence, we were missing a lot of information. It is essential to have representatives from National Defence.

The Chairman: This is a good observation, and I will do my best to have them added. In that case, we should perhaps hold a committee meeting; I could also speak to my colleague, the Chair of the National Defence Committee.

Mr. Daniel Turp: That begins on Thursday?

The Chairman: It will begin on Thursday if possible; I will ask for it.

Mr. Daniel Turp: We will transmit the information to Mr. André Bachand, who will certainly be pleased.

The Chairman: Mr. Bachand is always here.

Mr. Daniel Turp: Mr. Bachand, we were just talking about you.

[English]

The Chairman: Members may be aware that we've been informed by the press that Yugoslav troops crossed over into the Albanian border this morning, with a possible strategic desire to broaden the scope of the war. It's obviously a very dangerous situation, and I think the committee members should be kept up to date as regularly as possible.

I'd like to move on to our first witness, Mr. Myers from the Alliance of Manufacturers.

Mr. Jayson Myers (Senior Vice-President and Chief Economist, Alliance of Manufacturers and Exporters Canada): Thank you very much, Mr. Chairman and members.

My name is Jayson Myers. I'm the senior vice-president and chief economist of the Alliance of Manufacturers and Exporters Canada. I'm accompanied today by Pamela Fehr, who is our trade policy analyst.

I'd like to thank the committee for the opportunity to appear again. The last time we presented a very general view of our main issues and objectives in the upcoming WTO round. Since our last appearance, we've had the opportunity to canvas our members across the country. From them, we now have a list of more specific recommendations we would like to report on today before the committee. We will be presenting a paper documenting these recommendations to the Minister of International Trade and his officials.

I want to take this opportunity to brief the committee on some of the key recommendations. As you're aware, our membership represents 75% of Canada's industrial production and 95% of our exports. I know you've heard from many of our members as you've travelled across the country. It's been important for them to be able to meet you in their home territories, and they certainly have appreciated the opportunity to present their views to you directly.

We have previously presented members of the committee with a number of the more general issues, with respect to the WTO. I'd again like to very briefly go through some of the guiding principles we think should be behind the government's negotiating position, as we enter a new round of WTO negotiations. Then I will ask Pamela to very briefly list the key recommendations that have come from our talks with members.

First we want to reiterate the importance of WTO as a key pillar of Canada's trade policy. The aim here is to build, design, and actually enforce a fair, efficient, and effective rules-based trading system. That's especially in Canada's interest.

• 0915

We think the key objective should be to secure greater liberalization and market access for Canadian exporters—for Canadian businesses that are investing and doing business abroad. That's not only because it's more important than ever that Canadian business is exporting more around the world than ever before; we're also investing more around the world than ever before.

I'd like to draw the attention of members to the report that was published by the Department of Foreign Affairs and International Trade on March 25, on opening market access priorities. This is an extremely important document that actually acknowledges some of the key problems that exist in the external markets. It's a good beginning for identifying some of the technical, non-tariff barriers and the existing tariff barriers to trade.

It's also an extremely important aim to place Canada on a level playing field. The non-discriminatory treatment of Canadian investment and exports is an issue that has come up across the country. We feel that can be dealt with not only by building rules, but by making sure the rules that are negotiated in a multilateral forum are effectively enforced and transparent.

Those are the three key elements in terms of the rules-building process. We want to reiterate that the WTO negotiations is not only a process of negotiating market access; it's also a process of building rules and making sure those rules are enforced.

I will ask Pamela to very briefly go through the key recommendations that have come from our members across the country.

Ms. Pamela Fehr (Policy Analyst, Alliance of Manufacturers and Exporters Canada): Thanks, Jay.

Through extensive consultation with our members, as Jay mentioned, the alliance has come up with a list of recommendations I'm going to speak to now. I will go fairly quickly through them.

The scope of the millennium round is a frequently-asked question in trade policy circles today. The alliance has a couple of comments in this aspect.

First, we are of the opinion that the millennium round should not be a marathon round, but rather a quick and speedy exercise, hopefully resolved within a time period of three years. We also feel the round should not be focused solely on agriculture and services, which are up for negotiation in the coming year, but rather we encourage a broader-based set of negotiations that would give Canada the sufficient degree of leverage to produce a favourable outcome for all parties.

Dispute settlement has received much attention as well in the past year. The alliance has four key recommendations in this regard. First, we feel a solution needs to be found to WTO implementation issues. Uncertainty around certain articles in the dispute settlement understanding should be clarified.

We also suggest the DSU be modified, so disagreements over measures designed to comply with appellate body rulings can be resolved quickly and effectively.

There is a danger in the unwarranted use of trade remedies as a form of protectionism and this should be dealt with.

Finally, and overall, the WTO should come up with a set of principles and guidelines to govern the DSU process.

Business facilitation is essential for a working and functionally productive economy. There are a couple of things the alliance would like to point your attention to.

First, in our opinion, existing tariffs should be reduced or removed. It is our members' view that the timeframe for tariff reduction should be accelerated.

Finally, red tape in customs clearance and documentation abounds across the world, and we believe this needs to be removed. Member countries should be working at modernizing their custom systems, which would help speed up the flow of physical goods.

The General Agreement on Trade in Services is a key area of interest to alliance members. In general, the GATS should be extended to cover a wider range of service areas. Rules must be improved to prevent discrimination against Canadian companies, especially regarding government procurement and bidding opportunities.

The GATS should also be extended to discipline unfair trading, and should apply national treatment to a wider range of covered services, which of course involves reducing the current list of exceptions.

Finally, GATS should also be expanded to cover the free movement of professional and specialist personnel.

Telecommunications and information technology is of special importance to an economy that is driven more and more by technology in all aspects. In general, the telecom IT agreement needs to be deepened and widened and extended to a greater number of WTO members. More specifically, the alliance is of the opinion that Canada must achieve meaningful market access for Canadian telecom service providers in exchange for the removal or reduction of Canadian investment restrictions. This is related to facilities-based telecommunication service providers.

• 0920

We also suggest extended coverage in the area of government procurement to reach telecommunication services, and extendeded obligations for members in the area of procurement of telecom services.

Electronic commerce is of mounting importance to Canadian business. In the alliance's opinion it is important that the international community develop a set of rules to ensure the free flow of electronic trade and to avoid unfair or discriminatory limitations in other markets. The current set of principles governing electronic commerce put electronic commerce in a variety of areas under the WTO, and we feel that electronic commerce is a larger area that can't necessarily be confined to all of these areas and potentially should be considered as a priority area to look at in upcoming negotiations.

We feel that e-commerce is the basis of business for the future. It is critical that the importance of this be recognized at the Seattle ministerial meeting. Furthermore, the alliance would like to see an announcement resulting from this meeting in which the current temporary standstill on tariffs that are applied to electronic commerce and digital transmissions extended or permanently put into place.

Agriculture is of course one of the most contentious issues for Canada in the upcoming round. The lifting of tariff and non-tariff barriers in the agri-food sector is essential for increased market access. Restrictions should be increased on the use of special safeguard measures in foreign markets, and reductions in export subsidies are important. It's in the Canadian interest to further reduce the levels of permitted domestic support measures, and we do believe as well that Canada should have some flexibility on tariffication in the supply and management sector.

Finally, it is important to ensure that technical and scientific elements of trade such as the sanitary and phytosanitary measures not be used as technical barriers to trade. This is of key importance to our agriculture and agri-food members.

Transparency is an overriding issue in the WTO, as Jayson mentioned in his introduction. The alliance has a few specific suggestions with relation to transparency. Firstly, I know you're all aware of the 1997 OECD convention on bribery of foreign public officials in Canada's recent legislation, which was passed in February. We are of the opinion that this convention should be accepted by all WTO members, and would be a positive outcome of the WTO negotiations.

Transparency in government procurement is also essential, and any efforts to promote this should be continued. Finally, a commitment of resources for the training and assistance of developing countries and less well financed WTO members is required to achieve better rules governing procurement and corrupt practices.

Investment—the inclusion of investment on the WTO agenda must be seen as a high priority. Canada needs to develop a negotiating strategy that ensures that the issue can be handled in a way that attracts the degree of international and domestic support needed for fruitful progress in this area. An approach that formulates rules and yet safeguards bona fide areas of government legislation and regulation is important.

In more specific areas under investment, our members believe that the concept of expropriation must be better defined in the upcoming round, and certain aspects of investor state provisions such as secrecy and lack of openness should be addressed. Technical barriers to trade rise in importance as tariff barriers fall. A couple of key items have been adopted under the current TDT agreement; however, they should be strengthened and expanded.

Firstly, it is of key importance that countries do not use technical requirements in place of tariffs to protect domestic industries. Secondly, most notable for exporters in the current TDT agreement are the concepts of harmonization and technical requirements, the equivalency of regulations, and mutual recognition. We think these issues need to be addressed, strengthened, expanded, and enforced in the upcoming negotiations.

• 0925

Finally, competition policy and law is a highly complex area, as we all know. It is the alliance's opinion that the focus should shift away from coming up with and trying to agree on substance of competition rules and remedies and look more toward the development of a clear set of principles and guidelines for the open and fair administration and enforcement of these rules.

Industrialized countries should commit, as well, to providing financial and other forms of assistance to developing countries in order to assist their transition to full trade liberalization.

I'm going to ask Jay Myers to speak to a few more issues and to conclude.

Mr. Jayson Myers: Just very briefly, in terms of the process of negotiation I'd like to make three points.

First, it's extremely important that in developing the objectives of negotiations the Canadian government champion not only market access around the world, but also the building of rules and the enforcement of rules. I can't emphasize that enough.

We're very aware that this round of WTO negotiations is not going to be like previous rounds. This is not going to be simply a group of trade officials among various governments negotiating these agreements. It has to reflect not only the interests of business, but very much have the support of the public, or this round of negotiations simply won't work.

We're aware of that. And while we think that building public support, which is a very important part of this, and the benefits of public access have to be clearly communicated to the public, we recognize as well that issues about environment, about labour, about human rights are very much a part of building that public support. We think the Canadian government should be trying to develop win-win solutions here, and I think the issue of transparency is extremely important.

Everyone gains by more transparent, more effective rules. Everyone gains by countries actually implementing the environment regulations they have in place. I think that could be a cornerstone of the Canadian position. And again, I think Canada would win by championing the issue of transparency.

Second, it's extremely important to engage as many developing countries in this process as possible. We recognize that the developing countries have severe resource limitations, technical limitations, and it would be in Canada's interest to provide some assistance to developing countries, assisting them to come to the table prepared to discuss a wide range of issues, but with adequate support and an adequate understanding of those issues.

Finally, if Canada is looking at further commitments from developing countries, it's extremely important that Canada as well as other developed countries be in a position to implement the commitments that were undertaken in previous rounds of WTO negotiations. That's also extremely important.

Thank you very much.

The Chairman: Thank you, Mr. Myers.

Before we go to our next witness I'm going to ask if we could take a one-minute break among the members—we've got a full quorum here—to pass our budget.

I want the Alliance of Manufacturers and the others, the witnesses here, to know that all this openness and transparency you're so much in favour of does cost a bit of money, so we're going to have to deal with that.

[Translation]

On the back of our order of the day, you will find the budget breakdown. There is $32,000 for our two consultants, $20,000 for our other witnesses, and a total of $26,000 for the printing of two reports, one on the WTO and the other on the FTAA, as well as various other expenses, for a total of $80,000.

[English]

Does anybody have any questions or observations or problems with that? This is not a travel budget. It's just strictly the administration budget.

Mr. Charlie Penson (Peace River, Ref.): Mr. Chairman, is there no advertising being done? I see there is no advertising budget. Is no advertising being done for the meetings across the country?

The Chairman: We are presently using media lists and we are faxing across the country information concerning the hearings with the expectation that the press will write about it.

• 0930

Our experience in the foreign affairs review we did some years ago was that when we took out advertising, particularly in national newspapers, it was so expensive that it was prohibitive. I think it would have been over $50,000 or $60,000 for advertising alone. So for the eastern portion of the trip we decided that we could not take out advertising in major newspapers. It's just far beyond the budgetary scope of what we're doing. You'll remember that all the committees of the House have $2 million, and as chair of the liaison committee I'm very aware of the fact that we're going to run out of that pretty quickly this year.

[Translation]

Mr. Daniel Turp: Particularly since this is going into Mr. Conrad Black's treasury.

[English]

Mr. Charlie Penson: What was experienced in the Atlantic Canada hearings? Was the committee satisfied that people were being reached who wanted to come and make presentations to the committee?

The Chairman: We'll ask Ms. Bulte, who was the chair of the Atlantic side. I'll give you a quick report on the Quebec side after her.

Ms. Sarmite Bulte (Parkdale—High Park, Lib.): I'm sorry, Mr. Penson, I didn't hear what you said.

The Chairman: Mr. Penson has asked us why in our budget we have no money for advertising the committee hearings. I've explained to him it's very expensive. So he's asked what was our experience in Atlantic Canada about attendance at the meetings. Was there a feeling that there was sufficient information out there about the existence of the meeting so the public could participate in it?

Ms. Sarmite Bulte: I think the consensus of the group that travelled to the Atlantic provinces was that there could have been more notice. I think it was a question of notice, as opposed to perhaps advertising. And I think that for the next round of hearings we're trying to deal with that. There just wasn't sufficient notice.

Certainly we made it absolutely clear at all the hearings to the witnesses who came that they were invited to continue to submit written briefs and to let people know. And a lot of times when we spoke to the press that was certainly the message that was made loud and clear.

I think it was a matter of not sufficient time, as opposed to more advertising. Mr. Turp can....

Mr. Daniel Turp: I concur.

The Chairman: Our experience in Quebec was that in Quebec City we could have used a longer notice. I think we didn't have the attendance we would have liked in Quebec City. I think that would be fair to say. But by the time we got to Saint-Hyacinthe and certainly Montreal, people were aware we were coming. I think if we'd stayed another day in Montreal we would have had maybe more citizens groups and things come. Basically, the last three days of the hearings were successful. The first day was not as successful as we would have liked.

I think with more lead time we're going to be better off this time. People are out there. I think all the associations that are here before us today know about the hearings and are letting their local representatives know. We've informed the MPs for each city, as well as the provincial legislatures. We've written their speakers and contacted various MPPs. There's a news release on the web site, which has also been sent to the parliamentary media, and we're using all the networks of the various groups, like the Council of Canadians, the CICC.

So we're certainly aware of the problem. Given the constraints we've put on other types of things, like cutting down the number of members who can travel, to go and spend $60,000 on advertising when the members have voted to not let our own members travel because of expense would be unacceptable, I think.

Mr. Charlie Penson: My only concern, Mr. Chairman, is that if we're going to be making a full-fledged effort to let civil society know about this and if we want their participation, we want the best possible means of having them come out to these hearings. If that can be done through news releases and contacting media, that's fine. I guess I was a little surprised that there wouldn't be any money for advertising.

The Chairman: When you brought it up the first time, Mr. Penson, it was a perfectly legitimate observation.

The clerk advises me that we're finding that these trips are filling up very quickly because there's more understanding out there now and there doesn't appear to be any shortage of witnesses at all for both the western trip and the Ontario trip.

With those observations, could we get approval of the budget?

Some hon. members: Agreed.

The Chairman: That's approved.

And can we agree to the hiring of Mr. Maule and Mr. Hines?

Some hon. members: Agreed.

The Chairman: Please excuse me for interrupting you, witnesses, but I find it's best sometimes to capture the moment when we have members here.

I'll now pass to Mr. Lippert, of the Fraser Institute.

• 0935

Mr. Owen Lippert (Director, Law and Markets Project, Fraser Institute): Good morning, and thank you for inviting me here to speak today.

Just to speak briefly about the Fraser Institute, this is a—

[Translation]

Mr. Benoît Sauvageau (Repentigny, BQ): We received a copy of Mr. Lippert's document in English. Is there a French copy available?

The Chairman: Is there a French version of your statement?

[English]

Mr. Owen Lippert: No, I'm sorry. I apologize.

[Translation]

The Chairman: The committee will look after the translation. Thank you.

[English]

Mr. Owen Lippert: Thank you again, and I do apologize for not having my text as well in French.

The Fraser Institute is this year celebrating its 25th year. It is a registered charity in the field of education, based in Vancouver. However, we do maintain members elsewhere.

The question I hope to address today concerns Canada's priorities in the potential upcoming World Trade Organization talks. Specifically, I would like to address what Canada's priorities should be in the area of intellectual property rights. I hope in my discussions to outline a position in which Canada could take a leadership role in these future negotiations.

Before getting into the details, I'd like to emphasize that the ultimate goal of these international talks on IPR, on services, on all sorts of other trade-related issues is the realization of a unified, free global economy.

Over 200 years ago, with the publication of Adam Smith's Wealth of Nations, the idea of free trade achieved an unparalleled intellectual status within the study of economics. To be sure, critics have challenged the validity of free trade, but every attempt to undermine its universal validity has collapsed under the weight of qualifications and dynamic considerations.

The strength of free trade flows from the fundamental insight that just as individuals gain from voluntary exchange of goods and services among themselves, so too countries can gain from the exchange of goods and services across borders. The gains from trade derive from the division of labour and the specialization of individuals and countries in the production of certain goods and services. At each step, the resulting output provides for greater comfort and wealth.

I think it's important just to dwell on that for a moment: it's not just selling goods, whether it's airplanes or anything, but it's the effect that has on changing the economy.

Upcoming negotiations of intellectual property rights in the new round of global trade talks is perforce a return to the unfinished business of earlier agreements. As a result of the efforts by the developed nations, including Canada, the Uruguay Round established a separate set of discussions to reach a minimum set of standards for intellectual property right protection among the GATT signatory nations. These talks ultimately led to the 1994 trade-related aspects of intellectual property rights agreement, or TRIPS.

The content of TRIPS has been closely examined. Most agree that the nub of the deal was that it was a package deal. The United States itself would provide market access and would pressure the European Community to grant the same in the areas of agriculture and textiles, in exchange for many of the developing countries agreeing to an international standard for intellectual property rights protection.

The TRIPS agreement, building on the principles of the Paris and Berne conventions—that's on patents and copyright—obliged signatories to adhere to an international baseline for standards of protection for all areas of intellectual property: patents, trademarks, copyright. Second, TRIPS required effective enforcement measures, both at the border and internally. Third, signatories must adhere to the dispute resolution provisions of the World Trade Organization. That was a very critical decision, to have disputes outside of the normal World Intellectual Property Organization and in the WTO.

The prospect of TRIPS helped to motivate American support for the Uruguay Round. Without that commitment by the U.S. government, the Uruguay Round might well have failed. Though some developing countries have questioned the price of TRIPS in terms of lost economic sovereignty, the gains from increased trade access proved irresistible, particularly considering the American alternatives.

• 0940

As you'll recall, that was also the situation with Canada—and I'll get into this—which changed its intellectual property laws primarily through Bill C-91 in 1993 in order to take advantage of TRIPS.

It would be misleading and counterproductive to characterize future intellectual property negotiations as simply the United States and other developed countries trying to extort concessions from reluctant neighbours in developing countries. Many nations are currently upgrading their intellectual property rights for purely domestic reasons, and in this Canada, as I said, provides a useful role model. Indeed, as an aside, the Fraser Institute is hosting conferences on intellectual property rights next week in Santiago, Chile, and Buenos Aires.

TRIPS was a revolutionary agreement, which no one disputes, but much of TRIPS is unduly vague and complex. TRIPS' accomplishment is that it acknowledged that an international standard existed, rather than provide a definitive formulation of such standards. The contents of TRIPS itself can be described as defensive. Its articles characterize the existing diversity of IPR regimes, rounding them up rather than down, and then apply to this picture a standstill provision. The goal of TRIPS for American, European, and Canadian negotiators was more to restrain developing countries from any further erosion of IPR protection and less to revise IPR standards substantially upwards. So therein you start to see where future negotiations will go.

Issues of both language and substance were unresolved. For instance, the major issues included what restrictions will be imposed on compulsory licensing; the scope of price controls, particularly in the area of pharmaceuticals; what to do when patents expire in one country but not in another, which is the issue of parallel imports; and how to provide better enforcement at the border. In addition areas such as encrypted satellite signals, life form patents, and commercial databases were left off the table because of a lack of information or consensus. As well there were certain terms, such as significant investment, taking account of legitimate interests of third parties, and limits on remedies, as well other qualifying adjectives, such as substantially, reasonably, and legitimate.

Both Canada and the developing countries with whom we wish to expand our trade stand to gain from a prompt outlining of what could be an optimal global standard. For developing countries—and, indeed, in some ways for Canada as well—the benefit lies in reducing uncertainty in domestic policy and ameliorating international commercial conflicts created by the flux in IPR obligations.

It would be a lost opportunity not to address in future talks the definition of an optimal global standard. This will be difficult, but I believe it is possible given the interest in the subject and how our economy is changing. At a bare minimum the upcoming WTO talks should ensure no regression toward the notion of separate IPR standards, one for the developed world and one for the developing world. To do so would truly entrench a dependency model in international law that would be superficially protective and ultimately debilitating.

The role model in new WTO talks should in fact be the NAFTA treaty among the United States, Canada, and Mexico. The NAFTA treaty, however, should be a starting block rather than just a mere copy of what was in the NAFTA agreement.

If the upcoming negotiations should negotiate standards higher than TRIPS and higher than NAFTA, what would we expect to see in that? One of the things that's important to understand about all of these agreements is that, essentially, they change by the degree to which they allow exemptions. The TRIPS document and the NAFTA document are quite similar, but NAFTA allows fewer exemptions than does TRIPS. So as we're moving forward in negotiating these, you would have even fewer negotiations.

• 0945

The best-known national treatment exemption in NAFTA is in the cultural area. It has long been a position of the Fraser Institute and of many economic commentators that cultural exemption is suspect. I won't go into that, as things are in flux with the issue of split-run magazines, but you can see that if Canada were to insist upon creating an exemption for culture that undermines the general support for free trade, that is not an optimal outcome.

The NAFTA treaty has—and I go into it in my presentation—various specific things in mind. I'd like to just quickly point out the top issues that lie ahead. These include compulsory licensing; cultural exemptions; pipeline protections, which deal with data exclusivity, often for pharmaceutical drugs; higher life form patents; information network systems; trade secrets; and geographical exhaustion of rights, and perhaps we can even get to more regional groupings of intellectual property counsel. If these issues were addressed within what you'd have to call the neo-classical paradigm of trying to allow as few exemptions as possible, we could in very short order see a new and higher international standard for intellectual property rights.

Canada has a unique opportunity to lead those world negotiations. We have the experience of having upgraded our own standards in 1993. We certainly have the capacity to lead in the negotiations. Indeed, the capacity of Canada is such that CIDA and the Department of Foreign Affairs are helping or thinking about helping other countries in their negotiations, particularly in the Caribbean.

We also have a material incentive to provide for greater intellectual property rights, because the Canadian economy has changed. As you look around this committee room and the other ones, you get the sense that Canada is, as we used to say, the hewers of water and the carriers of.... How does it go?

The Chairman: Hewers of wood.

Mr. Owen Lippert: Hewers of wood, that's right.

The Chairman: The water gets carried.

Mr. Owen Lippert: That's right.

But the Canadian economy has changed. Approximately 60% of the Canadian economy is now in services. The part of our economy that is involved with heavy degrees of intellectual property rights is very high, and we have brand names we wish to defend, from pharmaceuticals to software to Bombardier jets. So Canada really stands to gain by making that a strong as possible international intellectual property rights regime. We weaken our own case when we get hung up on exemptions that frankly are often of dubious nature and undermine public support for these international trade agreements. This is not just a matter of magazines; it's also a matter of our policies in terms of pharmaceutical drugs and the protection of commercial databases.

Just to leave a final word, Canada is going to have to truly think these things out if we don't want to be left behind in the upcoming WTO round, if not within the ongoing free trade area of the Americas round.

Anyway, that's my report to this committee. I'd be glad to entertain any questions.

The Chairman: Thank you very much, Mr. Lippert. I was a little worried when I saw that your paper was entitled “One Trip to the Dentist is Enough”. I'm glad you avoided that part of your paper. Thank you.

I would like to turn to Ms. Bradford from Teleglobe.

• 0950

[Translation]

Ms. Meriel V.M. Bradford (Vice-President, Government and External Relations, Téléglobe Inc.): Thank you, Mr. Chairman. Good morning ladies and gentlemen. My name is Meriel Bradford and I am Vice-President of Government and External Relations at Téléglobe. Thank you very much for the invitation to appear before this committee to discuss Canada's trade policy priorities and their importance for our business.

[English]

Let me first explain a bit about our own company, Teleglobe. Like the hen and the pig, one was implicated in breakfast and one was totally committed to breakfast. We were totally committed to breakfast. We were the pig in the sense that we were a monopoly, and our monopoly was part of a trade liberalization.

We are a Canadian-based global telecommunications carrier serving the connectivity needs of carriers, Internet service providers, multinational corporations and broadcast customers around the world. Based in Montreal and operating from Montreal, we own and operate, through our subsidiary Teleglobe Communications Corporation, a network of satellites and submarine cables that connect to 240 countries. This network is ranked second overall in terms of undersea fibre optic systems. In 1998 we carried 15.5 billion minutes of traffic. By comparison, it was about two billion in 1994. We also added more than 200 employees to our Canadian operations, bringing our total number of employees to 5,350. Our market cap today is approximately $11.5 billion Canadian.

As of October 1998 we ceased to be Canada's official wholesale monopoly for intercontinental telecommunications facilities, but beginning in 1995—I know it's hard for some people to think back that far—we asked the Government of Canada to end our monopoly in Canada so that we could focus on international expansion and compete in global markets. This is my analogy of the pig and the hen. We indeed were the bacon that was served up for the breakfast. We asked for it as well.

Our experience in liberalization in Canada has been overwhelmingly positive. As a result of the agreement on basic telecom that was concluded in 1997 under the WTO, national telecom deregulation both in Canada and abroad has enabled us to penetrate new markets, secure new investment and infrastructure overseas, and grow a truly global business. We now have licenses to sell or resell our facilities-based services in more than 23 countries worldwide, in the U.S., Europe, Latin America and Asia.

Teleglobe operates one of the world's largest global networks, and is a significant competitor to companies such as AT&T and MCI WorldCom, in several areas including the carriage of international Internet traffic. With our recent merger with Excel Communications, we are now recognized as one of the five largest long distance carriers in the United States. Let me say, then, that our success as a global company is largely attributable to telecommunications liberalization and our government's efforts to open markets abroad.

It is with no hesitation that we fully support the Canadian government's active participation in the next round of WTO negotiations. This is not only for the telecom sector, but also a mechanism to open markets for all Canadian economic sectors that rely on international markets. After all, they are our customers, and as they grow, so will we.

I should also add that liberalization has been a positive experience for Canada, contributing to greater innovation in the Canadian telecom industry. Long distance retail rates continue to fall due to increased competition, benefiting consumers and businesses alike. As a company that has actively participated in trade policy discussions, we recognize that international trade is the backbone of Canadian economic prosperity, and that information technology and telecommunications are now a cornerstone of Canadian employment, productivity and our future economic well-being.

While it is clear that financial services and agriculture are slated to be key sectorial priorities under the negotiations in the next round, we urge the Canadian government to consider telecommunications services as a priority sector for further liberalization.

Let me say a word about the agreement on basic telecommunications.

• 0955

Despite liberalization gains made under this agreement, there remain considerable government-related obstacles to doing business in telecom markets abroad, and further economic advantages to be gained from their removal. Although we recognize that the ABT was only recently completed, in 1997, monopoly carriers are still very dominant in most markets. As of the end of 1998, approximately 85% of the world's telecom traffic was still carried by existing or former monopoly carriers, most of which continued to be state-owned.

The ABT was a good starting point for phasing out monopolies and providing the regulatory principles and fundamental commitments needed to introduce competition in basic telecom. In our view, the next set of negotiations must go further, ensuring that commitments are fully implemented. Further liberalization is required for many countries, such as Mexico, India, Brazil, and the majority of the Caribbean states, which have either not made commitments to liberalize basic telecom or have made only small concessions. In reality, there remain significant hurdles to realizing the benefits of full and open competition. The Canadian focus in future trade negotiations should therefore be on measures that will ensure effective competition and market access.

Consider the issue of foreign investment restrictions, which continue to present a market access barrier in many countries, including in Canada. Mexico, which is also a member of NAFTA and is an important Canadian trading partner, continues to impose a 49% foreign ownership investment restriction on both domestic and international carriers. In practice, this means that in order to enter the market, new entrants—such as ourselves—must partner with a Mexican firm, a difficult task given the limited number of firms from which to choose. Even if the right partner can be found, the foreign investment restriction effectively means the Mexican partner controls the capital investment and the new entrant remains a passive equity investor. Moreover, Mexico is not offering licences for resale, stipulating instead that carriers must make actual investments in Telecom infrastructure. We therefore urge the government to negotiate the abolition of foreign investment requirements in telecom services across countries in future trade negotiations.

We have some suggestions for improving the basic agreement we have now. In terms of strengthening the regulatory principles, here we get to the issues of transparency and due process, which are now contained in the reference paper on regulatory principles. Areas of particular difficulty for us now are those relating to interconnection, dispute settlement, and securing appropriate transparency of the regulatory process.

Second are investment rules for facilities-based carriers in order to allow carriers to establish their own operations in foreign markets without requiring a foreign partner.

Some examples of the non-tariff barriers that continue to inhibit our market entry include: the need to obtain appropriate rates and transparent process for interconnection, since much time and money is spent wrangling over these issues, which, if they were laid out more clearly in the agreement, would facilitate entry and save on needless foreign legal bills; public procurement of telecommunication services, since, as our colleague in the alliance mentioned, this is an important area for further liberalization; and allowing non-discriminatory access by foreign carriers to government bidding processes.

Let me say a word about our own Canadian measures. As I mentioned, since our recent merger with Excel Communications, we are a global company headquartered in Montreal, with strong Canadian routes. In Canada, however, international facilities, such as earth stations and submarine cables, may be 100% foreign owned. This is as a result of our recent WTO negotiations. Ironically, however, unless the Canadian rules governing foreign investment change, Teleglobe is prevented from investing in Canadian domestic facilities.

The Chairman: Why is that? I don't understand that.

Ms. Meriel Bradford: The domestic facilities must be Canadian-owned under the Telecommunications Act, which provides only for 20% foreign ownership in a Canadian facility.

The Chairman: And Teleglobe is not Canadian-owned, is that what you're saying?

Ms. Meriel Bradford: Teleglobe is Canadian-owned, but it has more than 20% of foreign ownership.

The Chairman: More than 20%? Okay.

Ms. Meriel Bradford: Let me say that this policy we are living with today in the Telecommunications Act only came into being in 1987. At the time, we were discussing the free trade agreement. Prior to 1987 there was no foreign ownership restriction. Canada imposed one in its policies of 1987 and included them in the 1992 Telecommunications Act, which came into effect in 1993. We haven't had a long history of this foreign ownership restriction.

• 1000

International hubbing makes it easy for carriers to compete internationally and in Canada without significant investment in domestic infrastructure. It is ironic therefore that we have measures preventing investment in domestic infrastructure. At the same time, the restrictions hinder the attraction of foreign capital, a key requirement for a competitive telecommunications industry.

I would like now to say a word about e-commerce, which is really the buzzword on the street and in every article you read about our industry and certainly about the new round.

While it is clear that e-commerce will be an important item on the agenda for the upcoming negotiations, we should not lose sight of the close connection between e-commerce, Internet, and telecommunication services, and we ought to remember that telecom services are essentially an enabling technology for Internet-based applications. They provide the infrastructure that allow the Internet services, of which e-commerce is simply one type of Internet application beside a host of others such as tele-medicine, tele-education, research, video conferencing, and e-mail.

Due to the close linkage between Internet and telecom services, we believe it's very important to understand that any initiative to spread the use of Internet and e-commerce in both developed and developing countries is largely academic unless proper policy is in place to ensure the underlying telecom services are competitively available. We would therefore like to emphasize to this committee that the successful adoption of e-commerce and the adoption of the Internet itself is predicated upon the availability of adequate telecommunications infrastructure resources, particularly in the developing world. Expanding and modernizing telecommunications infrastructure of developing countries so that they too can meet their needs for efficient voice, data, and image communication services requires large amounts of capital.

To mobilize more capital for investment, improve the performance of existing telephone companies, and to respond to demand for better and expanded telecommunication services there is a strong need for private sector initiative. Increasing competition in domestic communications markets of WTO members is the best means to stimulate this network upgrading as it increases investment and the adoption of technology in local infrastructure. The lack of network development in many countries is largely a result of low foreign investment, inappropriate pricing policies such as high interconnection fees, and the absence of clear legislative and regulatory frameworks to promote effective competition. I believe the World Bank and the ITU have both addressed this as a major policy consideration.

We believe, therefore, that favourable domestic policies and further liberalization of telecom services and markets will promote data communications and the successful spread of e-commerce, thus spreading the economic benefit of information technology to the developing world.

In conclusion, the multilateral rules-based trading system of the GATT and now the WTO has been pivotal to Canadian economic prosperity, allowing Canadian firms the opportunity to improve commercial links both within North America as well as with Europe, Latin America, and Asia while sustaining employment in Canada. Canada cannot be sheltered from trends in the global economy, as certain interested parties would have you believe. Canada should continue to uphold its multilateral commitments and actively engage in further trade negotiations in an effort to stimulate sectors that are important to Canadian overall economic and social well-being and to promote development of our trading partners.

Under the ABT, Canada has made meaningful commitments to open our telecom sector to competition on an MFN basis. Now that we have made this adjustment, fostering one of the world's most liberal and dynamic telecom regimes, characterized by lower prices and higher levels of innovation, Canada should begin negotiating with other nations that have yet to make meaningful commitments to open their own sectors under the WTO's multilateral rules.

Teleglobe looks forward to continuing a dialogue with the Canadian government and playing a supportive role in furthering Canada's position in future negotiations.

[Translation]

I have five points to submit to you as a summary of our position.

First, liberalization in telecoms has been a positive experience for Téléglobe and for Canada, in general.

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Second, telecoms is an enabling technology and should be given a much greater priority in Canadian trade negotiations.

Third, deeper liberalization is needed to key face with changes in the telecom industry, and more countries must be encouraged to sign the Agreement on Basic Telecommunications (ABT).

Fourth, the removal of Canadian routing restrictions and the opportunity for switched hubbing of all traffic outside Canada appears to call into question the purpose of Canada's 20% foreign direct investment and 33% foreign equity ceiling under the Telecommunications Act for domestic.

Fifth, any initiative to spread the use of Internet and E-commerce in developed and developing countries requires that the underlying communications services be accessible competitively available.

Thank you, Mr. Chairman, ladies and gentlemen.

The Chairman: Thank you, Ms. Bradford.

[English]

I expect that as part of your submission we'll be eventually receiving a copy of Mr. Sirois' book, properly signed by him to the members of the committee.

[Translation]

Ms. Meriel Bradford: Properly signed.

The Chairman: On free trade and properly signed by him to the members of our committee.

Ms. Meriel Bradford: Thank you, Mr. Chairman.

[English]

The Chairman: We're now going to move to the Speciality and Premium Television Association, Ms. Logan.

Ms. Jane Logan (President and Chief Executive Officer, Speciality and Premium Television Association): Good morning. My name is Jane Logan, president and CEO of SPTV, the Specialty and Premium Television Association.

[Translation]

It is my pleasure to address you today on behalf of the Specialty and Premium Television Association (SPTV). Our association represents the fastest growing segment of Canada's broadcasting system and our members include the majority of specialty networks in English and French, pay-per-view television services, and third-language services. We are a sector of 50 niche networks which, taken together, are changing the face of broadcasting.

In the past five years, our sector has more than doubled the number of hours of Canadian programming available to Canadian audiences and our share of the viewing audience for English television. We have increased the resources available to Canada's television and feature film producers, providing them with a domestic base from which to generate exports. In five years, spending by Canada's pay and specialty services on Canadian programming has doubled, and we have spent a total of $500 million on independent productions in that time frame. These are Canadian purchases.

[English]

For viewers, our spending has resulted in Canadian program choices that are highly popular. Last year we commissioned research into what Canadian audiences were watching. The results showed that nearly 65% of our audience to Canada's English speciality television networks were watching Canadian programs. That's the reverse of the general Canadian viewing trend. Audiences tuned to French-language speciality networks watched even more Canadian content.

In the digital universe exploding around us, speciality and premium services have demonstrated that they are willing and able to play an even more significant role both in generating original Canadian content and providing second-window opportunities for quality Canadian programs that educate, inform, and entertain Canadians.

Our members are an important component of an interdependent television and film industry, which includes producers, distributors, broadcasters, and other exhibitors, talent, crews, and support services. My comments reflect that interdependence.

Our success is built on a foundation of entrepreneural achievement and public policy. All Canadians take pride in the global successes achieved by Canada's television programs. Recent creative successes, our ability to attract foreign financing and export sales, and the success of specialty and premium services in Canada depend on two factors. The excellence of the Canadian industry, at the heart of which are individual entrepreneurs and firms, has been nurtured and developed by a solid foundation of government policies and programs. Without this partnerhsip between government and the private sector, we could not compete against the inflow of programs and the huge global entertainment corporations.

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The following policies and programs are important to my members and the larger television and film industry:

(1) Content regulations in television that ensure the exhibition of Canadian shows by requiring that a certain percentage of each day's program schedule be Canadian. For our members this can be anywhere from 16% to 100%, but it averages 60% overall and 60% in prime time.

(2) Section 19.1 of the Income Tax Act, which provides that to be an eligible business expense, advertising must be placed on Canadian television stations and networks. Advertisers are free to buy time on U.S. stations, but these expenses are not permitted to be deducted from income in the calculation of taxes payable.

(3) Investment controls that limit non-Canadian ownership of cable, broadcasting, and telecommunications companies to no more than one-third of voting shares, and require Canadian control in all cases.

(4) Various CRTC regulations, including the eligible satellite services list establishing that foreign programming services can be provided by licensed broadcast distribution undertakings, such as cable companies, and linkage rules establishing how many Canadian services must be provided along with the foreign ones. Canadian ownership has worked with this regulatory regime to ensure Canadian content and programming of relevance to Canadians. The careful selection of foreign programming services non-competitive to Canadian speciality television has assured a Canadian rights market and resulted in a viable business case for niche Canadian services.

(5) Tax credits and financial support through the Canadian Television Fund and Telefilm that encourage private investment in the production and distribution of Canadian television programs and movies by Canada's burgeoning independent production community.

(6) Public investment in the CBC and the National Film Board.

(7) International co-production treaties concluded by Canada with more than 30 other nations.

These programs and policies have been implemented by a succession of governments of all political stripes. Because Canadians believe in freedom of expression and choice, they do not limit access to foreign cultural products. Canada is the most open market in the world for cultural productions of others, and our success as a production location is ample evidence of our positive approach. Rather, government programs help ensure that Canadians have choice in our own country. These programs and policies are also not static. They have evolved and should continue to evolve with a dynamic industry as Canadian needs and realities change and our industry matures. However, in the minds of some, Canada's cultural measures interfere in the free market. This makes these measures vulnerable to pressures from our trading partners and the global trade agreements negotiated over the last decade. In that time we've witnessed the successful challenge of Canada's magazine policies before the WTO and threats against a range of other cultural measures under NAFTA, FTA, and WTO.

One example from my industry highlights an important aspect of the problem. In licensing a new set of Canadian specialty television services in 1994, including New Country Network, NCN, the CRTC removed from the list of eligible foreign services a competitive U.S. specialty channel, CMT, or Country Music Television. That service had been allowed into Canada originally on the condition it would be removed when a Canadian service was offered. But its removal was challenged both by the office of the U.S. trade representative and CMT itself. While these actions were halted when NCN and CMT merged, the CRTC announced in 1997 that it would no longer enforce its policy that a competitive service would be removed when a similar Canadian service has been licensed.

In light of current trade agreements, Canadian policy-making in the cultural field is being undertaken with one eye on potential challenges to our actions—a kind of policy self-censorship. Even with exemptions for culture or country-specific reservations, or in the absence of specific commitments respecting cultural policies, the agreements have a substantial impact on Canada's cultural sovereignty. This impact will only increase as technological change continues to blur distinctions between the cultural industries, computing, and telecommunications.

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It is important to remember that this debate is not only about existing policy and programs; it's more fundamentally about our right to develop new ones and to adapt or amend others as our society evolves. For example, government programs and competition laws need to reflect our domestic market. However, the key point here is that Canadians must be free to make such determinations by and for ourselves, and not because of external pressures.

Most Canadians now accept that trade in cultural products cannot be treated in the same manner as trade in other goods and services. The Prime Minister, the Minister of International Trade, the Minister of Canadian Heritage, and others have spoken eloquently on the issue. The only debate is how we can best protect it.

Recent history demonstrates that exemptions and reservations are inadequate. Merely avoiding making concrete commitments also doesn't seem to work, since agreement language may have unintended consequences, as we discovered with the WTO's decision concerning our magazine policies.

My members believe a new approach is required. The upcoming World Trade Organization ministerial meeting in Seattle is both a challenge and an opportunity. It is a challenge because the WTO agenda for the millennium will be comprehensive and will cover sensitive cultural areas and there will be pressure on Canada to make commitments in the cultural field. But it also provides a forum in which Canada can take the lead in developing a new international instrument, a global charter of cultural rights.

[Translation]

Such a charter has been proposed by many in the cultural field. Recently, DFAIT's own Cultural Industries Sectoral Advisory Group on international trade endorsed the concept.

To succeed, the charter must have an equivalent status to the trade agreements themselves, it cannot be secondary. It would recognize the importance to all nations of maintaining cultural diversity. It would contain only those commitments that are appropriate to culture and set out rules on what kinds of measures countries can use to promote diversity.

Importantly, the charter would need to be self-defining. What constitutes a matter of cultural significance to one nation, may not be to another, and these definitions must be allowed to change over time, since we cannot know today what form of cultural expression will develop in the next century. Finally, challenges and disputes under the charter would need to be judged by cultural experts and not trade experts.

The battle to achieve a global cultural charter will not be easy, since it will pit us against our neighbour and major trading partner. Canada will need to work hard to mobilize like-minded nations. But, we proved with the land mines treaty that we can do it. The stakes are high and it is a battle we cannot afford to lose.

[English]

I've not provided as many specifics as my colleagues here today because our industry has read the SAGIT report with interest and we accept its recommendations.

Thank you.

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

We'll hear from the Patent and Trademark Institute of Canada. Mr. Bloom.

Mr. Glen Bloom (President, Patent and Trademark Institute of Canada): Thank you.

My name is Glen Bloom. I'm president of the Patent and Trademark Institute of Canada. I have with me Stuart Wilkinson, the honorary treasurer of the institute.

The Patent and Trademark Institute of Canada, the PTIC, is a professional organization that comprises approximately 1,250 members who specialize in intellectual property matters throughout Canada. We represent a wide scope of business interests in Canada, across Canada.

There can be little doubt that intellectual property is key for the millennium on issues of competitiveness and is key to ensure that Canadian companies succeed not only in Canada, but in the global marketplace. There is a strong need to ensure that Canada's intellectual property laws foster the development of intellectual property in Canada and foster the development of intellectual property business in Canada. In addition, there's a need to ensure that there are adequate and effective international standards and norms in intellectual property protection.

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We have provided to you a rather detailed technical submission. I do not propose to go through it in a detailed way, but to merely highlight some of the key points and to indicate to you some areas of concern to the profession in Canada. I will discuss initially some concerns with respect to copyright and trademark matters, and Mr. Wilkinson will address some issues relating to patents. I will close with some comments on trade in services.

I should mention from the outset that I believe our submission is in the course of being translated into the French language, if it has not already been done. I understand that if it's not tabled in the French language by now, it should be by perhaps as early as later on this morning.

I'd like to start with some comments on the relationship between the trade treaties, the WTO, and the World Intellectual Property Organization, WIPO.

Currently there are standards and norms of intellectual property matters addressed in the WIPO forum that we have seen in the past are then moved over as standards to be adopted in a trade forum such as WTO. There are many current treaties and draft treaties at WIPO that will likely be raised by other trading partners of Canada in the renegotiation or the upcoming negotiations of the WTO.

I turn first to the copyright area, which is the key intellectual property right in the field of electronic commerce and the Internet. There are a number of developments almost on a daily basis in some of these areas. We have currently two WIPO treaties that Canada has signed. One is the WIPO copyright treaty and the other is the WIPO performers and phonograms treaty. These treaties set out standards on intellectual property protection in the copyright area, focusing primarily on the electronic environment.

Although Canada has signed the treaties, we have not yet developed domestic policy on those treaties. It is key, before entering into World Trade Organization negotiations, for Canada to have a domestic policy on these issues rather than to have a policy imposed on us by our trading partners.

Another area of great concern in the electronic environment is the protection for commercial databases. At our spring meeting a couple of weeks ago, there was a speech presented by a representative from IHS Micromedia, a Canadian company owned by IHS abroad, one of the largest if not the largest of the commercial database providers. The comments at the presentation were to the effect that because of great uncertainty in Canada about the available protection for databases, investment decisions on developing databases and marketing databases by companies of that nature will be made abroad and not in Canada. The concern there is that unless there is adequate protection, effective protection, and protection that is well understood, the jobs that would come to Canada will go elsewhere. Many of the database companies are foreign-controlled. There's one large Canadian database company with major interests outside of Canada as well.

The fourth area in which there is no domestic policy is in relation to the limitation of liability if appropriate for Internet service providers. Again, Canada must have a policy before entering into WTO negotiations.

Turning now to the trademark area, there are also in the trademark area a number of developments in harmonization of laws around the world. One of the developments referred to in our paper is something called the Madrid protocol, an international agreement administered under WIPO. The Patent and Trademark Institute of Canada has significant problems with the Madrid protocol and the extension of that protocol to Canada. Currently the protocol is delayed in its implementation by Canada because of issues relating to a vote by the European Community. If that issue is ever resolved, and that's more of a political matter than an intellectual property matter, we have to very carefully look to ensure that international globalization does not have the effect of granting protection to foreigners and giving foreigners more favourable treatment than is available to our small and medium-sized business in Canada.

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Another area of concern in the trademark area is one dealing with famous marks or well-known marks. There are currently discussions at WIPO in Geneva—there was a session March—in which there is a strong desire by certain of Canada's trading partners to provide increased protection for famous marks. This would give the ability of large foreign multinationals to secure a wide scope of protection beyond what is currently conveyed to Canadian law, and it would impair the ability of Canadian business to ensure adequate and effective trademark protection and a wide selection of marks in Canada.

The Patent and Trademark Institute has also expressed concerns about the expansion of the trademark protection for well-known marks. That will likely be an issue on the agenda from at least the United States and the WTO.

In the patent area, before turning matters to Stuart Wilkinson, I would like to reference a current draft treaty that's under consideration at WIPO right now. It's the patent law treaty. That treaty is under negotiation this week and next. The PTIC has a member attending in Geneva because we're very concerned about some of the provisions in those treaties. They're very technical. I don't propose to go into them in any detail but merely to mention that Canada must be up on these treaties, must understand the developments, and must have a position that reflects Canadian interests before going into the WTO negotiations.

I would ask Stuart Wilkinson to provide greater detail from the patent perspective. I would like to mention that our institute is composed of members who practise in private practice, such as myself, and more importantly, perhaps, members such as Stuart Wilkinson, who are in-house employees of major Canadian companies. Stuart is with Nortel.

Mr. Stuart Wilkinson (Honorary Treasurer, Patent and Trademark Institute of Canada): Thanks, Glen.

As Glen indicates, I wear two hats. One is with the Patent and Trademark Institute of Canada, now the Intellectual Property Institute of Canada, and to that extent I look after the elements of hewers of wood and carriers of water, as Mr. Lippert put it nicely. The other thing I'm responsible for, in my company, Nortel Networks, is the extent to which Nortel is affected by patents around the world and the extent to which Nortel seeks to have its patents help it competitively around the world.

My focus is patents. As I look at the World Trade Organization activities, I guess I would look at it as an exercise in making trade easy. As I look at the patents we hold and we face, the patent monopoly is that legitimate monopoly that says you can make it easy to a point. The patent monopoly is a legitimate one, and you can trade to the extent that I, with my patent, allow you to trade in that invention. So as a matter of fact, patents do represent some barrier to trade, and one has to look at why they've served so well, in spite of the significant effort toward freedom of trade.

The patent represents, because of its position, some cost and some difficulty, let's say, in freely open trade. One of the reasons a patent compounds that is because it is essentially a national instrument—Canadian patents, British patents, U.S. patents; it's not a global patent.

As we've looked at the development of patent law over the past ten years, or possibly a little more than that, what we've seen is first of all an effort to harmonize patent laws.

Let's say the move toward freer trade looks to get a baseline, again, as Mr. Lippert put it, of patent laws to sort of bring them into a relative conformance with each other. There is a growing initiative toward a global patent system. Currently it's muted, but it's there.

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There are certain candidates that would look to establish primacy in a global patent system. The Europeans make no secret of the fact that they believe they have the ability. Our friends down south, as I know from my own activities, have the infrastructure that tends to attract patent activity, so they have a very sophisticated patent infrastructure, a litigation infrastructure, to compound that. So as we look toward WTO negotiations, one must expect that there will be strong lobbying positions toward harmonization of patent laws and globalization of patent laws.

A very significant question, as we're persuaded by those lobbies, those interest groups, is what happens to Canadian operations? The Canadian Intellectual Property Office employs a lot of people. It's a redoubtable institution. What happens to the Canadian patent litigation and the other intellectual property litigation?

If we take a look at where litigation is headed, my company doesn't do it here any more; it does it down south. That's because there's a slow consolidation of intellectual property business within territories that are not Canada. That consolidation will probably increase, and for a company like my own, we're fairly happy about that. As a global company, it suits us fine, but as a Patent and Trademark Institute officer, I believe it's inevitable that we see the decline of some of the patent organizations, the people we employ in those organizations, and indeed the business of patents. Make no mistake; it's a business that parallels general business.

So I believe one of the things we should watch is the extent to which the World Trade Organization negotiations tend to put a slant on the extent to which patent activity, patent litigation, the acquisition of patents, moves from Canada into more consolidated areas—Europe, the States, and so on.

Consequently, the main thing I think we should look for within the World Trade Organization negotiations is vigilance to see the extent to which initiatives are wholly toward the establishment of trade freedoms and the extent to which they will have as their effect the reduction in what I would call “the patent business” in Canada.

Thank you.

Mr. Glen Bloom: I'd like to conclude—

The Vice-Chair (Ms. Colleen Beaumier): I would ask you to do that in about 30 seconds, please. We would like time for the questioning.

Mr. Glen Bloom: Yes. I'd like to conclude by referencing a comment on trade in services.

Under the NAFTA agreement there was a reservation that was imposed or created by Canada to ensure a flourishing of an intellectual property profession and professional advice in Canada. That reservation must be maintained in any future WTO negotiations. If there is no requirement of residency in Canada for those who convey intellectual property advice, we may well risk that the advice will not be available in Canada to Canadian small and medium-size business and Canadians will have to go elsewhere.

Thank you very much for the opportunity to make submissions before you.

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

Mr. Penson.

Mr. Charlie Penson: Thank you, Madam Chair.

I'd like to thank the witnesses for coming this morning and helping us with this whole area of what Canada should be doing in the next round of the World Trade Organization talks, which are to kick off probably next year.

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I thought there were some good presentations. I'm interested in the expanding list we're hearing about. Some people talk about the need for a small cluster-group approach. Others said we want a general round. It seems to me we're starting to grow into a lot more areas, which is probably a good thing, in my view.

I just want to ask, Miss Bradford, it seems to me you've made a very remarkable presentation here this morning. I just wish that a few groups that have made presentations to us here in the past could have been here to hear your presentation, especially some of the agricultural ones, where monopolies in the Canadian Wheat Board and the supply management industry in a closed loop system would benefit.

The remarkable presentation is that you've asked the government to remove the monopoly so you could grow. Even more boldly, you're now questioning the foreign investment policy that seems to be hindering your growth as well. Further to that, you're looking for monopolies to end and government trading enterprises in other countries to reduce their control to allow us to take advantage of telecommunications in countries that have not moved to a private system—privatization—or a liberalized system, such as Brazil. That's a remarkable move for a company such as yours, isn't it, that enjoyed a monopoly just a few years ago?

Ms. Meriel Bradford: Thank you for the unsolicited testimonial. I would like to put that on the Internet, on our web site.

I think the realization that a market of 30 million people did not provide for growth for an international business was such a determinant in our thinking and the strategy of our company. And here I have to look to the leadership of Charles Sirois, who said we are better off trading a market of 30 million for a market of six billion, which is the world market.

Certainly we were a former crown corporation, so there was a major cultural shift in the organization that needed to happen. We needed a change in our regulatory regime, which we eventually got from our regulator in 1996. That allowed us to move from a rate-based, rate-of-return monopoly to a more incentivized monopoly where we would take the benefits of reducing cost and give them to our shareholders, our employees, and of course our customers.

You need the right forum within which to change your business. It means the regulator, the policy-makers, the management, the unions, and the employees have to be involved, and you have to then get the right talent to help you grow the business outside the country.

I think that was what I wanted to share with the committee today—the story of success from monopoly to global enterprise. It takes guts. We're very pleased with the way we've been able to grow our business.

Mr. Charlie Penson: Miss Bradford, the Singapore ministerial essentially talked about the need for a telecommunications agreement, and it seems to me there was talk there—there was an understanding—that all countries wouldn't join immediately, but that there was a critical mass that would join and therefore make it workable. You seem to be suggesting there are still impediments, that 85% of the world market are still either monopolies or state trading enterprises that restrict your ability to grow in those markets. Is that correct?

Ms. Meriel Bradford: Let's remember that the basic agreement in telecom has about 70 members who signed up for it. Not all of them went to fully open markets. So even among those who took on obligations, they're phased in over time, and they're not always ending up at a fully liberalized marketplace. That's the first consideration. The second is that the ITU, the International Telecommunication Union, which represents all the countries in the world—and for the most part, their carriers are associate members—represents over 200 countries and companies.

Of course the WTO has only about 134 members. There are many that are seeking to join the WTO. You have a universe of 70 out of a potential universe of 240, and we have a long way to go to get all WTO members signed up, get new accessions signed up. And here I'd like to say a word about the importance of the Chinese negotiation to accede to the WTO, on which we're working closely with the government. It's very important for the global system and for our business. Then you have the outer universe, if you wish, of those who are not WTO members and have a long way to go to adopt a more open marketplace.

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I think my message today is that it's very important for developing countries to work towards more open markets in telecommunications. They are not just one sector. We often talk about telecom as the oxygen of the international economic system, and all of you, in your daily lives, know how much you use networks to do your business, whether it be the Internet or the telephone.

Mr. Charlie Penson: For the general panel, it seems to me the list is growing in terms of what we might like to see on the table at the next round, and I would just like input as to whether.... I gather from most of the group here that they feel it's a good idea to expand it just beyond agriculture and services.

The list I have been putting together from what I'm hearing is agriculture; services; intellectual property through TRIPS, and there is still work to be done there; telecommunications, and Ms. Bradford just talked about unfinished business; international competition policy; the dispute settlement resolution and how that can be reworked; and trade remedy law, which I heard about this morning. We hear there's ongoing work on the investment side, and then of course there are groups that come to us and ask for labour standards, environment, and human rights to be loaded onto that. I'm just wondering if there's agreement...or what are your thoughts on expanding it so that there's more reason to believe that there could be success by having a general round, if there are areas I've missed that should be included in that list that Canada takes forward?

Mr. Owen Lippert: I would just add that the list of items is growing, and it's an important list. I think as we go into this we should not be overwhelmed by all the different categories that are going to come up, but instead try to pick out those areas that provide some way to organize these materials, and in that, the most important organizing one will be the investment, in many ways.

Ultimately where I think the WTO talks are going to go is that intellectual property will be protected as an investment and under the investment rules. With the failure of the multilateral agreement on investment, there's a bit of a void there, but again, NAFTA provides a model, and intellectual property being something treated under investment in NAFTA is really the model for what you'll see, I think, in the World Trade Organization.

So when you have violations of copyright standards or patent standards, the companies holding those devices will be seeking compensation or private remedies, rather than just having it ratcheted up to a country-to-country fight over trade access or something like that. You want to push those disputes out into the hands of the private companies and let them pursue private remedies—even private remedies against governments. Other than that, it will just collapse under its own weight, I suspect.

The Vice-Chair (Ms. Colleen Beaumier): Thank you. Did someone else...?

Mr. Jayson Myers: Could I just make a very quick point?

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

Mr. Jayson Myers: Not to add more issues to your list, Mr. Penson, but government procurement is also an area that is extremely important.

I think in looking at this, the number of issues that are coming up for negotiation, we're seeing a proliferation, not simply because the issues are being raised, and I think these issues shouldn't necessarily only be dealt with in isolation and to give some form of leverage in the negotiations, but the issues are proliferating because there are so many interdependent issues here that we can't begin to deal with telecommunications issues unless we're looking at procurement issues. The investment issues and the intellectual property issues are all tied in together. I think the key element here in going ahead with the negotiations is that the negotiations again not be defined in terms of necessarily the official terms of the treaties themselves, but that we step back from there and ask what are the most important objectives for Canada in these and look at the common elements that go across all of these issues.

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

[Translation]

Mr. Sauvageau.

Mr. Benoît Sauvageau: My first question is for the representatives of the Alliance of manufacturers and exporters Canada.

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You referred to the Multilateral Agreement on Investment. You must surely know that my party, the Bloc Québécois, asked it to be withdrawn from the OECD and negotiated at the WTO. But in view of the general out cry and the Internet success—this reminds me of what Ms. Bradford, of Teleglobe, said—we saw how the public could oppose it.

Ms. Fehr and Mr. Meyers, if a new MAI were presented under the WTO, how should we go about it? How should it be changed so that it could become acceptable to civil society?

My other series of questions is for Ms. Bradford of Teleglobe, but if the other witnesses want to speak, I invite them to do so. Ms. Bradford, on page 4 of your brief, it says:

... we urge the Canadian government to negotiate the abolition of foreign investment requirements in telecom services across countries in any future trade negotiations.

With respect to agricultural standards, some countries have eliminated or reduced their requirements, while other countries haven't. Is this equitable and fair? How has this happened? Could you give us further details on this statement?

Again on page 4, you mentioned prohibitively expensive licensing fees and unclear licensing process. Is this a problem throughout the world or only in some countries? How could it be solved?

My third question is about the 20% rule that the Chairman referred to a little while ago. I may not be knowledgeable enough, but I have difficulty understanding the 20% limit on foreign ownership. Could you tell us something more about that.

If there is enough time, Ms. Logan, I would like you to tell me about the Global Charter of Cultural Rights. What strategy would we follow to achieve such a charter, which is only at an embryonic stage?

The Alliance representatives might wish to answer first.

[English]

Mr. Jayson Myers: Perhaps we could respond in relation to the question about the agreement on investment. Again, the issue of investment, the non-discriminatory treatment of Canadian companies operating in other markets, I think is the key issue here in many respects, and it's what we should have in mind, and perhaps not negotiating necessarily a separate agreement on investment but building the treatment of investment into other areas or other agreements that we're looking at. Again, this is a fairly general issue here, realizing some of the sensitivities that have arisen over a separate agreement on investment. Perhaps the most constructive resolution of that type of problem would be to show how provisions affecting Canadian investment in other markets are a very important part of the whole series of issues that are being negotiated in the new series of WTO negotiations. I think that may be the key here.

Secondly, of course, again, I think it's extremely important to bring forth the point in public that an agreement on investment or an agreement in a number of these areas we're speaking about today is in the interest of Canadian companies operating around the world. This is not simply a matter of global companies coming into the Canadian market to exploit what is happening here, but we have a very keen interest as Canadian companies in making sure markets are open and that Canadian companies are treated in a non-discriminatory way. I think that's the most important message we can communicate publicly.

[Translation]

Ms. Meriel Bradford: You have read our brief very carefully, and I thank you for your attention.

I will first deal with the problems associated with the investment rules. I shall take the example of Mexico, where a certain number of concessions have been granted to telecommunications providers.

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To be able to enter this market, you have to find a partner who already has this type of concession. Téléglobe cannot enter it without being associated with a partner, perhaps passively, a company that has no interest in telecommunications, but it would be very difficult to find one. So we have to form an association which with a company that is already in the market and working in telecommunications, and this is really not our preferred approach. We would prefer to enter the market as Téléglobe, to set up there and carry on with our international trade, as we do in the United States or in England.

You also mentioned obtaining an operating licence. We have experienced many problems and difficulties in this regard, including in Germany, where the cost of a permit is 32 million German marks. However, we didn't want to buy the network, we were simply looking for an operating licence. After lengthy negotiations with other stakeholders in the market, things are beginning to fall into place; nevertheless, it has taken two years of discussions and political and legal initiatives. We are even thinking of going to the Commission of the European Communities for solutions before taking our case to the WTO dispute settlement agency.

So there is first of all, a lengthy national process to be followed to try to find solutions, before going further, namely in Brussels in the case of a member of the European Union. If there is still no remedy, we could consider going further, but it costs a great deal of energy and money.

We are proposing that the document on regulatory principles be clarified in order to avoid such problems in the future. Everyone should be clear on the rights and responsibilities of all stakeholders.

I could also mention the problems that we are facing in France and Mexico in trying to obtain an operating licence that enables us to have infrastructures, be it a switching centre in Paris or a little fibre optics. These countries require a minimum investment. As I have said, we are going to have to start digging and find access channels through Paris, even though this isn't at all what we want to do. We simply want to be able to plug in in order to serve international clients. The tendency is to oblige those who want to offer a service and obtain an operating licence to make investments. Here again, it would perhaps be useful to specify such things in the Agreement, so that we will know what to expect.

I will now answer your question on the 30% rule. Téléglobe's infrastructures are designed only to serve the international market, that is, earth stations and undersea cables that come to Canada. Such facilities are not subject to the 20% limit on foreign direct investment. Such infrastructures can be up to 100% foreign- owned. Téléglobe, therefore, has no so-called national structures. This is why we claim to be a global company that started in Canada.

Have I answered your questions?

Mr. Benoît Sauvageau: Yes, thank you.

[English]

Ms. Jane Logan: As I understand it, you've asked me what is the strategy behind this global charter for culture. I think our support of it is premised on getting out of the current cycle, which is the “I used my exemption and you can retaliate cycle”.

The example I gave earlier of Country Music Television I think is a case in point. Country Music Television at the time of the press reports in 1994 showed that the U.S. was prepared to retaliate with measures worth $1.6 billion. Country Music Television today is a small niche television service with revenues of $10 million.

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It is very hard to fight that kind of pressure, yet we believe in the importance of cultural institutions, telling Canadians their own stories and having cultural industries actually in Canada.

So the cultural charter would, first of all, recognize the importance of cultural diversity, which I don't think we have any difficulty with here in Canada. It would acknowledge that cultural goods and services are different from other products. It would acknowledge that domestic policies and measures are intended to ensure Canadian products and services are significantly different from other policies and measures.

It would then set out the rule on the kinds of measures countries could and could not use, so there would be a whole discussion on content quotas and whether they are valid, and subsidies and what you can do. This is not asking for carte blanche; this is asking to have a discussion that takes place and then becomes the standard. Finally, it would establish how trade disciplines would apply or not apply to cultural measures that met these agreed upon rules.

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

Mr. Speller.

Mr. Bob Speller (Haldimand—Norfolk—Brant, Lib.): I'd just like to follow up with Ms. Logan and Mr. Lippert too, because I would assume he's sitting there totally disagreeing with you on this. It's just a wild assumption.

Maybe we can further this debate. Essentially you're asking for an exemption, and you give various good reasons why we should be moving that way. You're saying we should make it wide open and compete. I wonder if we can just go further along that line and ask Mr. Lippert what he would see, in terms of what sort of agreement we could get at the WTO, given not only Canada's position but that of France and other similar countries.

Mr. Owen Lippert: You're right that I'm opposed, and the institute has been opposed for some time, to this idea of a cultural exemption. If you take that idea apart, you actually find some pretty disturbing things at the bottom of it. One is the idea that cultural goods are different from other goods. That simply doesn't hold water. You have books, magazines, and whatever, in all those forms, so it's not physical. You're saying, okay, it's something a little bit more metaphysical and somehow there is some cultural identity and that is different. Frankly, even if you go down that route and say you have this cultural identity, why are you then involving the government in its protection? That is something individuals will do in their own right and they will make their own choices. When you get into this notion of a government-approved culture, that's when you get into things like cultural exemptions.

There's a history in Canada of being defensive about our culture because of pressures from the United States, and one can be sensitive to that. But creating all sorts of new rules and penalties is not the answer there. That answer is particularly not defensible on its own terms, but it's also not accepted by our trading partners, with some exceptions, and it's being used, frankly, to serve some very narrow interests. There's just no way around that.

I'm going to have to make the prediction that Canada will remove the cultural exemption easily or with great difficulty. Removing it easily is in our own interest, rather than going through all the pain and agony, having our arms twisted and everybody flashing and flopping around on the negotiating room floor.

Ms. Jane Logan: If we wanted to take the easy route, there would be no Country Music Television. There would be no showcase for Canadian artists playing country songs, whether you like them or not. It's a question of whether we can blow off a $10 million business for the sake of $1.6 billion in retaliation. I guess we can. That's what would happen, and it would happen in every niche and every cultural sector. It would roll out.

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Fundamentally—and this is my turn—I think cultural goods are different from soybeans and telephone parts. They are about expressing our values and identity. That may be where we have to agree or disagree on their value.

You ask why we are involving the government. You spoke earlier about the importance of protecting brands. What we face—and I'll use my own industry of specialty and pay television—is a situation where U.S. branding in the entertainment industry is universal and overwhelming. These products are promoted on such a scale that you have probably heard of television services in the U.S that you have never seen, and you still think they're good because they do such a darn good job of promoting their entertainment system. They have a whole lot of money behind that entertainment system as well.

We would not have the chance to have access to distribution systems or advertising. We wouldn't be able to compete with these American services, in terms of affording to buy product—even Canadian product—to showcase it if we didn't have the current set of CRTC regulations I described. That is not to say our success is a government success; it's very much a success of private industry and creators at the same time.

Mr. Owen Lippert: Every industry in Canada said precisely that about the free trade agreement: we're too small to compete; we're going to be wiped out. I have friends in the wine industry who said they wouldn't be able to survive. Ten years later, those industries—and there has been some shake-out—are doing remarkably well. Canadian wines are now being sold in the United States, as unbelievable as that may have sounded ten years ago.

The ability of the Canadian cultural industries to do well will simply not be impaired by opening up that market. They will survive and do very well. I know we can go round and round several times here—and far be it for me to be tedious—but prior to all these rules there was Canadian culture. It did very well. You're getting back to a way of dealing with the world prior to this outburst of defensive nationalism in the 1960s.

Ms. Jane Logan: In the 1960s there were very few entertainment choices. We didn't have cable coming into 80% of Canadian homes. We were looking at fundamentally different distribution systems. As a child in Montreal in the 1960s, I had a choice of four television channels—CBC, SRC, and two privates. Times have changed.

There are exciting opportunities out there now, and consumers are becoming very sophisticated. They're interested in the cultural products. As I said, when it comes to Canadian specialty television, we've seen our audience share grow. In fact, we have a highly popular product. But it couldn't exist without these policies, given that giant U.S. entertainment machine right across the border.

You've said products are selling in the United States. That's true, and that's certainly true for television shows. But on the other hand, it's nearly impossible for a Canadian television service to cross the border and get any distribution in the U.S. I think there was an article in the Globe and Mail on the weekend about MuchMusic USA trying to fight its way into the U.S. market, and the difficulties it has had since 1984 in gaining any penetration into that market.

Structurally, there are real barriers to us expanding into that market. There are 80 million households that speak the same language as us. Believe me, our services would be there if they could.

The Chairman: Thank you, Ms. Logan.

Is that it, Mr. Speller?

Mr. Bob Speller: Very good, thank you.

The Chairman: That was a very helpful discussion.

Mr. Penson.

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Mr. Charlie Penson: I just want to pick up on this topic, Mr. Chairman.

Ms. Logan, I have certainly heard this theory advanced before, in that the cultural industry seems to be in a shift away from the idea of an exemption under the World Trade Organization. That was the first go-round. Now there seems to be a shift to having some kind of a special WTO committee or agreement that would govern just culture. The difficulty I have in understanding that is in who would sign on to that.

It seems to me that the cultural industries that have made presentations here in the past have identified the United States as the biggest threat to our culture and therefore the need for the protections that you've talked about. However, Canada already has an exemption under NAFTA in the cultural industries. Of course, with that goes the United States' right to retaliate to the equivalent effect. That's not going to change unless the NAFTA agreement changes, so I'm just wondering how this would work. It seems to me that the United States probably wouldn't sign on to a WTO agreement even if a number of other countries did. Therefore, if Canada continues to have the exemption and the mechanism exists under NAFTA for the retaliation, where would this lead? How would that solve the problems you've identified?

Ms. Jane Logan: I'm not a trade expert, but I expect that there are those who understand what vehicles might be the best vehicles in which to put forward this kind of concept. We were talking about a cultural charter that would not be subservient to other agreements, though. And, no, the United States won't like it. In fact, we've seen this U.S. cultural agenda try to take root at the OECD, then it went to the MAI, and now here it is at the WTO. So I'm sure it would be very useful to deal with these cultural issues, create the definitions, set them aside, and have the argument largely agreed to on the fundamentals, although it may still evolve. Where would we get support? From what I've read, I do believe there is a lot of support out there. Would the U.S. come to the table? I think this is important enough that they would want to participate.

Mr. Charlie Penson: Okay. Then the question I have is whether you're asking for this cultural agreement to be part of the WTO discussions in this so-called future round or whether you would have it as a separate negotiation some time in the future. Just what do you envisage here?

Ms. Jane Logan: I believe that is something perhaps best left to the trade experts, but through either mechanism, it should have the advantage of not being overturned. As I said, it shouldn't be subservient to other agreements.

Mr. Charlie Penson: Okay, but you're not here today making a presentation to the committee that culture be included in this round of the WTO negotiations. That's what I'm trying to clarify.

Ms. Jane Logan: We're here to support the SAGIT report that looked at a number of alternatives, and looked very specifically at a cultural exception, and said the group felt the charter on culture would be a better approach.

If you would like, we will submit a full report, and perhaps I can then be more specific on the use of the mechanism.

Mr. Charlie Penson: Yes, and if you're going to do that, Ms. Logan, I think it would be helpful if you could provide us with some examples of how this agreement would take precedence over the existing agreement we have with the United States in the cultural area in NAFTA right now. I think it would be important for the committee to know how that might be able to work. I have difficulty understanding it and I don't believe it can happen, but it would be helpful if you have some ideas on how that could happen.

Ms. Jane Logan: We'll provide those.

The Chairman: Did I see you reaching for your gun, Ms. Fehr?

Is that it, Mr. Penson?

Mr. Charlie Penson: Yes.

The Chairman: Madame Debien.

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[Translation]

Ms. Maud Debien (Laval East, BQ): Good morning, ladies and gentlemen. My question is first of all for Mr. Myers, and, then, for Ms. Bradford, because she dealt with the same subject.

Mr. Myers, in your report you said that the industrialized countries should provide financial assistance and various forms of assistance to the developing countries. I would like to know what type and how. Furthermore, what form of assistance could companies provide to developing countries?

Ms. Bradford, you also said that we should promote access to telecommunications infrastructures in developing countries. How can this be done, and what role can Téléglobe play in this regard?

My second question is also for Mr. Myers. In your report, you point out that it is in Canada's interest to gradually reduce its agricultural support measures. Are you opposed to the supply management system?

My last question is for Ms. Logan. You have said that you support the Cultural Industries Sectoral Advisory Group, which has proposed creating a new instrument to replace cultural exemptions. A number of stakeholders in cultural industries have told us that they supported the creation of this new instrument. As you have said in your report, it will take many moons before such a new instrument will appear. In the meantime do you believe that Canada should continue to defend its policy of cultural exemptions?

[English]

Mr. Jayson Myers: To begin with, in terms of support for developing countries, I think this is important. To some extent, many representatives of the governments of developing countries come to negotiations without the resources they really require to adequately understand the agreements they're negotiating. They also come without adequate preparation to play a full and meaningful role in the negotiations.

I think there may be two types of support that Canada might be able to offer developing countries. One is support in terms of sharing information and expertise with developing countries on the key issues and on a preparatory role for trade officials from these countries, both as they're preparing for negotiations as well as during the course of negotiations. It's also very important for Canada to provide the second type of assistance through CIDA, through our official aid programs, our assistance programs, and that's assistance in strengthening governance systems, the implementation of regulations, the implementation of laws, and strengthening systems of corporate governance in developing countries. Building that governance infrastructure is also extremely important.

[Translation]

Ms. Maud Debien: Everybody knows that CIDA is already doing it. I would like to know what the industry is willing to do.

[English]

Mr. Jayson Myers: First of all, there is working with CIDA. I agree that CIDA is already doing this, but I think it has a much greater role to play in expanding that assistance. Industry can play a very important role particularly, both in the areas of increasing transparency in corporate governance activities as well as in increasing the transparency of regulatory systems within these countries. Of course, the major issue is how industry can work with governments in these areas. I don't think there is any clear way forward to build an effective Canadian industry relationship with the governments of developing countries, so it has to be done in relationship with CIDA or perhaps other official agencies there.

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Again, though, I do think Canadian industry does have a very important interest in making sure the governments of developing countries come to the table well prepared and that they are effectively enforcing the rules they have committed to. At the same time, I think Canada has a commitment to live up to in what has been negotiated in previous rounds, the Uruguay Round in particular. It's not going to be easy to convince developing countries even to come to the table to negotiate on a wide range of issues unless there is also a clear sign that what has been negotiated previously is being followed through.

In relation to the question on supply management and agriculture, we're not suggesting to do away with all supply management in agriculture overnight. Again, the objective here should be to open markets, to enable Canadian agricultural producers and agrifood businesses to grow and expand their business around the world. I think the flexibility, perhaps in a bit more of an open system in terms of the way agriculture is managed, has to be a part of that as well.

[Translation]

Ms. Maud Debien: You know that the European Union and the United States provide huge agricultural subsidies, and Canada has done more than its homework in this regard. This is why I wanted to know if Canada should maintain its position, in view of the round on agriculture that will start next fall, with the support of all the dairy producers' associations in Canada and the dairy industry, which are demanding that Canada maintain its position on supply management.

[English]

Mr. Jayson Myers: I'm extremely concerned that Canada may be left out anyway because of where international negotiations are going on agricultural issues. We can't be focusing solely on the domestic management and supply management of agriculture on those issues. If negotiations in other areas are going beyond that, I think we somehow have to respond to where international negotiations are headed. At the same time, of course, we have to recognize the interest of Canadian agriculture producers across the country.

I'm not suggesting that we act unilaterally, outside of the negotiating process. Of course, on the agricultural problems, the European market export subsidies for production, as well as the difficulties in getting into the European market and the difficulties in entering the American market for agricultural produce—these are far more closed markets than the Canadian market is. Nevertheless, in going forward as an objective for more open market access, I think that's where we should be headed in a negotiating position. In terms of whether we get there or not in regard to the final end product on the agricultural side, we may not get there, but at least we may push for more open market access and, at the same time, be prepared to open our market more extensively, on a reciprocal basis. I certainly think we should be going forward on the agricultural field and agricultural negotiations and not be acting unilaterally in the format of the overall negotiations.

[Translation]

Ms. Meriel Bradford: Ms. Debien, you asked me to say how we, as a business and Canadian corporation, can contribute to improving access to infrastructures in the developing countries. This is very important to us, and we have done many things in this area.

Allow me to say that the way telecommunications are developing, if we do not change the policy and legislative framework, we will not be able to do anything. It is very important that we promote the work of the World Bank to help the countries that have chosen to change their policy framework and want to have access to Canadian expertise and experience.

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Téléglobe is a marvellous example, since it has gone through all of this. We can send people on site to give some explanation of how we succeeded in changing the policy and legislative framework in Canada in order to increase market access and demonopolize the markets. We often go to speak of our experience. We often receive foreign delegations in our offices, be it in Ottawa or in Montreal. We provide guided tours and make presentations.

We have to encourage the privatization of the state monopolies, because it is extremely difficult to change the business culture that always prevails in state monopolies, which really do not have the proper tools to change the culture or the markets or to make the undertakings more sensitive to consumer needs.

Therefore, framework legislation must be passed to supervise telecommunications and govern all potential market entrances. An independent regulatory agency then has to be created that will be able, like our CRTC, to manage the market and the transfer from a monopolistic market to a competitive market.

Ms. Maud Debien: A national agency?

Ms. Meriel Bradford: This would be an agency set up within each country. This agency would be consistent with WTO regulatory principles. We already have an idea of what we need to do. This is not an easy process because it takes a great deal of time to set up an agency and to ensure that the people understand the concept of transparency and the regulatory process and to develop all of the procedures.

Since we have our own ideas on regulations in Canada, we may very well suggest improvements. We have to have access to these markets so that Téléglobe can go there and offer its services. It often happens that when a market opens up, the newcomers decide not to set up an entire international network, which is very expensive. They prefer to have access to INTELSAT and the submarine cables and to turn the traffic over to Téléglobe so they in turn can focus on the domestic market. They really prefer to choose a Canadian company which, in their eyes, is less threatening than an American giant. They often come to us.

We also provide technical training through an organization known as TEMIC, which is based in Montreal. This association provides telecommunications training to managers from developing countries. This association covers both the private and public sectors and every year provides a series of courses to the young and to the not-so-young who live in developing countries and who come to Canada to get training in telecommunications management. We are very active. Nortel also participates in this program.

CIDA often asks us to be part of their team of experts to help certain countries that want to change their policy and framework legislation. Right now, I'm working on a project to help the West Indies rethink their political framework in various sectors, including telecommunications. Our experience is proving to be very useful.

The CRTC compiled a data bank of Canadian experts who are prepared to provide their technical, training or management services to foreign companies.

The World Bank is making an extremely important contribution to fund changes in the political framework and legislation. The ILO is investing approximately $30 million, per year, in programs designed for developing countries. We are also participating in these initiatives by helping them establish priorities and by suggesting programs. A former official from the Department of Communications Canada is managing this $30 million program for the benefit of developing countries.

In addition, the Internet will provide all kinds of opportunities that we haven't even thought about yet in terms of tele-education and work in the global market place, and we won't even have to leave home. I have high hopes that the Internet will unable us to provide this type of training and cooperation at an international level.

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Ms. Maud Debien: It would help to have electricity, wouldn't it?

Ms. Meriel Bradford: It all starts with the framework under which the business—

Ms. Maud Debien: The political framework.

Ms. Meriel Bradford: —can compete.

The Chairman: Thank you, Ms. Bradford.

This 5-minute period has turned into a 15-minute period. As usual, Ms. Debien, your charm holds sway.

Ms. Jane Logan: I can respond very quickly.

[English]

You've asked me if Canada should continue to defend its support for a cultural exemption while this huge amount of work that needs to be done for a cultural charter takes place. In fact, the cultural charter is intended to be a new international instrument that would take away the need to create exemptions in the future and the difficulties of implementing them. So the answer is no.

Your point was that this would take a long time to develop, and I guess our point is yes, but there are firm relationships in place with other countries that already have many cultural programs in place. We think there are a lot of relationships that can actually be built on in bringing this forward, so we are confident in it.

[Translation]

Ms. Maud Debien: Meanwhile, we must maintain the cultural exemption. Is that what you are telling me?

[English]

Ms. Jane Logan: No, I'm saying to maintain it or to negotiate a new one.

The Chairman: Mr. Reed.

Mr. Julian Reed (Halton, Lib.): Thank you, Mr. Chairman. First of all, I would like to apologize to the committee for not having been here through the whole session. Some duties in the House took me away for a while. So if some of the exchange has already been completed, just tell me. Shoot me down and that'll be the end of it.

I would like to zero in on the Manufacturers and Exporters of Canada and the area of agriculture particularly. There's always been a concern about this thing we call supply management in Canada. I think just to make the air clear we should point out that supply management, first of all, does not involve all of agriculture by any stretch of the imagination. It involves some agriculture and it exists because there is a perception that with supply management there are certain benefits to the economy of Canada and to the farmers of Canada because of it.

If we look at the experience in the United States, particularly where they have fairly parallel types of techniques of raising poultry and producing eggs and so on, those areas of agriculture that we have under supply management are to a large extent taken over in the United States by large corporate interests, where the farmer himself has become a 9 to 5 employee, and we made the decision—

The Chairman: I would say a 9 to midnight employee.

Mr. Julian Reed: Canada made the decision at the urging of agriculture to make this choice. We give up something on one hand, but on the other hand the consumer gets something. The consumer gets a steady supply of product; it gets product of the very highest quality, which is not duplicated in the United States, let me point out. So there are trade-offs there. That's my little pitch for supply management.

What concerns me when we talk about reducing tariff barriers, subsidies, non-tariff barriers is the fact that Canada has been described as being a decade ahead of most of the rest of the world in terms of its approach to subsidy reduction. We believe that agriculture, if given a level playing field, can compete head to head, but it doesn't get the chance.

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I'll give you one example, which never seems to get examined thoroughly, and that is the American supply of water. Water is one of the great subsidies in the United States, and it's never addressed. Yet it is managed by the Army Corps of Engineers. Nobody says that's a subsidy, but I'll tell you in the United States, with the demand for water that exists right now and the near-critical stage that water supply has reached in the States, surely it's a subsidy.

So maybe you can help us. How do we identify those kinds of barriers? How do we identify those things that we look at and say if that water was not available, if the costs of that irrigation system were not being subsidized by the American government, where would that particular area of agriculture be? What state would it be in today? We don't seem somehow to be able to get at those kinds of barriers.

The Chairman: Mr. Myers.

Mr. Jayson Myers: Clearly, the issue of agriculture is not a simple one; it's very complicated, as you suggest, in the area of supply management. I think it's exactly the types of issues you raise, in terms of the subsidies, some of which are perhaps more evident than others, and particularly in the North American market, that we should be focusing on. And I agree, I think, in terms of the degree to which the Canadian market is open for agricultural products, we are ahead of both the United States and many other countries as well.

I guess our main concern, though, is whether, in an approach to agricultural negotiations, we simply say this is our existing system of supply management and we're going to protect that regardless of where the course of negotiations goes, or should we enter into the negotiations trying to promote as open-market access as possible for Canadian producers? The point here is that the latter negotiating position should be the position we adopt. We should be pressing for open-market access. And I agree with you, given the level playing field, our farmers can compete and our agrifood sector can be extremely competitive. We should be pressing for that level playing field and for market access. That's the objective we should be aiming for.

If in the process of achieving that we gain that market access, if we can bring down the export subsidies in some of the other markets we compete with, all we're saying is at that time have some flexibility in our own supply management system to make sure we can lock in those gains. Again, we're not arguing that we should do this unilaterally and outside of what we're achieving internationally.

Mr. Julian Reed: But now it's a lever that we hang on to because it is perceived that we can't make these breakthroughs. We fail to make breakthroughs on other commodities. For instance, we win awards for wine all over Europe. Can't sell a damn bottle there. Now, tell me why. It's because of protectionism. We grow the highest quality wheat in the world. American millers want Canadian wheat. But we run into obstacles trying to sell it in the United States.

Mr. Jayson Myers: But shouldn't these be the market access objectives we're trying to achieve through the negotiations?

Mr. Julian Reed: They're the objectives, and I don't disagree. I agree they should be the objectives.

Mr. Jayson Myers: That's the point. We should be negotiating the access into the markets and use this as part of our tactic to do that.

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Mr. Julian Reed: I would anticipate, in Europe particularly, that if we were to venture forth and say we would like Europe to go on a level playing field with Canada in terms of production of foodstuffs, we would have riots again in Paris.

Thanks, Mr. Chairman.

The Chairman: Maybe I could ask a couple of questions then. I must say, Mr. Myers, just on the agricultural thing, what I've certainly learned—and I don't think I knew it when I started these hearings—is that it's pretty clear from the statistics we've been given by the agricultural community that Canada's markets are more open than others, and it's a serious percentage. We're open 8% or something, and the U.S. market is open 2.5%. If we could get another 2% of the U.S. market, I'm sure a lot of people would be willing to give up something.

But at this point, until the others come up to us, what our farmers are telling us is let them get to our level, then we'll talk about giving up something. But don't tell us to give up something more for an ephemeral, non-access issue, and have the beet subsidies, the peanut exclusivities, and all the coziness that goes in the political system. That's just an observation. It doesn't call for a comment.

Mr. Jayson Myers: That's exactly the point. We shouldn't be coming at this and saying we're ready to give something unless we are negotiating more open markets.

Mr. Owen Lippert: I'll just add one thing to that. This is an old fight in terms of the intellectual understanding of free trade. Torrens in the early 19th century comes up with the objection to free trade on the basis of this “terms of trade”. A lot of research has gone into it, and suffice to say, where it stands now is that unilateral removals of the various tariff and discriminatory barriers actually correlate to increased economic growth, because how economic growth is achieved is not by trying to keep a lock on a market, but by allowing those industries to increase the degree of their specialization and their competitiveness. So at least in the economic literature there is a very compelling argument for unilateral removal of tariffs and other discriminations. And this tit for tat, “we won't do it unless you do it” is a political problem, given the political sensitivities usually about having to deal with a little bit of churn in terms of industry and wages.

The Chairman: This is obviously a debate we could have, and perhaps we shouldn't get into debate, because I have some questions to ask you. I think I'll go so far with you down the road, but I don't think, Mr. Lippert, you're innocent enough to say that the world is a nice, wonderful, free trade world where everybody else is playing by the game.

If you're a unilateral disarmament man and want to take off all your clothes and jump into the puddle and say, here I am, I'm disarmed and I'm ready to let you take whatever you want, you can take that attitude. But I don't think the people who are going to lose the jobs and will have to go through the long, painful adjustment period we're talking about are going to accept that. I don't think the political people who are dealing with them are going to accept it either.

We had a very good man in here from the agriculture sector in Quebec. You weren't here. Some of the members were here. He said anybody who thinks the Europeans are going to enter a system where they're going to see several hundred thousand farmers out of work in the next few years is just whistling Dixie. It's not going to happen. So it seems to me while it would be nice to live within the world you posit, we don't live in that world. And it seems to me we have to look for the solutions within that world.

So with that in mind, I have some questions I'd like to ask you. The first is this. You spoke about TRIPS. Do you know whether the United States, in its intellectual property laws and patent laws, totally conformed to the GATT decision that found its intellectual property laws were GATT-inconsistent, and whether or not, since it's leading the charge for this, it has now brought its legislation into conformity with the WTO rules? I would suggest to you that in my experience with the United States, they always say they're going to do this and they never do. They always cheat. They always stick stuff in their legislation that totally undercuts.... The President agrees to one thing and Congress goes and takes it away with the other hand.

So I'd like to know whether or not you're aware of that.

Secondly, in terms of TRIPS and stronger standards, it would seem to me that one of the problems we're going to have is when China comes into the WTO. It's probably in all our interests to get China into the WTO, and certainly the Americans.... Obviously it fell through on Mr. Zhu's visit, but it seems to be moving in that direction. It might even happen by November.

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Where do we go on the TRIPS thing? Once China is in the WTO, isn't this going to start some serious new problems? We're going to end up in a real debate between the Brazils, the Indias, the Chinas, and those of us in the intellectual property exporting world who are going to want to get stronger standards. How do you see that playing out?

Mr. Owen Lippert: To answer both your questions, on the U.S. compliance with TRIPS, I don't know if they're out of whack with their TRIPS obligations. They recently passed some legislation, I believe in 1995. The thing about the U.S. system, and Stuart and Glen will know this much better than I do, is that it's the difference between first to file and first to invent. That's what's really causing a bit of a hang-up, I suspect, in terms of U.S. compliance. Clearly the point is that there is an interest by the United States to comply. Its major pharmaceutical, entertainment, and software industries export over half their product and get half their revenue from overseas trade. So they're very much pushing a domestic agenda of compliance with TRIPS in order to strengthen its case outside.

As to whether there are other interests, sure, there are other interests everywhere. The interesting thing about China is that in terms of intellectual property, in one sense, China's not as bad as it's made out to be. In China the problem is more illegal copying as opposed to state-sanctioned intellectual property appropriation.

The Chairman: It's an enforcement issue.

Mr. Owen Lippert: You don't have with China the same problems you have in Argentina or in India, where you have the government-sanctioned taking of foreign intellectual property and then using that to prop up domestic industries. In China what they do wrong is against the law, their own laws, and can be addressed. In terms of the copying, there's a lot of copying that goes on in China, but the government there has made at least tentative steps to deal with it. So intellectual property, I suspect, will not be the sticking point so much in China's accession to the WTO as opposed to its completely out of control subsidization of the state industries and the very poor financing in those.

The Chairman: You mentioned India and Argentina as being examples of...did you mention Argentina—

Mr. Owen Lippert: Argentina, yes.

The Chairman: —as a country where in fact they have a lot of laws that permit...? Is this like our patent legislation? It's the argument over whether or not—

Mr. Owen Lippert: They have various forms of compulsory licensing, which they're supposed to be removing, but there's a fair bit of controversy as to whether they're complying, moving to compliance, or they just have totally unregulated industries.

The Chairman: Thanks very much.

Mr. Glen Bloom: Mr. Chair, if I may add to the comments that were made....

The Chairman: By all means.

Mr. Glen Bloom: Certainly with respect to the TRIPS obligations, the United States is largely if not in complete compliance. The issue on the patent question raised by Mr. Lippert as to whether it's a first to invent or first to file system was a matter not raised in TRIPS, and it is an issue that has been discussed internationally through WIPO with respect to harmonization of substantive laws. But that wasn't on the table on TRIPS.

With respect to China, certainly the difficulty for Canadian businesses that are exporting abroad and for Canadians in Canada is the counterfeiting activities that take place in China. It's the enforcement of the intellectual property rights in China, and that has become a major concern, and it is evidently an issue that has been raised at very high levels between U.S. and Chinese government officials.

The Chairman: Thank you very much. That's helpful.

I have two other questions, this time to any panellist. Mr. Myers, in terms of the developing country discussion you had with Madame Debien, have you been following what's being done in the FTAA negotiations? I know that in the FTAA negotiations there's a whole envelope for micro-economies or small state economies. Do you think that's a logical thing that these WTO negotiations should borrow? Is that a model we look at, rather than talking about LDCs and NICs and all of those sorts of stratas, but recognize that there are some economies that are more vulnerable because of size in the global economy and focus on them that way? That's really my question about that.

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Then I have a question generally, to all the panellists, about e-commerce, which somebody said in their paper was the new buzzword we hear about all of the time, particularly from our American colleagues. Does this fit in anywhere that's already there, or does there have to be an e-commerce thing like there is for telecommunications, and so on? If e-commerce fits in somewhere, which one of the codes does it fit into? Which one of the existing structures does it go into, or do you have to have a totally new, separate structure for it?

Mr. Jayson Myers: First of all, in relation to not only the FTAA but also to what developments are taking place within Chile and our free trade agreement with Chile, and also in MERCOSUR, and the potential of negotiating SAFTA—the South Asian free trade agreement—in which Canada, of course, would not be a part but I think an important priority for regional trade and regional political issues in the area of South Asia, these are all areas where I think there's a great deal to be done, and the alliances and a number of other Canadian business associations and a number of Canadian businesses are actually heavily engaged in programs to assist smaller companies to adjust.

Regarding the issue of modernization, particularly on the part of small or medium-sized companies, the response of those companies to more open markets...they are looking at perhaps the experiences that Canada and smaller companies in Canada faced in the context of NAFTA and are providing some expertise or expert advice, but also perhaps an opportunity for some technical assistance as well.

I think all those are extremely important ways of not only building business relationships in these markets, but also providing these companies operating in smaller markets, and particularly in newly emerging industrial economies or developing economies, with some of the technical assistance they need. That is important. It has been a priority for our business development programs in the alliance, and a number of our divisions are also playing an active role here.

I think the last time I made an appearance before the panel I was heading to India and Pakistan. I have just returned from those countries after a series of presentations on the experience of Canadian companies in the wake of the free trade agreement and NAFTA.

My impression in those economies is of the real importance of engaging the business community in not only free trade negotiations but in multilateral trade negotiations, the importance of overcoming the concerns of smaller companies. In particular, another round of WTO negotiations simply means market liberalization and global competition flooding into the market and putting smaller companies again in a position where they would not be able to compete with more cheaply priced imports coming in from large multinational producers.

Of course, those were all issues that were debated in Canada in the 1980s and are very much part of the debate going on right now in smaller economies and developing economies. If we're looking at building WTO negotiations beyond a very small segment, or in fact engaging many of the developing economies in a new round of WTO negotiations, those concerns really do have to be taken into account and some assistance given. That's a long-winded answer to that.

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On the e-commerce issue, I think e-commerce goes far beyond the idea of simply an electronic marketplace today. The Internet was at one stage an electronic library; now it's often seen as an electronic marketplace. But in reality the Internet is simply a form of communication. All of the issues we've been speaking about today, from procurement, cultural regulations, regulating content and broadcasting, to the technology issues, intellectual property protection and so forth, all arise in the context of e-commerce.

We have a a non-tax regime for transactions on the Internet and we would certainly not like to take a step backwards in Internet commerce to a regime where new tariff barriers or new non-tariff barriers might arise. I think we are at a stage right now where we have a regime we should be able to build on.

I would be a little concerned if we were simply to deal with e-commerce issues in the context of simply other agreements that might be negotiated here. This is an area where we could actually promote freer trade and the movement of physical goods and services in other non-electronic means. But strengthening the current regime with some clarification of rules and in the area of intellectual property protection, where the technology has outpaced the agreements, is another issue. We're considerably further ahead in the area of electronic commerce, in many cases, than we are in the treatment of other goods and services.

The Chairman: Just so I can understand your answer, I take it your view is that strengthening the general provisions of the WTO throughout, whether they're dealing with tariff or non-tariff barriers, and in the services area particularly, will be sufficient for e-commerce. We're not going to end up with an e-commerce code, like we have a telecommunications agreement, or banking and financial services agreements, etc. We're not going to have an e-commerce agreement. We're just going to have a set of general principles that will weave through all of these agreements that will apply to e-commerce.

Mr. Jayson Myers: There may be issues we're dealing with now in e-commerce where we may want to lock in the present system of open trade and open communication. I wouldn't want to exclude that by simply negotiating e-commerce within the existing agreements.

Our recommendation would be that this is an important area and we should be doing a little more study in looking at those areas that come under e-commerce, the areas that would fit nicely in existing agreements where we could achieve something there, and areas where we might be looking at a separate agreement or at least locking in some of the advantages of open markets we have right now. Again, it wouldn't be an e-commerce regime but an electronic communications regime.

Mr. Glen Bloom: If I could add on the e-commerce point, there might well be issues in relation to privacy that would have to be addressed that might give rise to some separate segment. I would, however, like to address two other areas.

The intellectual property area raises numerous issues of great concern. First and foremost is the protection of content in the electronic environment. The WIPO copyright treaty raises three points that must be considered. The first one is to establish a right to communicate to the public by telecommunications to protect the content on the Internet, which right would include a right to make the work available on a web site. That is one issue Canada perhaps is in compliance with, but it's uncertain.

Second would be the necessity of establishing a....

The Chairman: Is that because of the terms of our Copyright Act?

Mr. Glen Bloom: Our current Copyright Act has a right to communicate to the public by telecommunications. It's uncertain whether that right extends broadly enough to apply if the work is simply made available and not communicated. The desire would be to sue if the work had been put up on a web site and not to have to establish it had actually been communicated to somebody else.

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The Chairman: Are revisions to the Copyright Act along those lines being contemplated, to your knowledge?

Mr. Glen Bloom: Currently the Department of Industry is looking at the issue of ratification of that treaty, so the issue is up in the air. There's no policy that says we will ratify. In my submissions earlier, I said we need to have a policy before going into the WTO because other countries will be very vigorously pushing these.

There are two other issues in the copyright treaty that raise concern. One is to create a prohibition against the circumvention of technological measures that restrict access or use of copyright materials. This would include a black box on the television set to unlawfully decode signals. There are provisions in the treaty that would require such a provision. Canada will require an amendment if we are obliged to go in that direction. It seems to be sensible to have something in that direction.

The third issue, tampering of rights management information—the copyright notices or ownership notices in relation to the information—in a fashion to facilitate infringement is an issue of great concern.

Those are probably the three areas in the intellectual property area on e-commerce, apart from database protection generally, that would be of concern.

The Chairman: You mentioned privacy. Would pornography be another area?

Mr. Glen Bloom: Yes, but that might go beyond the mere e-commerce issue.

The Chairman: Madame Bradford, and then I think we'll wrap up.

Ms. Meriel Bradford: Thank you.

I think we've really almost come to the point where we cannot look at the global trading system with the old structures we had. I would say to the committee that without maybe chambarder the whole structure, we really have to think about how business gets done in a global economy. Do we have the right boxes all lined up in the current WTO, which has a GATT over here, GATTS over there, some other codes here, and linkages to WIPO over there? Quite frankly, if we sat down today with a new piece of paper, I'm not sure we would make all those constructs.

The question will then come down to a very pragmatic one for the world trading system. Do we want to reshape the whole international set of instruments we have, or do we want to tinker around with what we have and add a bit here and a bit there, given that we want an early harvest, or do we want to rethink the global trading system?

That's a very macro thought I put in front of the committee. I wouldn't normally raise that with you, but e-commerce essentially comes to the point of how are people going to do transactions in a globally connected world? We are not going to trade across the border with our tariff items and our harmonized tariff system. That is not the world in which we'll be living in the next millennium.

If people really want to think creatively about what we need as structures, we're going to need things, such as Mr. Bloom described, that are consonant at the domestic level and work in a global system. I don't think it's fair that all of that has to be in the WTO. It means rethinking all our international institutions for global economic commerce and global economic undertakings. I don't know if we have our minds around that as a country. We certainly don't have our minds around it as international players.

E-commerce, for me, means looking at each of the boxes that are already there and saying “Is this problem taken care of, or do we need to find a new discipline, right or obligation to take care of the problem?” Quite frankly the jury's out, but I'm a bit skeptical that we need a lot of new boxes right now.

The Chairman: Do any of the 134 members of the WTO have their minds around this particular issue?

Ms. Meriel Bradford: No.

The Chairman: This is a big challenge, then, isn't it?

Ms. Meriel Bradford: It's also a trap, because people like to use the buzzword of e-commerce and start thinking about new obligations. We should be somewhat more pragmatic. We need to be creative in the longer term, but we need to be fairly pragmatic right now about what we are actually talking about in terms of new rights and obligations.

The Chairman: I want to thank all the members of the panel very much.

Mr. Reed, I apologize for having to go out to meet some other obligations. We really appreciate you coming and sharing your very helpful comments with us.

Certainly if you have any more ideas between now and when we write our report—we expect to have a report by June—we'd be more than happy to receive them, and so would our trusty researchers, our voracious readers and consumers of everything sent to them.

Thank you very much for coming and helping us today.

We're adjourned until Thursday at 9 a.m., subject to the possibility of a briefing on Kosovo from 8 a.m. to 9 a.m.