FAIT Committee Meeting

STANDING COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE

COMITÉ PERMANENT DES AFFAIRES ÉTRANGÈRES ET DU COMMERCE INTERNATIONAL

EVIDENCE

[Recorded by Electronic Apparatus]

Monday, April 26, 1999

• 0837

[English]

The Chairman (Mr. Bill Graham (Toronto Centre—Rosedale, Lib.)): I wonder if I could call this meeting of the committee to order, please. I'd like to welcome our first panel of witnesses to this hearing. I won't make a lengthy statement about what the purpose of these hearings is. I think you've picked it up off the Internet and you know that the purpose of the committee is to hear from Canadians and organizations concerning what our negotiating strategy should be and what our interests are in the upcoming negotiations in the World Trade Organization, which should start in November of this year in Seattle.

I'd like to welcome all of you. We're going to keep to a tight schedule because we have a great many witnesses and we have to leave here at 6 p.m. for a flight to Toronto. We'll try to finish this panel by about 10.20 a.m. to allow time for a break. Maybe each member could start with about a 5- or 10-minute introduction, then we could go to questions. That way we'll have enough time for questions from members.

I noticed, Mr. Cosbey, you're first on our list, so maybe you could be good enough to begin your presentation. Thank you very much for coming.

Mr. Aaron Cosbey (Interim Program Director, International Institute for Sustainable Development): Thank you, Mr. Chairman. On behalf of IISD, I'd like to welcome the committee to Winnipeg, and welcome all the participants who have come to present to this particular panel on trade, environment, and sustainable development. I should convey at the outset the regrets of Mr. David Runnalls, the president of IISD, who would have very much liked to be here, but is involved in a board executive committee meeting in Ottawa at this time. So you've changed places on this occasion. You'll remember that he did present testimony to the committee in Ottawa, but of course those of you who know David would know he would not have passed up another opportunity to regale you. In any event, I'll try to fill in for him.

I want to start by saying that I'm glad the standing committee is taking the time to make these consultations, which I consider most timely and important—timely, of course, because, as you say, we are now in the countdown stages to the initiation of a possible millennium round in the WTO that promises to change the future of the world's economy in at least as great a measure as did the Uruguay Round, the last round, and because we are currently in negotiations for the conclusion of a free tree agreement of the Americas by the year 2005. It is important for a number of reasons, and I want to turn to the rest of my intervention to try to give you a general sense of why IISD believes the linkages between trade, environment, and development are important and significant for the committee to be examining.

• 0840

What is Canada's interest in the linking of trade and sustainable development issues? Why is it important for sustainable development that we get it right in the upcoming negotiations in the World Trade Organization and the free trade area of the Americas?

I will start by saying that when we say sustainable development, we do not mean just environment. We mean the three-legged stool of environment, economy, and human well-being, and we emphasize that these three are intimately interrelated, fundamentally so, in such a way that we cannot advance in one area in the long run without paying attention to the other areas as well. I think here in Canada we have an excellent example of that in the east coast fisheries, where for some time policy was driven by a desire to advance in terms of economic development, in terms of human well-being, but at the expense of environmental integrity. In the long run, as we have seen, this has come at the detriment of economic development and human well-being.

So when we say sustainable development, we mean this interrelated and inseparable combination of the issues of environment, economic development, and human well-being.

In terms of how specifically the upcoming negotiations might be related in this way, Mr. Runnalls' presentation, as you remember and as you will be reminded in a written brief, went over almost a dozen specific recommendations for Canada's goals in upcoming negotiations in the World Trade Organization agreement and in the free trade area of the Americas.

I'll try to more generally set out, as a way of giving an overview to this panel, why those recommendations are necessary, why we see these linkages as being important, and we'll let you refer to the specifics in the written brief. I see those relationships as being important for three reasons.

The first is that our regulations may come into conflict with the rules of world trade or regional trade. As an example, it has not yet been settled how the rules of international trade relate to multilateral environmental agreements. An excellent example here is the Kyoto protocol, which I think you all know is the protocol to the framework convention on climate change. We've done some analysis of how countries that are implementing their responsibilities under the Kyoto protocol might come into conflict with the rules of the World Trade Organization. There are a number of potential conflicts between countries fulfilling their obligations under this environmental agreement and fulfilling their obligations under world trade rules.

Another example of this type of conflict is environment, health, and safety standards in general. As an example here, I give you the European Union's proposed directive on product standards in computers, which demands a certain amount of recycled content in the construction of computers and demands that computers be made in ways that don't create toxic wastes. These are facing a probable challenge under trade rules as a technical barrier to trade, as being unnecessarily trade restrictive. Here we see a fundamental clash between the regimes of trade law and environmental law, both of which have laudable objectives. But until we make clear how to separate legitimate environmental protection from protectionism, we will have these types of conflicts. I think it's very important that in the upcoming negotiations we do find some mechanism for separating those two.

The second specific area of importance I see in the relation between trade, environment, and sustainable development is in developing countries, which depend heavily on good rules to achieve sustainable development. Sustainable development is not cheap. It's an expensive proposition in terms of money and resources, and it's especially expensive in developing countries where the need is for economic growth as well as environmental improvement. A good counter example of this is the Asian financial crisis, where specifically in Brazil and Indonesia we've seen how financial collapse and economic chaos can create environmental destruction.

• 0845

Another example of this is in the WTO agreements on textiles and clothing and in agriculture, where if the rules are well implemented, developing countries will be able to use trade in agriculture, textiles, and clothing as an engine of development, a means by which to create the wealth that may potentially lead to sustainable development.

But without faithful implementation of those rules in the WTO and without improvement of those rules, specifically in the area of agriculture, we will not see that type of trade used as an engine of growth; we will not see the type of development in southern countries that can lead to their ability to improve their environment and the global environment.

So good rules are necessary for developing countries, as well as for Canada, in order to create sustainable development globally.

The third specific point of linkage I see between trade and sustainable development is the ability to find win-win opportunities, i.e., those areas in which trade and sustainable development can be mutually supportive. An obvious example here is the area of subsidies. If the WTO and the FTAA can get their rules right, we can have regimes that work to remove subsidies that are both environmentally and economically perverse. I think here again of the area of agriculture, where subsidies that have not yet been de-linked from production—those that pay producers to produce based on the amount they produce—have created, in areas like the European Union, immense amounts of overproduction in terms of both goods and waste—emissions, pollution.

This type of environmentally and economically perverse subsidy is a prime target for improved trade rules, both in the FTAA context and in the WTO context. These are institutions that were set up in the first place to try to deal with issues that could not be handled unilaterally by any one country, such as the removal of tariffs. They are perfect institutions also for dealing with issues like subsidies that cannot be attacked unilaterally by any one country, but will benefit all countries if all countries attack them simultaneously.

So the third linkage is the ability of properly framed trade rules to capture this type of win-win benefit.

The main message, in both my presentation and in the brief submitted to you by Mr. Runnalls, is that the issues of sustainable development in the WTO context and the FTAA context need to be mainstreamed. We cannot sideline them in the committee on trade and environment in the WTO. We cannot isolate them into that forum, because we have done serious analysis of the WTO as an agreement and found that there were practically no areas, bodies, organs, or agreements that did not have significant sustainable development implications and did not need a sustainable development lens.

Therefore, the issue needs to be mainstreamed. As I say, sustainable development needs to be tackled throughout every committee and body of the WTO. Some of the recommendations in Mr. Runnalls' paper speak to that need.

In closing, Canada has a unique opportunity to make a difference in both the WTO and the FTAA frameworks. In both contexts, Canada is seen as a middle power that is respected for its integrity on issues of sustainable development and accorded a respect far beyond its economic might. In both fora, therefore, Canada has the opportunity to act as a bridge between the powerful nations and the poor nations in brokering agreement on rules that can respect environment, trade objectives, and development objectives at the same time.

I'll come back again, in closing, to the issue of timeliness. As you know, the FTAA negotiations are underway, and since December of last year we have been in a pre-negotiations phase in the WTO for a possible millennium round. Therefore, I congratulate the committee on this initiative and hope the recommendations will reflect strongly the need for Canada to take into account sustainable development objectives in its negotiating strategy in both the FTAA and the WTO contexts.

Thank you.

The Chairman: Thank you very much, Mr. Cosbey.

• 0850

Dr. Hanson, you have 10 minutes.

Dr. Arthur Hanson (Senior Scientist and Distinguished Fellow, International Institute for Sustainable Development): Thank you very much, Mr. Graham.

I will reinforce some of the messages Aaron has brought because I work for the same organization. I served as president from 1992 through to last fall. I certainly feel that dealing with the subject of trade and sustainable development has to be right at the top of our priority list of work, because trade is involved fundamentally with wealth creation.

In sustainable development, we're concerned about how you use wealth for the betterment of people and the protection of the environment, so we have tried to keep this tight link between the two. One of the first things we did—and I'd like to reinforce it to the panel, if I could—was develop a set of seven seemingly very simple principles that should inform trade negotiations. We call these the Winnipeg principles. Janine Ferretti was involved with them. The current head of UNCTAD was a member of the panel that produced them. I will very briefly go through them without any details.

The Chairman: I'm sure Mr. Blaikie, the member of Parliament from Winnipeg, was associated with them—Mr. Axworthy as well. We have to make sure all our Winnipeg MPs are included. They're going to call it the Winnipeg initiative.

Dr. Arthur Hanson: We've given some spotlight to Winnipeg through these. In fact we had to work in various parts of the world because this was indeed an international group. We were trying to bridge the very difficult issues of the development side, the environment side, and the trade side. There are a lot of differing views, as you know.

Without going into detail, let me just indicate these seven principles. One is trying to deal with the economic efficiency question. How you cost-internalize is part of that as well.

Second, and particularly important to developing countries, is the issue of equity.

Third—and Janine I can still recall your comments on this at the time we did this—is the fundamental issue of environmental integrity. If that cannot be addressed through a trade agreement, it is unlikely to be sufficient for sustainable development.

The fourth one, which I consider the most interesting and least explored still, except in the European context, is the issue of subsidiarity and whether nations can have the right to set their own standards on issues that perhaps don't affect others. It's basically driving down decisions to their lowest possible level in society, as opposed to dealing with everything at an international or national level.

The next one is also very important to Canada's interests particularly, and that is to deal through international cooperation as opposed to unilateral action, as we've often seen in our trade disputes with the United States.

Science and precaution are extremely important elements. One of the critical things that has emerged since the time of the Rio Summit is the notion of the precautionary approach or principle. It is very important now for this to be inserted into thinking about trade agreements. Basically the precautionary approach says you don't have to have all knowledge before you take action on something. If you suspect there's a problem, try to deal with it before it leaves a residue to taint future generations, as we've found with DDT and other such things.

Finally, openness and transparency are very important in trade agreements. This is something the IISD has been trying to hammer home in a number of different circles. We've seen some very laudable movement on this within the WTO, but there's still a lot more to be done. So applying these principles in the next round of the WTO is very significant.

I'd like to just make some observations, based on my own experience. I think others within IISD would agree with this. But let me just point out what I think are some important points to keep in mind as we go into trade and sustainable development negotiations.

First of all, Canada, and particularly developing nations, depend on access to markets that have as few barriers as possible. It's important to underline that we're not trying to create barriers in dealing with environment and development issues. In fact, we need to be as generous as possible in creating access for others to our markets. I think this is important. At the same time, we have to be very vigilant that we're not creating non-tariff trade barriers through the use of environmental practices. I think Canada has a strong vested interest in this. As we've seen in the past, we sometimes are subject to these non-tariff trade barriers.

• 0855

My second point, again, is an obvious one. Trade practices should enhance the well-being of people, and at times this will require considerable adaptation. Sometimes people feel, quite rightly so, that trade is damaging to their communities and to their livelihoods. We should be seeking a WTO negotiation in which the well-being of people is front and centre. Environmental quality and sustainable resource use should not be sacrificed for the sake of expanded trade.

It's interesting that in the last half a year there have been two independent commissions in the world. The World Commission on Forests and Sustainable Development, which we've been associated with, just released a report in Ottawa last week and in Washington and Europe called Our Forests, Our Future. Last year there was an independent commission in September that released a report on the state of the world's oceans. Both of these point out what they consider to be a crisis situation of the world's forests and of the world's fisheries and oceans.

These crisis situations are directly related back to considerations of trade. In the case of forests, tropical forests have been the subject of much debate and discussion. Taxation practices, subsidy practices of the sort Mr. Cosbey mentioned, have had a horrendous effect, and the same is true with the world's fisheries. In addition, I think you'll hear later this morning that the subject of agriculture, which many people attach the word “crisis” to, but I'm not sure I always would, has the same set of problems.

So dealing with the sustainable resource use aspects of trade and natural resources is a very important element to be considering in this upcoming round of negotiations.

I would just like to echo what Aaron said about subsidies. They're pervasive. We think they require urgent attention and action, and we think that putting this within the context of the WTO could be a win-win kind of situation.

I should point out that there is an adequate base of information to justify that these are significant and vexatious problems. For example, we've produced a book called Perverse Subsidies: Tax Dollars Undercutting Our Economies and Environments Alike that documents worldwide how many billions of dollars in various sectors, such as fisheries, the energy sector, transportation...that are problematic. I would be very delighted to make sure that anyone that wishes on the committee gets a copy of this book.

The Chairman: Mr. Penson is just positively salivating for it.

Dr. Arthur Hanson: Salivate no longer. Please take a copy of it.

The Chairman: The one string to his violin since these hearings started has been the vexatious and evil aspect of agricultural subsidies. We're assuming you're a planted witness brought by Charlie this morning.

Mr. Charlie Penson (Peace River, Ref.): It's a pleasant surprise this morning, Mr. Chairman.

Dr. Arthur Hanson: I will also pass on to you that we have some additional literature that you might find interesting as well.

We are participating with others in a program called the Van Lennep Programme on Economics and Sustainable Development to try to both document the scale of these subsidies in specific areas...but how can you successfully get rid of them? That, of course, is really the ultimate goal. So we would be very delighted to keep in close touch with you on that subject.

It's also very important to recognize that service and investment agreements are all part of this mix. We don't know what the ultimate fate of the MAI will be if it gets into WTO negotiations, and yet we're not against the concept of an MAI kind of agreement. The question is, what goes into it and how well can that serve sustainability interests? It's also important that we're not simply talking about goods; we're talking about goods and services.

It's also important, Mr. Chair and members, that we examine the issues of technology sharing, debt-for-nature swaps, and various kinds of emissions-trading arrangements. I don't know how these are going to figure within the new WTO. They're becoming more and more important in the context of what Aaron was talking about in relation to multilateral environmental agreements, and they are really part of the trading system.

• 0900

We work with China, for example. China is very, very interested in the technology sharing that is potentially available to them in the field of environment. It's also an opportunity for our own businesses.

And finally on this point, there's a whole new movement...and again I'd like to leave a copy of a publication prepared by one of our staff members who is here, Mr. Stephan Barg, called Global Green Standards: ISO 14000 and Sustainable Development.

The issue of certification and independent standard setting, essentially by the private sector negotiating internationally, is very important to us. It's very important to this country because, as we've seen with the B.C. forest industry, the Europeans in particular, who sit and decide whether something is sustainably produced or not, can have a big impact on our markets.

What we've seen over the last seven or eight years is a tremendous expansion in the number of certification programs in the world. It's my feeling that these are inevitably going to become part of agreements through the WTO.

So I commend this book to you. It gives you an indication of some of the work with the ISO 14000 standards.

Just to pick up on a point raised by Mr. Cosbey, in the case of fisheries there is a Marine Stewardship Council, started by the World Wildlife Fund, that is now certifying seafood as being sustainably produced or not. Do you think our cod, or what's left of it, or our shrimp, or our salmon would pass the tests of that? If not, we'll find that it's going to be cut out of markets in Europe. Similarly, with the Forest Stewardship Council, which is another—

The Chairman: Cut out not by legislation, but by consumers who wish to look at it as labels....

Dr. Arthur Hanson: Exactly.

So this becomes a very potent form of potentially non-tariff trade barrier and potentially, as in the case of the B.C. forest industry, it is an important part of the reform process in forest management. So it's a double-edged sword. The basic point is that we can't ignore this. When we go ahead with our negotiations in the WTO we have to ensure that we have a clear idea of what we want out of that kind of certification process. Inevitably, what is starting out as a voluntary or quasi-voluntary approach is going to be picked up more and more by official channels.

As I've tried to indicate here, these are not theoretical points at all. They come right back and hit us in our pocketbook. The question then becomes: where should Canada be in terms of leadership on this? I would argue that our role should be leadership in the field of trade and sustainable development. I don't think we've been strong enough on this up to this point in time. We've done some useful things through NAFTA, but we've been very inconsistent in terms of our dealings with the WTO in this area.

For me, there are two very convincing reasons why we should take a leadership role. First of all, and Aaron really touched on this, it's expected of us. We're supposed to be leaders in the field of sustainable development and our credibility becomes strained if we don't follow through with real action. Secondly, and this is the most telling reason in my opinion, it's in our best interests. We're a trade-dependent nation. We're vulnerable whenever we're faced with accusations that our goods are not produced sustainably or when we're judged to be unfairly subsidizing a product or sector, even though that can be a very unfair process.

In a more positive sort of vein, there are real advantages to be had through the development and export of sustainable technologies' environmental services. We see this already in the environmental sector. Many Canadian firms are making lots of money selling both equipment and services abroad. And we're seeing the development of new energy technologies, such as the Ballard fuel cells and so on. These become new sunrise industries. They ensure that if we get a foothold established and we get favourable treatment in future trade and investment deals, we're going to be ahead of the pack in some senses.

The nature of our trade relationships is really quite complicated, as we all know. My belief is that we should be thinking about a little matrix of how we deal with this problem. One is how we deal with this hemispheric free trade set of considerations.

• 0905

As a simple example, in that particular context we should be ensuring that we're really firmly behind organizations like the North American Commission for Environmental Cooperation, and I'm setting you up, Janine, for your future presentation. It's important that we not just have these benign bodies that sit in Canada, but that we really truly support them.

In the case of the WTO we have a very significant role to play in this upcoming round of negotiations, and things like taking a stand on subsidy issues are important to us.

When we deal with developing nations it's very important that we be seen to play that middle nation role, bridging the gap, helping with capacity-building, ensuring that CIDA puts more money into areas like trade as an area of capacity-building, which they haven't done very much of so far.

Finally, when we're dealing with trading partners in Europe, we should recognize that they're going to have a very complicated agenda and some of it's going to come back and smack us if we don't behave well environmentally at home.

So we have to consider a very complicated pattern, but it's a very exciting time because this round of the WTO will be the first to seriously take into account sustainable development.

Perhaps I should stop at this point in time and thank you for your attention.

The Chairman: Thank you, Dr. Hanson. You've been very helpful.

Ms. Ferretti, I understand you've come from Montreal because you missed us there. I'm sorry you missed us there, but welcome to Winnipeg anyway.

Ms. Janine Ferretti (Director, North American Commission for Environmental Cooperation): Thank you very much for the opportunity to be here.

The North American Commission for Environmental Cooperation was created by the three Governments of Canada, Mexico, and the United States as a result of NAFTA. The CEC is entrusted by these three countries to facilitate environmental cooperation in the context of pursuing increased economic opportunities through liberalized trade. So it is very much a unique institution. It is an experiment, in practice, that hopefully will lay down the groundwork for the experience to be applied in other areas.

It was also established to help the three countries address trade and environmental concerns. Many of the issues that you see on trade and the environment before the WTO and in the context of the FTAA are also issues that have been, in part, addressed by NAFTA and its environmental side agreement, the North American Agreement on Environmental Co-operation. We are now in the implementation stage. Canada can actually benefit a lot by looking at its North American experience as it deals with and addresses those very same issues in the context of the FTAA and the World Trade Organization.

I'd like this morning to briefly raise three important issues that stem, in part, from the lessons we've learned over the past five years here in North America in the NAFTA context. These issues are very much alive globally and in the hemisphere.

The first issue is the central role of transparency and public participation in trade policy. As you're aware, there are many concerns that their hard-worn environmental regulations and standards could be weakened or harmonized downwards in a race to the bottom.

Part of this concern stems from an actual contrast in the character and approaches to the development of environmental and trade policy. For example, trade reforms are very much based on neutral policies that are non-discriminatory and non-interventionist. In contrast, environmental policies are characterized by often regulatory intervention and discrimination between polluting industries, and I'm speaking about the domestic context.

Also, environmental policy is very much developed in open and transparent processes with plenty of consultation. Trade policy, on the other hand, has a history of being developed in relatively more closed processes with fewer opportunities for public debate and consultation. Of course, this is changing, but it shows you there is a difference in approach there.

A most marked example perhaps of Canadians' concern about transparency is the recent objections I'm sure you've heard of regarding the NAFTA chapter 11 on investor-state dispute mechanisms. So far we've had a number of cases brought against Canadian environmental regulations, for example, regarding the ban on the use of MMT exports, to PCBs and exports of fresh water. These have spurred the cause for greater transparency and accountability in the dispute resolution processes so that environmental concerns and public concerns can be taken into account.

• 0910

We are already seeing some changes in the World Trade Organization that are very promising, such as the restriction of documents, the ability of third parties to make amicus-brief submissions, and ongoing consultation.

A second issue that's very much front and centre is the importance of better understanding the environmental impacts of free trade. One of the mandates of the CEC was to actually look at what the environmental impacts of NAFTA are. You recall there was a very strong debate early on about the possible impacts of NAFTA. Last month we released a major report entitled Assessing Environmental Effects of the North American Free Trade Agreement (NAFTA):, which I believe you have at your table. We found through this that it's not an easy task, that it's very difficult to understand the economic impacts at the economy-wide and sectoral levels of free trade. And understanding the environmental effects of trade policy reforms is even more difficult.

Nonetheless, through this experience we've learned to understand what the questions we need ask are, what models to use, and what assumptions are needed to assess environmental impacts. We know that a number of World Trade Organization member countries have expressed an interest in undertaking a thorough environmental assessment of the past Uruguay Round on the environment and how the new round will affect the environment. I know that's also of interest to some in the context of the FTAA.

This will help address the public concern about the issue of environmental impacts of trade agreements. I believe in North America you have the experience that can present a good foundation on the methods and analytical approaches that could be used by the Canadian government, provincial governments, business organizations, and NGOs in better understanding the environmental effects of trade agreements.

The third issue is trade rules, and that's a very broad category. You know there is a very polarized debate. Some think that trade rules should not at all address environmental...rather, that trade agreements are inherently negative on the environment and should be stopped. There's plenty of work that can be done in the middle ground there to define how trade rules can support environmental objectives.

I'd like to briefly name three specific areas where that focus is needed.

First, and you've heard this already from the previous speakers, is the need to resolve the ambiguity regarding multilateral environmental agreements that apply trade measures, such as the Montreal protocol to safeguard the ozone layer. NAFTA resolved this issue in part by stating that if there is a conflict between a multilateral environmental agreement and NAFTA trade rules, the conditions or provisions of the specified environmental agreements—we're talking about the Montreal protocol, the Basel convention, and CITES—would prevail where there's a conflict.

A second area where trade rules need to focus attention is the ambiguity around products and production process methods. This refers to conditioning market access on the character of a product—in other words, whether it has recycled paper content—or the way a product was produced. As the previous speaker, Dr. Hanson, mentioned, we have a lot of experience in the forest product industry with that, and we're seeing this very same issue emerge in the context of the deregulation of the electricity sector. As we're moving toward a North American grid, we're looking at issues about setting caps on emissions for each unit of electricity. Another example would be having a specified renewable energy content rule. These are issues that very much go to the heart of this, and eco-labelling and certification are very much a response to that. We at the CEC will be producing a report on what the experience has been in eco-labelling and certification schemes.

A third area that trade rules can focus some progress on is in exploring win-win solutions, where liberalized trade can actually be mutually reinforcing with environmental protection. Last month Statistics Canada estimated that the environmental goods and services sector in Canada is $22 billion per year. That figure will without doubt expand in the future, especially as we're looking at climate change response policies alone. Canada can take a leadership role as well in pushing for honest discussions to end environmentally harmful subsidies in agriculture and fisheries.

Those, in effect, are the areas in which we've done some work here in North America. I believe the experience you have here, the real world experience, can be of use to Canada as well as the other countries as they examine the trade agenda and their trade priorities in a global context as well as in the hemisphere. Thank you very much.

• 0915

The Chairman: Thank you, Ms. Ferretti.

Now I'd like to turn to Ms. Smith from the United Nations Association in Canada.

Ms. Muriel Smith (President, United Nations Association in Canada): Thank you, and I appreciate the opportunity to be here very much as a generalist, as a citizen who's tried to follow the trends and the implications rather than being engaged in the specialized kind of research that the three previous witnesses' backgrounds represent.

I have a written brief, but I will not follow it verbatim. The first part really just shows the sequence of experiences as a citizen and how my perspective evolved, culminating in the Rio conference of 1992, where I developed my own little triple-E version of how to combine economy, equity, and environment or ecological issues.

When I went to the conference I'd had experience at the provincial level of politics, trying to integrate social, environmental, and economic interests, so I knew how difficult it was. I was very excited that there would at least be an attempt to look at these issues together, but I knew the problem of even linking two of them, let alone three. So I come from that perspective.

As part of the United Nations Association—well, president, currently—of Canada, I've become increasingly aware of how the institutions that govern trade and finance are separate from the United Nations. Many people think they are one and the same, but there is no accountability across the lines. There is hopefully increasing communication, and the degree of democracy that's achieved at the UN certainly leaves a lot to be expected. But in the financial and trading organizations the weight is very much in favour of those who have the money. At the World Bank and IMF, the voting is actually weighted according to how much money is put in. At the WTO, although every country who joins is a member, it seems that the executive committee and the agenda-setting is very much controlled by the richer countries.

As an observer of the WTO, we approached the December 1996 meetings with a fair bit of input from third world countries, and they were saying non-judgmentally what they hoped for at the meetings. They hoped for advance on the Marrakesh agreement from the Uruguay Round, access to markets for textiles, clothing, and agricultural products. At the same time the developed world seemed to be concerned more with the higher-level kind of product, not primary or secondary, but the whole range of services—intellectual property rights, telecommunications, investment, financial services, and so on.

At the meetings we were very discouraged. As NGOs we had very little access or opportunity for input. The results seemed to show almost a galloping ahead of the agenda for the developed world, because their economies need kick-starting in those areas, and almost an ignoring of the concerns of the developing world, and that really reduced our hope that the WTO would be an effective vehicle. However, we don't give up on these things.

The environmental regimes and the human rights regimes also seemed to be separate and treated as inferior. Should there be a dispute, as I understand it, between the environmental regime and the trade regime, the trade issues take precedence. Our observation is that this augurs very poorly for the integration of social, environmental, and ecological issues. Hopefully at this round, there will be a critical examination of that, and as other speakers have said, hopefully where there is conflict the environmental issues of such basic long-term importance to us all will be enabled to take precedence.

Our observation about the political pressures for the developing countries—and I guess Canada and its politicians fall into this category—is that they feel such pressure for employment in their own countries that they pursue the trade goals willy-nilly.

• 0920

The other issues of equity and environment are important, but they take second fiddle. We submit that is partly because they see no alternative way to generate employment in their own countries. Somehow the evolution of sustainable development in our countries must take greater notice of employment opportunities in the social service field, culture, environmental protection—all the areas that enhance the well-being of people but do not deplete the environment or close off the developing world.

We're very conscious that the options are not protectionism versus completely open trade. It's a false premise to put free trade as a goal in and of itself. Critics, including George Soros and others—I have something from a responsible wealthy voluntary group of businessmen in the U.S.—are saying that the untrammelled free market system is very unstable, but also inequitable. That's its trend. Without some balancing factors, both NGOs and active estates, there will not be the balance, stability, and prosperity for all we hope for.

We don't see the current WTO trends paying any attention to those issues. So we hope that Canada, for the reasons cited by the previous speakers—and I highly endorse what they have said—as a relatively very favoured country to which trade and environmental integrity are important, will work as a middle country with like-minded countries and try to bridge the gaps between the so-called G-8, other northern countries, and the developing world.

I think the issue of free trade as the best means of achieving development has to be questioned. It's one among many means to achieve the goal. Some countries are experiencing severe structural adjustment programs. I know the WTO does not directly deal with those issues, but on the other hand, trade can't be looked at in isolation, unless they realize that developing countries are perceiving these as forcing them to cut back on their social services and open their borders. Many of their people are experiencing environmental degradation as a result, with the destruction of local communities, the ignoring of indigenous knowledge—and the litany goes on.

We might ask why they are taking part in the WTO if this is the case. Since the end of the Cold War many feel it's the only place they can go, and many still hope the formula of promoting free trade and a free market will generate prosperity. But there are many others who are seriously criticizing it.

We believe if we don't address these equity issues within countries and among countries sooner and also integrate the environmental concerns, the prosperity we hoped for from trade will be a very false product.

The Chairman: Thank you very much, Ms. Ferretti.

You might be pleased to know we propose to have a chapter in our study that will link the relationship between international financial institutions' structural adjustment and others to trade. I think everybody is recognizing that these cannot be treated in isolation, although they're very different institutions. We're following your suggestion.

I understand the Provincial Council of Women has just joined us. Ms. Morris, I didn't have a chance to introduce you, so welcome. Please keep your introductory remarks to about ten minutes, and then we can move to questions.

Thank you very much.

Ms. Valinda Morris (Spokesperson, Provincial Council of Women): Thank you very much, Mr. Graham.

On behalf of the Provincial Council of Women, Elizabeth Fleming, our vice-president, and I welcome the members of the Standing Committee on Foreign Affairs and International Trade to Winnipeg today.

We also thank the International Institute for Sustainable Development, which is headquartered here, for convening this panel hearing for the committee and for our invitation.

• 0925

We are pleased to present this brief—I hesitate to call it a brief because we've rushed it so hard—on behalf of the National Council of Women and ourselves. The national council did not know about the earlier hearings in Ottawa, so we are picking up the ball here. We will confine our remarks to the topic of this panel and expect the NCWC, our national council, will address the broader issues in a written submission shortly.

In the submission to the MAI in November 1997, we requested broader consultation with the public before these major rounds, so we're pleased this step is being taken. We understand it is the only opportunity for non-governmental input. I hope you're getting a good response across the country.

As you may know, the National Council of Women is over 100 years old. It's a non-profit voluntary organization of women's groups representing large numbers of citizens in various occupations, languages, origins, and cultures. We represent a wide cut of public opinion. We have 22 local councils, 4 provincial councils, a study group, and 25 nationally organized societies, and they're in every province of the country.

We are able to speak to you with one voice today because we have a common policy developed through local initiative. We may only speak on existing policy when we are dealing with the government, media, or the public. We present a brief to the Prime Minister and the cabinet annually. We also have consultative status with the UN Economic and Social Council and are affiliated with the International Council of Women, which is in 74 countries and brings together women from all those countries.

In thinking of the sustainable development principles, we endorse the definition found in the World Commission on Environment and Development of 1987 and believe Canada's National Task Force on Environment and the Economy did as well. The Province of Manitoba also has its own Sustainable Development Act, and the provincial council has been involved in the formation and review of the strategies involved in that and in trying to ensure that development is balanced, both economically and environmentally.

However, we question whether these principles are in jeopardy. For example, the goal of full-cost accounting for development is key, yet it is rarely if ever used. André De Moor and Norman Myers illustrate this visibly by showing how government subsidies distort economies in the agriculture, energy, transportation, and water sectors with devastating environmental and social costs.

We're now fearful that any resolve toward sustainable development has weakened, as trade-oriented organizations such as the WTO, the World Bank, the IMF, and the OECD gain power and control for the future in the name of globalization, free trade, privatization, deregulation, and voluntary initiative.

All of these organizations and processes fail to situate trade within the wider context of the international agreements that include sustainable development goals.

Thinking of the environment and international and national agreements, we feel Canada is failing in its commitment. We've listed a number of these international and national agreements in our documentation. But we really wonder whether they are increasing the control and protection of the environment.

• 0930

We wonder whether the committee has spoken to or read the reports of Mr. Caccia, the chair of the Standing Committee on Environment and Sustainable Development, or Mr. Brian Emmett, Commissioner of the Environment and Sustainable Development, because they clearly indicate we're not meeting our policy commitments. To maintain the public trust in our government's commitments, we have to be assured that Canada is honouring these agreements.

The national council itself has a number of principles and policies on free trade, globalization, and the negotiating of international agreements. Our overall goal is to work for improvement in the status of women and their families and the betterment of the conditions of society for everyone.

We accept that the world is changing with the globalization of world economies, but we believe that some way must be found to ensure that these changes respect the principles that advance the health and well-being of populations within national jurisdictions and protect the sovereignty of the citizens.

Specifically, we support the equitable distribution of income, adequate health care and social services, environmental standards, universal quality education, fair labour practices, as well as the equality of all peoples before just laws. We also support a strong role for national governments in meeting these objectives and have a number of policies on the issue of free trade and environment.

Canada's spending cutbacks, harmonization, downloading, deregulation, and privatization of government monopolies have further weakened our position vis-à-vis global trade laws. We feel that balanced sustainable development is not possible without this protection.

We have appended these, citing all our resolutions, as listed in the brief itself.

In 1998, when we were presenting our policy on negotiating international trade agreements, we advocated an open transparent process throughout that respects civil liberties, human rights, and Canadian laws and regulations, including national environmental standards. We recognize that we are dependent on multinational and transnational corporate participation for our future, but we're concerned that transnational corporations are being subsidized by taxpayers, either directly or through tax measures. They're free to cut the workforce without repercussion, seem to have taken over a dominant position in the marketplace, and tend to play off one jurisdiction or country against another.

The national council recognizes that Canada is still a nation highly dependent on the export of its natural resources. Its prosperity depends more than most countries on foreign trade. We acknowledge that many small- and medium-sized Canadian firms have prospered by finding market niches in the new environment of trade liberalization and have brought employment to Canada. However, one of our chief concerns is Canada's loss of sovereignty. With every passing month, we're discovering how weak and helpless we are in the face of international trade laws, American utilitarianism, and our own governments', both federal and provincial, favourable treatment of trade investors' rights, which overrule environmental protection of human, animal, and plant life and health. We understand that the WTO does not recognize “local”, meaning provincial government, jurisdiction. Where does this leave the public with downloading, harmonization, and the social contract? We are very concerned about that.

• 0935

We cite the fact that the sustainable development principles could be permitted in chapters like the technical barriers to trade parts of the GATT and NAFTA, but in the actual case decisions by the WTO, such standards are said to violate the WTO agreement. Likewise, in article 20 of the GATT, there could have been the basis for maintaining national standards, but under the WTO and the FTA and the same article, in every case the domestic standard, not only in Canada but elsewhere, that was at issue was found incompatible, leading to it having to be rescinded. The same fate seems to have befallen the multilateral environment agreement.

We feel this loss of sovereignty is very distressing, and it undermines public protection and trust. It further weakens the accountability to the citizens and taxpayers. We feel it's incumbent upon all the elected members of Parliament to ensure that our existing standards and legislation are upheld.

We also cite NAFTA chapter 11 and the investor-state arbitration clause in there. We note that there have been four suits filed against Canada so far, regarding gasoline, PCB wastes, B.C.'s control on bulk water exports, and softwood lumber quotas, and we wonder whether Monsanto will be the next one, regarding the ban of rBST hormone for cows. We know that our—

The Chairman: Ms. Morris, I'm sorry to interrupt you, but we're getting close to 15 minutes. I don't like to interrupt, but I know we have some questions for the whole panel and we have only a half hour for them.

Ms. Valinda Morris: Sorry.

I'll just say that another serious concern is water, and we've listed the various aspects of that and our firm belief that it's a basic necessity and not a global commodity to be traded for profit.

If I may, I'll ask Ms. Fleming if there are any recommendations that should be....

Ms. Elizabeth Fleming (Vice-President, Provincial Council of Women): Not for now. I think we have—

Ms. Valinda Morris: We will be adding some recommendations in writing. Thank you very much.

The Chairman: Thank you. It was very helpful.

Ms. Valinda Morris: Thanks for interrupting.

The Chairman: That's all right. I don't like to interrupt, but we have some members chomping at the bit here to be able to ask questions of the various members of the panel.

I propose that we go to about 10.25 a.m., and then we'll take a five-minute break before we have the next panel, and we have the minister coming. Let's try to keep it disciplined so that we can finish at 10.25 a.m. sharp.

Mr. Penson.

Mr. Charlie Penson: Thank you, Mr. Chairman. I would like to take this opportunity to welcome the panel here this morning to our WTO hearings. I think it's very important that we have an opportunity to hear the different points of view across the country, not just in Ottawa, and that people can come and make a representation basically in their home province.

• 0940

I was really interested in the area of agriculture subsidies in connection with sustainable development and the conclusions Mr. Cosbey and Dr. Hanson drew from the idea that subsidies can be very detrimental to sustainable development. I certainly see that in my own field in agriculture, where we have a farm in Alberta.

It's really interesting. About three years ago I saw an infrared aerial satellite photograph of the Canada-U.S. border, the 49th parallel between Saskatchewan, Alberta, Montana, and North Dakota. You could actually see the border, the 49th parallel, and you had to ask yourself the question, how could it be that you could physically see the border? The answer was, essentially, agriculture policy—agriculture policy with subsidies in the United States and farm programs that encourage them to grow grain crops. Those subsidies were not available to the same extent on the Canadian side; therefore those lands were in grasses, which I would suggest are far better for the environment in terms of soil degradation and that type of thing. So you can actually see some physical evidence of that in farm policy.

On soil degradation, here in Canada as well we've seen topsoil depletion down about 50% over the last 75 or 80 years. I would argue, as I think you do, that a lot of that is due to farm policy and subsidies to some extent. So that's a very interesting area, and I welcome any move we can make to get back to a market economy and get away from those kinds of policies.

We see, for example, in the European Union, places like the Netherlands that have a very big overproduction in the hog industry, largely due to subsidies, and they've created all kinds of environmental problems for themselves in terms of nitrogen levels in the ground water and so on. So you're not going to get any argument from me on those areas.

Dr. Hanson, I do have a couple of questions on something that I didn't quite understand in your presentation. It had to do with non-tariff barriers and how that can be detrimental to what you're suggesting we should be doing. There was also the ISO standards. Can you elaborate a little bit further to help me understand?

Dr. Arthur Hanson: Sure. On the non-tariff barriers, in essence, you use an environmental argument when you really want to keep a product out, so you might try to put in place a formal kind of forest certification product barrier, for example, and you can't leap over the hurdle. You make it so difficult that a country can't export its product to you.

In some cases, it's certainly justifiable to use the environment as a concern. The issue is that groups that are really concerned about keeping products out of the marketplace will even team up with environmentalists, who can, in some cases, be unwittingly used in the process.

I think the issue that Aaron raised with the computer issue in Europe would be....

Would you put that in the same category?

Mr. Aaron Cosbey: Yes.

Dr. Arthur Hanson: A lot of inventiveness goes on in this business, so the important point is to ensure, if the environment is being brought forward as a reason to keep a product out, that it is a legitimate concern, that it's a real concern and that it's simply not one that is being put to competitively keep a product out of the marketplace.

Mr. Charlie Penson: In order to do that, I gather you had suggested it be done on a scientific basis, then, if there is a scientific argument.

Dr. Arthur Hanson: Yes, very much so. This is one of the reasons why we put sound science as an important principle. We need to have a good, solid base of knowledge, if at all possible.

There are exceptions there, and that's why the precautionary approach becomes important as well, the borderline kind of cases where there is some toxic chemical or something like that, or something that's suspected to have a problem attached to it, and you may be able to make the case, but we can't let that product in because we don't know enough about it.

Mr. Charlie Penson: In other words, you would err on the side of caution in those kinds of—

Dr. Arthur Hanson: Yes, in general, but it does create making sure we have a strong scientific argument as soon as possible for any environmental concern.

• 0945

Then this goes back to tie into the second part of your question, and that is about all of these standards. Certification and standards are a bit of shell game.

Worst-case scenarios—if you buy a can of tunafish that's processed in Thailand and it's got this nice little dolphin-free symbol on the thing, do you believe that or not? I'm not sure I believe it, because those frozen tuna come into southern Thailand and are processed in big plants there, and who really knows whether or not they've been produced by a method—they've been caught, in other words, in a net that also doesn't catch dolphins? It's pretty iffy.

So certification issues become critical in this. What a lot of countries are doing now is they're starting their own certification programs or within-industry certification programs. Some of these are robust; some are not.

Mr. Charlie Penson: Like the ISO programs?

Dr. Arthur Hanson: I was just going to come to the ISO 14000. Now ISO—and there are some others like this as well, but particularly the ISO—comes from the International Organization for Standardization. What they're doing is they're not certifying the process, but they're certifying the management methods of the firm that is involved, in the same way that ISO 9000 total quality management works.

So they're saying if this firm is certified as ISO 14000 compliant, that it does things the correct way in general, that it has an environmental management system in place, that it thinks about these issues. But it doesn't say that particular product is certified as being sustainably produced. Whereas something like the forest certification process actually says the product itself...they will certify that piece of lumber came out of a forest that was perhaps not an old-growth forest, or that it was produced in a fashion that was environmentally sound.

Mr. Charlie Penson: I'm still having a bit of difficulty. Are you suggesting that the ISO-type programs are a way of getting around the need for sustainable development in industry, somehow showing they have standards that may not necessarily meet sustainable development? Or are you suggesting they are good programs that have large acceptance?

Dr. Arthur Hanson: It's a helpful tool. It tells you that if a company is certified as being ISO 14000 compliant, it's thought about how it deals with its waste, it has an environmental management system for dealing with hazards, and so on. But it doesn't tell you product X was produced in a sustainable fashion.

It's one of the means of providing some objective measure that you're doing things in the right way. Then, like anything else, you have to decide for yourself whether you believe that measure is sufficient. So if you were, let us say, the Toyota automobile company, or any of the others, you might take that into account when you're dealing with a supplier, that you have good reason to believe that supplier of automobile parts is dealing with the environment in an appropriate fashion.

Now, you might want to go much beyond that, as Toyota does, for example. They will go down and ask to see five years' worth of information on how the supplier disposes of their wastes, or they will give terms even as to how the wastes should be disposed of.

In dealing with these trade and environment issues—and I'm talking trade and environment, not necessarily trade and sustainable development—in the past a lot of what we've had to deal with is one assertion versus another assertion. The Europeans say to us “You're hurting those animals that are caught in the traps”, or “Your forest practices are no good”. Well, what defence do we have? What independent certification processes do we have? That's this whole area of certification that I think is very important and equal—

Mr. Charlie Penson: So it's just taking the lead in making some kinds of standards available for public—

Dr. Arthur Hanson: We should very much be in a lead role in that. As a natural-resource-exporting country with a wide array of natural resources, we're very vulnerable to the whims particularly of the Europeans on this. So we should be on top of those trends. Fortunately, from our point of view, we have a couple of things going for us. In relation to the Canadian Standards Association, they've been very closely aligned with the ISO efforts of ISO 14000, so we have a kind of natural lead established there already.

Also, some of our industries—for example, the forest industry on the west coast—are now changing their attitudes and accepting some of the forest certification processes. So we're part of the way there.

• 0950

Mr. Charlie Penson: I just have a short question for Ms. Morris, and that has to do with your presentation. I'm not sure I have it right, but if I understand this right, I think I have a problem with it. You suggested deregulation of Canadian monopolies is a problem for sustainable development. I heard earlier, in the other presentation, that there is a great need for transparency in international organizations and in these kinds of businesses. I'm thinking there are probably some representatives here from the Canadian Wheat Board, which is one of those monopolies. Isn't it important to have transparency so we understand whether subsidization is taking place or isn't taking place?

Ms. Valinda Morris: I don't think it's a transparency issue, Mr. Penson. I think what we were referring to is the lack of public protection if we deregulate government monopolies, say, of water, hydro, things like that, without full protection of the public, so we know every citizen will have access to water and power at a reasonable cost. We can't sacrifice that by deregulating or privatizing and allowing for profit motives to cause an increase in the rates for utilities.

Another concern would be any regulation about maintenance of infrastructure. So we need a regulatory barrier, or regime, still. To totally deregulate is dangerous.

It's funny; I see you're an Albertan. My son works for TransAlta, and believe me, we argue about this.

I'm not sure I've got my facts right, but that is the purpose of the national council in mentioning it.

Mr. Charlie Penson: The only comment I would make is in a place in Alberta, where they have deregulated, there are public utilities boards to monitor that. So maybe that's one way—

Ms. Valinda Morris: Yes. It's important that we ensure that all provinces have good boards that are not politically swayed and that they stand for the public good and not the government of the day.

Mr. Charlie Penson: Agreed.

The Chairman: Thank you very much.

[Translation]

Mrs. Debien.

Mrs. Maud Debien (Laval East, BQ): In previous presentations, a certain number of agencies, particularity from the business sector, said that there was a trend to overload the WTO with all sorts of issues, particularly environmental issues or human rights or social clauses, while the WTO is not the proper forum to discuss these issues, and it should be reserved only for trade. We were told that there is no link between trade and the environment, human rights and social clauses.

Fortunately, we have also heard opposite versions. In your opinion, what mechanism should be created at the WTO? Does it already exist, or should it exist, and what is this mechanism that would enable these issues to be subject to basic rules such as those that we are trying to develop for trade dealing? Perhaps Mr. Cosbey or Ms. Ferretti could answer this first question.

My second question deals with the International Institute for Sustainable Development. When Mr. Runnalls appeared, he did not have the time to further address your recommendation that the international community find a forum other than WTO to negotiate all of the multilateral investment rules. I would like you to briefly explain this aspect of your recommendation.

• 0955

My third question concerns the developing countries. We know that the developed countries are currently trying to help the developing countries in various ways by providing technical or legal assistance. A number of damaging tariffs have been dropped so that the developing countries will be able, someday, to participate fully at the WTO. One agency suggested that all importers from developing countries be granted duty-free status, but at the same time allowing these countries to limit their market access, until such time as they can be full members of the WTO and receive fair and equal treatment like the other countries. I would like to know your opinion on this recommendation.

[English]

Mr. Aaron Cosbey: Thank you. I'll try to address the first two questions, and Janine will address the third and possibly the others as well. These are excellent questions.

With regard to the question about overloading the WTO agenda, the point we frequently try to make is it's not a question of whether you have environment incorporated in the WTO or not; it is there now.

There have been disputes in the brief lifespan of the World Trade Organization as it exists on reformulated gas imported into the U.S. in conflict with the Clean Air Act, on the use of beef growth hormones on beef imported into Europe, on the catching of turtles in the production of shrimp in southeast Asia, and currently on the importation of asbestos into the European Community from Canada. There have been others.

There were more in the GATT, as it existed before the WTO. There will continue to be this type of dispute in the WTO. Environment is already there. The question is, is it being properly addressed? We argue that it is not. Then I come to the next part of your question. What is the mechanism by which it should be addressed?

Currently, we have basically a reinterpretation of the rules every time a panel sits down and another reinterpretation every time an appellate body reviews a panel decision, because the rules, as formulated, were never written with the idea of environment in mind. These were written in 1947. We're still functioning with those same rules.

We have not sat down, as a community of nations, and decided how we can separate legitimate environmental protection from green protectionism. This, because we can't agree to that in a multilateral forum, is being left to the dispute panels to decide in their interpretations of current rules, and those panel rules, as I said, basically reinvent the interpretation every time they sit down. This is not a stable basis for international commerce, and this, after all, is the purpose of the WTO, to give certainty to international investment.

So we have argued that what is needed is an understanding in the WTO of those rules with respect to environment. That is, in the coming negotiations there needs to be negotiated an understanding on trade and environment that lays out the criteria that constitute legitimate environment protection. What process do you need to follow as a country in propounding trade restrictions on an environmental basis? What are the elements of this process that allow us to set it aside from something that is protectionism? Openness and transparency is certainly one of those elements. There are a number, and actually Canada has put forward a couple of interesting recommendations in this regard.

The prime argument, though, is that there needs to be such a mechanism. What the details come out to in the negotiations is unclear, but without this argument, without this mechanism, we will continue to have extremely controversial, extremely divisive, disputes in the WTO, which do not further sustainable development internationally. I think of the fallout from the dispute panel on shrimps and turtles, which pitted the United States against India, Pakistan, Malaysia, Vietnam, and Thailand. The bitterness from that dispute is long-lasting and will last well into the millennium. It frustrates our efforts on sustainable development in other fora, other multilateral environmental agreements, where we need the cooperation of developing countries.

So there needs to be greater certainty. There needs to be this mechanism negotiated in the next round that says under these circumstances you can have such trade restrictions and under these circumstances you cannot.

• 1000

To address your second question, to try to elaborate briefly on our argument that the WTO is not the right place for an investment agreement, we have argued this strongly and are proposing a new regime for investment. If we look at the needs for an investment regime, there is a need to ensure the rights of investors in the country of investment. This is something that was well looked after in the draft agreement of the multilateral agreement on investment, although we do have concerns about the provisions for expropriation. They refer here to the NAFTA chapter 11 disputes that have been mentioned by a couple of speakers and on which we are doing some research, but for the most part the rights of investors were well considered in the draft text. However, the obligations of investors were missing from that agreement. That is, we certainly feel that any country accepting investment has the right to demand that investors follow a certain code of conduct when investing in their country. This was completely absent in the OECD negotiations and has been completely absent in the discussions to date in the working group on investment in the WTO. For a number of reasons, the WTO is fundamentally incapable of putting forward those types of obligation on private actors.

If we look historically at the institutions we have developed to deal with the needs, the very complex needs, inherent in the link between investment and sustainable development, some of the best examples that spring to mind of mechanisms of this sort are, for example, the UN Framework Convention on Climate Change in the Kyoto protocol, which may be one of the most important economic agreements ever signed—and I say economic agreement advisedly. It's an environmental agreement in name, but in fact it proposes to fundamentally restructure the economies of the nations of the world.

Our proposal then is a separate forum on investment issues, a separate treaty, in and of itself a new institution to negotiate on both the rights and the obligations of investors vis-à-vis the states in which they invest. We realize that this is not the official position of the Government of Canada, but if we are to address the needs, we argue that it's not possible in a framework or a forum like the World Trade Organization, at least not based on their record to date.

[Translation]

The Chairman: I now give the floor to Mr. Blaikie.

[English]

Mr. Blaikie.

Mr. Bill Blaikie (Winnipeg—Transcona, NDP): I too want to thank the panel for a range of presentations, all of which I have a great deal sympathy for, both in terms of analysis and policy. I have nothing really I want to quarrel with you about.

I can ask a general question. Why do you think it's so hard to get this...? It's years now after the Brundtland report, and there was a time there shortly after the Brundtland report when it looked like for everything governments did they were committed to submitting it to environmental analysis. The notion of sustainable development rolled off every political tongue in the country, and yet this steamroller of globalization and free trade without regard for environment, or without regard for environmental enforceability, at least, just carried on, and carries on yet and carries on in the form of the WTO, which is the first layer of world government. And it's a layer of world government that doesn't take into account the environment, except in these very perverse ways. It has an effect on the environment, and it's already there, as you have argued, but it's not there in the way it ought to be. It doesn't seem to me that there's any lack of public support. I've never heard these insights decried, and yet nothing happens. I would be grateful for an insight as to why this is so.

• 1005

Dr. Arthur Hanson: Janine, you may have some ideas on this point.

I've been dealing with this subject area of environment and development issues for about the last 30 years, and over that time...pardon me?

The Chairman: You haven't been dealing with Mr. Blaikie for the last 30 years.

Dr. Arthur Hanson: No, I haven't been living in the prairies for the last 30 years, but in various parts of the world.

I think the whole trade community tried to keep itself outside of the environment area for the longest time. For example, there was a GATT committee on trade and environment. It never met for 12 or 20 years. This is something that was notable in the environmental community. We recognized this. We dealt with institutions like the World Bank and even the IMF, which is another one that is somewhat recalcitrant in this area. So more has happened since 1990 in dealing with trade, environment, and development than has happened in the previous two decades. But it was starting from such a low level.

What we've seen is a gradual move within the WTO towards taking an active interest in this, one whereby it's not simply a passive.... If they knock hard enough at our door, we'll at least grouch and grumble and do something. An example of this is in this last period in March, where there was a high-level meeting in Geneva for the first time ever of trade people and people at the environment deputy minister level, and this is a notable achievement.

I think the second thing that becomes critical in this, and this relates back to the last question on the role of developing nations as well, is that developing countries are very concerned about market access and about any barriers to market access. I think this is one of the crucial things we have to address in this next round of WTO. We have to be prepared to recognize important concessions in the marketplace for developing countries for them to allow progress to be made in dealing with the environmental issues through the WTO. It's almost that simple. It's a very complicated task indeed, but it comes down to bridging that gap.

There is a much stronger interest on the part of the European countries and on the part of some of the North American side. The United States can run very hot and very cold on this environment issue, but the developing nations have been very consistent in saying, we want market access, we need the development in order to improve our own way of living, and that's the trade-off for us getting what we wanted on environment.

Ms. Janine Ferretti: Can I answer that? I think it also goes back to the question Madame Debien asked, and it is that perhaps the mechanisms aren't there yet in terms of allowing some progress. Certainly the secretary general of the World Trade Organization recently called for the establishment of a world environment organization, something to act as a partner with the WTO to deal with these issues. And that's certainly something we have here in North America, where there is a NAFTA free trade commission and there's now also an environmental commission.

The purpose of establishing the two is not to have two solitudes going in parallel tracks, but also to encourage some sort of a collaboration between the environmental community and the trade community, and it's not there yet. It's something we've just started, and progress is just beginning to be made. In my view, that's the only way we can make progress, because if we continue to look at environmental issues in a trade context, you're missing that partnership. You really need to look at it with the two institutions side by side.

• 1010

The developing country issue is not to be overlooked. Again, here in North America you have a very interesting partnership. You have two developed countries—the United States and Canada—and you have Mexico, which is a member of the OECD, and while technically perhaps it's not part of the group of 77, it is nonetheless, in our context, very much a country still in development. And we know in that experience that it's an awful lot of work to work with Mexico to increase a sense of trust and confidence that these issues of environment are not going to be used as protectionist measures and that environment and trade can actually offer Mexico opportunities to gain financially, for example, from access to Canadian and U.S. markets for products such as coffee, organic produce, and so forth. That's something we need to begin to demonstrate—the value of a trade-environment agenda in a real form.

The Chairman: Ms. Smith.

Ms. Muriel Smith: I believe it's a hierarchy of values, that somehow trade and profit, through the economic activity, takes precedence over everything else. This is accompanied also by very strong publicity from the corporate sector and from governments of the day saying that if we don't have the trade and growth, we can't afford to do other things. That started out to be the mandate of the Sustainable Development Act here in Manitoba, where somehow we were identified as a developing area and we had to have the growth in order to afford to do the other things.

I don't think it's a lack of adequate information. It may be a lack of insight. For quite some time now, the statistic has been available that from 1960 to 1990, while trade in the world went up by a multiple of seven, the gap between the top fifth people in the world and the bottom fifth went from a ratio of 30:1 to 60:1, and I gather that now it's closer to 84:1 or 85:1. So the whole equity issue is parallel to the environment; it's not identical to it. But the equity issue has been left out of the calculation. I think, by the same token, the environmental issues have been subordinated to the economic growth. I think it's a matter of political philosophy and economic philosophy.

I, for one, am quite pleased that some of the people like George Soros, who made phenomenal fortunes in the current system, are now speaking out and saying it must have some kind of global regime that moderates it, and there must be open, strong political states that can bring about greater balance.

None of these directions, it seems to me, are showing any signs of being adopted at the WTO. We live in hope, and I'm encouraged by some of the comments about the environmental issue being brought up to a greater equality with the economic issue. But I submit that the equity issue also must be there. We may be putting false hope in a free trade regime that will somehow—what is it—raise all ships equally. It may be that we'll see the developing countries with their debt burdens and their less sophisticated economies under freer trade, freer access to our markets, still falling further behind. That kind of inequity growing within and among countries may be as severe a problem, and certainly will contribute to the environmental degradation.

This takes us right back to the point that Art Hanson made—I think it was Art; maybe it was Aaron—at the very beginning, that unless we learn to think of the three items...he's called it human well-being; I've been calling it equity. Unless we learn to think of equity, ecological sanity, and economic development together and have institutions that can somehow combine those, then we are in difficulty.

The mechanism is challenging, but it may be the very issue that the European Union had at the Lomé convention, which gave preferred access to the former colonies. However, under I think it's the WTO rules—the banana issue—that has been disallowed. Free trade in bananas has been proclaimed. I just came back from Europe, and believe me, they don't have answers, but they certainly are very resentful that what they thought was a progressive policy toward the developing countries has been disallowed by this institution.

• 1015

The Chairman: That's a very good point. Thank you very much.

Mr. Pickard, sir.

Mr. Jerry Pickard (Chatham—Kent Essex, Lib.): Thank you, Mr. Chairman.

I want to first of all say thank you very much to all the committee members who have come forth and placed their concerns on the table. In all of the discussion, I thought, here we have sustainable development; we've got environmental concerns that have been dealt with in a compartmentalized way, trade issues that were dealt with in compartmentalized ways, and political issues about developed and underdeveloped countries. We've dealt with labour, which is another one. And we've suddenly realized that we must change, we must move that agenda immensely. We're piggybacking onto the WTO every concern, and trying to say, all right, we're going to focus on the trade side of things and see if we can work in environment, labour, underdeveloped countries, and everything.

Is there a need at this time to look on a broader scale and say that we need something beyond the World Trade Organization? I think if we try to piggyback everything onto that organization, be it financial, labour, or environment issues, they're going to be so bogged down if they try to deal with the issues adequately. I think this is why the agendas may not have been moved as we would have hoped they'd be moved. And quite frankly, it is the area in which to move them.

Are you satisfied that the mechanisms to do this change, to create something that would move all of your agenda forward in sustainable development, environment, labour, underdeveloped countries...? Can it be done at the WTO? I'm not sure after hearing the comments and concerns that are coming forward this morning.

I think we need further integration of all of these in other bodies where we can finally bring issues together. I wonder what your thought is, because no one is going to argue. Most of the points you've brought forth are motherhood points, as far as I'm concerned. And certainly your statement that Canada has to be a leader is correct. We must also make sure that those issues are dealt with in a reasonable way. We have come eons. We've gone a million miles in the last ten years in trying to deal with them. I guess my question to you is, do we have an adequate structure?

Dr. Arthur Hanson: Let me take a stab at that. That's a very important question. I think there are a couple of answers to it that are important. One is that whatever element of the international community we're dealing with—and this is a particularly important one—has to bear its responsibility and load, so to speak, for dealing with the issue of sustainable development. So the World Bank, the IMF, or the World Health Organization, these key building blocks that we have for an international community, have to formulate and implement within their own contexts the issues of sustainable development. That's something that's been agreed upon by the United Nations as a whole and by countries from all parts of the world. It's one of the areas of consensus, it seems.

I think even though it's a new organization, the WTO is building on past precedent of the GATT, and it is behind the times. There's no question about that.

The World Bank, which has come some distance, a long way from what it was five and certainly ten years ago, is an example of an organization that went through exactly the same thing. In fact, the denial state—which I can recall from the early seventies in the World Bank—said these were not important issues, that it was impossible for the bank to make...that it was the developing countries themselves that wanted development done this way, and the bank therefore had a responsibility to do it that way, etc.; or that we were dealing with things that were too complex and agendas that were too complex. There were all sorts of arguments.

So those arguments, one by one, are picked away, and you can see that if you're doing your job well, we would argue strongly that taking on the sustainable development agenda will make life better for you, easier in the long run, even though the issues seem complicated, than if you go into a state of denial about them. The WTO, to its credit, has come through that state of denial to the point where it now wants to act.

• 1020

I think it is very important that in our negotiations we propose things that are doable, that we not go with just a panoply of ideas and say, do everything and it'll all be okay in terms of sustainable development.

So we have to strategically hit at points that are doable, where there can be agreement reached in bridging this north-south gap in particular. Then I think we can make progress. It will not all happen overnight.

I personally worry a little bit about taking the ideas away and saying, well, we'll put a world environment organization over here and a world trade organization.... There is a need for this balancing, but these organizations have to internalize these ideas themselves. They have to recognize that they are important—critically important, in the case of the WTO—players in terms of sustainable development in the world. They have various mechanisms. They have a trade and environment committee, a trade and development committee, and so forth. We did a kind of road map a couple of years ago, and it's quite interesting. You have to go right through the whole organization to bring these ideas in. Some of them are very technical ideas that deal with food quality and so on, and I could go on.

So it's not a single point. It's throughout the organization. Now I think they're part of the way there, and that's the value of making these interventions and playing this leadership role at this time. Because we could make a major shift for the first part of the coming century if we do it right in terms of these negotiations.

Mr. Aaron Cosbey: I'll be very brief. There may be some other interveners who want to speak to this issue.

This is a crucially important question, and if I understand it correctly, it's broken down into two parts: is the WTO the proper place for environment and development concerns, and if it is, how do you do that?

To the first question I'll answer yes. I've argued already that environment is there whether we like it or not, and it's up to us now to address it in a constructive way. Environment and economy are so closely interrelated in a globalized world that you are seeing these disputes arise increasingly, and we need to find a way to address them.

Development has been there from the start. It's always been, in the written words in any case, part of the mandate of the GATT and the World Trade Organization to raise the standards of living of the developing—and developed—countries. But there has always been special provision for developing countries.

This allows me to sneak back to the questions of Madam Debien about special treatment for developing countries. It has always been a fundamental tenet of the WTO that developing countries should have special treatment. Usually, that has taken a fairly stock approach—longer timelines in terms of implementing agreements—but the agreements always did get implemented eventually.

To answer the second part of your question, I've already discussed what we propose in relation to addressing the environment issue within the WTO, and that is to come to some sort of understanding that tries to separate green protection from legitimate environmental protection.

In our presentations to the recent World Trade Organization high-level symposium on trade and the environment, we argued strongly that the development component should be addressed, as you say, not just within the WTO, but that the WTO needs to reach out to those other international organizations whose mandate is development—UNDP, UNCTAD, and the World Bank—and we argued that there is a need for a more creative, more imaginative approach to special and differential treatment in this next round than simply longer timelines.

We need to take the lessons of 40 years of development experience of the World Bank on board in trying to design more effective ways to see that developing countries have special and differential treatment in the negotiations of the WTO, because as Ms. Ferretti has said, if you implement the same rules for all, some smaller and poorer countries, because of their geography, inflexibilities in particular sectors, weak capital markets, or whatever the situation may be, are not going to prosper as they might.

So what we called for was a joint effort of the WTO, the World Bank, UNCTAD, and the other UN and IFI agencies responsible for development to try to come up with a more creative and imaginative approach to special and differential treatment for developing countries in the coming rounds. Part of that certainly would include easier tariff access for exports of least developed countries, but I think we need to go even further than that.

• 1025

The Chairman: Thank you very much.

We really have to end now because we've come to the end of our time. Are you satisfied with that?

Mr. Jerry Pickard: As much as I can be. I do think that structurally we have to really examine where we're going and what we're doing. I think that's critical. Thank you.

The Chairman: My structural question is addressed to Dr. Hanson. I'll do it very quickly because we're running out of time.

You mentioned the principle of subsidiarity, which comes from the European experience. I think one of our witnesses, Ms. Morris, mentioned the problem with the provinces and their role, and that we have to figure all of this out. When we're moving to this area of greater global integration, how is subsidiarity going to work? With regard to the environment, if you're going to have environmental rules that function globally, how are you going to have subsidiarity where the local players have input or any form of sovereignty or control over it if for purposes of efficiency and in order for the rule to work it has to be applied globally? What's your magic solution to that?

Dr. Arthur Hanson: I don't know if there's any magic solution. That's the problem. As soon as you get into the local issue, you're talking about maybe a thousand solutions.

I think the important point is to at least recognize the existence of subsidiarity so that you can allow for differential standards in different parts of the world. A classic case would be as we try to deal with the biodiversity issues, which are close to trade issues in many instances. In Canada we have the situation of habitat being basically controlled by provinces, and yet we have to negotiate within the existing global conventions and national strategies. This gets into the endangered species stuff and so on we're currently discussing, and I think there is a role for the provinces in that.

To my way of thinking, it doesn't mean we can set up pollution havens or that we can have provinces abdicate on responsibilities for the environment. But we should look at it the other way around, that, first of all, people who want to have very high standards get the opportunity to do it, and, secondly, that we use subsidiarity as a concept to kind of pull up by the bootstraps as opposed to take everything down to the lowest common denominator.

I would be happy to talk about that in more detail at some other time, because I think subsidiarity is a very important part of future trade agreements.

The Chairman: I agree with you, but how to make it work is also a problem.

Dr. Arthur Hanson: Exactly.

The Chairman: I think we're going to have to end here, because our other panel is waiting. Thank you very much, each and every one of you, for coming. We appreciate it very much. It has been very helpful.

We'll adjourn for two minutes, members. Then we'll have the minister and the whole large agricultural family.

• 1028

• 1035

The Chairman: I'd like to call us back to order.

We're pleased to welcome a panel that has been put together to discuss largely agricultural issues. We're very pleased to welcome the Minister of Agriculture of the province. Minister, thank you very much for taking the time to come this morning.

Members, we have nine witnesses on this panel. Obviously, we won't be able to do things in our normal way when it comes to questioning.

I understand, Minister, you may have to leave early.

What I would suggest, members, is that we hear the minister first. Maybe he could make a presentation of about ten minutes in length, and then we'll have five-minute segments of questions for the minister. Then we'll go to the other members of the panel. Would that be satisfactory?

Then, Minister, you can leave whenever you're free. But, again, thank you for taking the time to come and speak to the committee this morning.

Hon. Harry J. Enns (Minister of Agriculture, Government of Manitoba): Thank you very much, Mr. Chairman and members of the committee. I wish to extend a very warm and hospitable welcome to Manitoba, where our food producers are very busy getting this year's crop into the ground. I welcome all of you to Manitoba.

Disproportionate to our numbers in agriculture, we are a major provider of jobs and economic activity for the country, and of course for this province. So it doesn't surprise me that I am flanked by the kind of delegations you have here before this committee to raise the agricultural concerns for your consideration.

Agriculture in Manitoba is diversifying in response to changing economic conditions. The agriculture sector has been aware of the requirements to adjust to new economic environments since 1995, when the Government of Canada removed the Western Grain Transportation Act and the export subsidies it provided to grains.

For nearly a century grain transportation subsidies in Canada enabled the cheap transport of bulk commodities to port locations for export purposes or to feed deficit regions outside the prairies. This practice benefited our grain producers but caused a serious economic distortion that inhibited value-added development in Manitoba. In 1995, as part of Canada's commitment to the 1994 World Trade Organization Agreement on Agriculture, Canada eliminated these export subsidies, subsequently removing these market distortions. I would ask that the committee take particular note of that. You are now in western Canada, where this very significant agricultural policy decision made in 1995 by the government of the day impacted massively on agriculture.

Manitoba's direct impact of the loss of the Crow was some $90 million, and Manitoba freight rates for grain and oilseeds increased dramatically. For example, in 1994-95 the freight rate for canola from Portage la Prairie to Vancouver was some $20 per tonne. In 1998-99 it has more than doubled to $44 a tonne. This has reduced the relative value of grain in Manitoba and is driving our agriculture and agri-food industry toward greater diversification and increased value-added activity and to search for developing new markets. These new economic realities are increasing our opportunities and incentives for producing high-value, low-volume crops for export for which transportation costs are minimized; more livestock production, and the resulting need for increased forage production; adding value by processing agriculture production before it is exported; and searching for new crops to produce and new markets.

In 1995-96 and 1996-97 Canadian grain producers enjoyed a period of higher grain prices and healthy returns at the farm gate. During the 1997-98 and current crop years, we returned to a period of increased pressure on world market prices for grain and hogs. With lower prices, the reality facing Manitoba farmers is now abundantly clear. Our producers now have a competitive advantage with one of the lowest-cost feed grains in North America. This is encouraging Manitoba farmers to expand their livestock industry with renewed investment, focused on increased value-added exports of meats. Manitoba's major crops are wheat, canola, and barley. However, crop production in Manitoba is becoming increasingly diversified as a result of the changes to the transportation policy.

• 1040

Farmers are planting more of their acres to vegetable crops, as well as pulses and forages, and even hemp this year. I'm pleased to announce to the committee that Manitoba will soon become the source of a major processing facility in reintroducing that ancient and age-old crop, commercial hemp.

While beef cattle and hogs dominate Manitoba's livestock production, dairy, poultry, and egg production are important elements in Manitoba's agriculture. Manitoba's livestock production is also diversifying, with growth in the production of bison, elk, and other livestock, such as ostriches.

The dominant trend in Canadian agriculture and agri-food is increasing exports. In 1996, Canada's agricultural exports exceeded $20 billion for the first time. In 1998, Canada's exports have risen to $24 billion. In Manitoba, increasing exports are also the dominant trend in our agriculture. Manitoba's agricultural products are shipped to other Canadian provinces and to more than a hundred countries.

In 1998, total Manitoba agri-food exports were almost $2.5 billion, while our exports were down slightly from 1997 due to declining prices for some of the key commodities. Manitoba's agricultural exports have increased by more than 67% since 1993.

Changes in Manitoba's exports are reflective of the changes that are occurring in our agricultural production. Manitoba exports about 75% of the wheat we produce. In 1998, the value of Manitoba's wheat exports fell by some 50% from 1997, primarily as a result of lower production and lower prices. Most of our barley production is being used in the province, and we are currently exporting about 30% of our barley production. The value of our barley exports in 1998 also fell by upwards of 65%, compared to 1997 levels, largely due to lower prices. While lower cereal grain prices contributed to this decline, reduced production and increased barley feeding to Manitoba livestock were largely responsible for this decline.

Our canola seed export in 1998 was some $286 million. While this is not a new record, it is an increase of some 58% from 1993. Our exports of canola oil in 1998 established a new record of $407 million, an increase of 112% from 1997, and almost seven times more than in 1993.

The purport of all these figures is simply about the desperation that some of our producers are facing to find alternative higher-value crops, crops we are processing to a greater extent within province, as we are with the canola production, to avoid the excessive freight costs our producers are now facing.

Nearly all of our cattle and almost 90% of our hogs are sent out of the province, either live or as meat. Other trade highlights in 1998 include a new record export for cattle, as we continue to export more cattle to the United States. Our hog exports declined slightly in 1998, but our pork export established a new record of almost $197 million, 27% more than in 1997 and more than three times what was exported as processed meat in 1993, again indicating our desire to add value before exporting the product.

Manitoba has illustrated a move from exporting raw commodities toward the export of value-added processed products. In 1993, we exported $8 million worth of frozen potato products. In 1998 our export of frozen potato products was almost $141 million, an increase of more than 60% from 1997 and nearly 18 times our export of 1993. The United States is the largest single market for Manitoba's agri-food exports. Almost half of all of Manitoba's agri-food exports by value go to the United States.

Manitoba is supportive of liberalizing trade through bilateral and multilateral trade agreements. The North American Free Trade Agreement, NAFTA, and the Canada-U.S. Agreement, CUSTA, are the best examples of how trade agreements can have positive benefits to Manitoba's agricultural food sector. In total, our agri-food exports to the U.S. have increased by almost 350% since the Canada-United States Trade Agreement became effective in 1988.

• 1045

Canadian agriculture ministers understand the importance of export for our agri-food sectors. In July 1998 we agreed to support an industry goal that would see Canada build on its $90 billion domestic industry and reach a target of 4% of world agri-food trade by the year 2005. Meeting this objective would put Canada's exports between $30 billion and $40 billion.

Meeting this objective would thus obtain significant benefits for Canadian agriculture, including the creation of some 260,000 new jobs. I make that point because we ministers of agriculture are often asked whether we really need to produce all this food. Certainly we have enough for our own use. In Canada, blessed as we are with the land we have and the farmers we have, we are a major economic contributor to job creation, which is important to all of us in this country.

If Canadian provincial and federal governments are to support such an aggressive goal strategy, the overall priority will be a requirement to create conditions in Canada for businesses to operate profitably. There will be a need for the business climate in the agri-food sector to be as attractive for investors as alternative investments.

These conditions include maintaining and expanding market access, especially to premium markets such as the United States. As part of our preparation for the WTO negotiations on agriculture scheduled to begin later this year, Manitoba Agriculture has been working with industry to define the issues that are important to them, and to assist them in developing their positions in the next negotiating round.

During the winter of 1997-98 my staff worked closely with Keystone Agricultural Producers Inc., Manitoba's general farm organization, to assist them with the development of their trade policy position. This work was completed in April 1998 when KAP released their trade statement.

In order to broaden the discussion to include processed foods, Manitoba Agriculture staff and officials from Agriculture and Agri-Food Canada, Market and Industry Services Branch, Winnipeg, held a seminar with the Manitoba Food Processors Association on October 29, 1998.

Industry is telling us our main export market will continue to be the United States. Other main markets for our products will include Asia, the Americas, and Europe. We have heard that agricultural production in Manitoba will continue to undergo significant change. The production of livestock represents a growth opportunity for agriculture in Manitoba. Improved and expanding market access is essential for this opportunity to be realized.

Manitoba industry has told us that Canadian trade strategy must focus on what each sector needs to build its strength rather than entering into a trade-off mentality. While other bilateral agreements and negotiations are an important vehicle to improve market access and enhanced trade dialogue, the World Trade Organization should be the primary forum for establishing fair trade rules. The international harmonization of standards for sanitary and phytosanitary issues and genetically modified organisms is essential to the continued success of Manitoba's exports. The next round of the WTO must go further to reduce identified trade-distorting subsidies, especially export subsidies and non-tariff barriers.

While other WTO member countries are enhancing funding for green box and blue box programs, Canada has reduced expenditures in these areas. Canada must push for clarification and narrowing of the green box definition and elimination of the blue box. Spending by competitive countries must be monitored to ensure that it is clearly not trade distorting. Canada must encourage all trading countries to continue to move toward more liberalized trade agreements, while ensuring that all participants are adhering to the spirit and intent of current and future agreements.

The Province of Manitoba has not yet fully finalized our position for the upcoming WTO negotiations on agriculture. Our position will include analysis of the achievements in the Uruguay Round. It will be based on what our industry is telling us and will include information we have gained in other consultations, such as the dialogue with the Canadian industry, which was held in Ottawa only last week. I'm looking forward to sharing our position with my federal, provincial, and territorial colleagues at our annual conference, which is being held in Prince Albert in Saskatchewan this coming July.

• 1050

While our work is not yet complete, I'm pleased to be able to share with you some themes and ideas that will be addressed in our final position. I believe that negotiations regarding agriculture should be as comprehensive as possible, as broad negotiation increases the scope for making significant breakthroughs. The importance of exports to our agri-food sector means that the overriding objective in trade negotiations must be an achievement of freer and more open access to the international markets and the elimination of unfair trading practices.

Canada cannot afford to return to the situation created by the trade wars between the United States and the European Union treasuries that were so hurtful to agriculture in the late 1980s and early 1990s. The importance of exporting raw and value-added products to our agri-food sector means that our industry is vulnerable to such a trade war. Canada has eliminated the WGTA and the export subsidy it provided for our grain and oilseeds. Allow me just to emphasize that point.

Particularly here in Manitoba and perhaps more so in western Canada than in other parts of Canada, one of the frustrations that farmers expressed was that the fundamental government policy, described by our opponents as a trade subsidy, a freight subsidy, which I remind committee members was in the order of $750 million annually, was taken right off the table by Canadians, along with some other modifications with respect to milk powder.

There are representatives from the dairy industry who can speak more fully to that. We realize in Canada that we gave at the office at the last round. And my farmers are increasingly frustrated when they hear of enhanced programs that the American farmers are providing, as we heard throughout the summer. For instance, the Americans do it in a very skilful way through a loans program, which you are familiar with. An American farmer can borrow money at a commodity-established price for his beans, his corn, his wheat. While the count isn't up yet, just in these commodities the American treasury has paid out some $506 million on beans, $780 million on corn, $434 million on wheat—and we're just partway through the wheat.

My farmers understandably call that unfair trading practices when all the focus is being made on the relatively modest programs we have. I will also remind the committee members that in agriculture we gave up a very substantial support program called the income insurance program. We know it as GRIP here in the prairies. Again, it is a program that funnelled substantial help to Manitoba producers. That was set aside. In other words, western Canadian farmers in the main have played by the rules. We don't see that forthcoming on the part of our European and American farmers in particular. We look for Canada to take a very strong position on that issue specifically.

The Chairman: Minister, if it's any comfort to you, we've just completed a trip to the east, and eastern farmers are in exactly the same position.

Mr. Harry Enns: That's great.

The Chairman: They've made the sacrifices, but other people haven't, so you're not alone, believe me.

Mr. Harry Enns: I would just like to make that point. We honestly believe it's a fair and honourable position for Canada to take. Canada has taken the role of leadership regarding the elimination of export subsidies, and our objectives in the next round must be the elimination by all other countries.

We believe that green box definitions need to be re-evaluated...a major accomplishment of the Uruguay Round required by both the Europeans and the United States to move away from price support schemes to direct payment programs. I recognize that direct payments or decoupled supports distort trade to a lesser extent than price supports, but the capital-investive nature of agriculture means that these payments provide an economic advantage that our producers find difficult to compete with.

Producers in these countries have more financial resources that lead to increased production. The federal government must press for the elimination of the blue box category for domestic subsidies as these direct payments clearly distort production and trade and the increased production of commodities. Europe and the United States, despite the world supply situation, amply demonstrate that.

• 1055

Manitoba is supportive of the agreement of sanitary and phytosanitary measures negotiated in the Uruguay Round. This agreement means that for the first time rules were established to attempt to prevent such measures from being used as non-tariff barriers to trade. The WTO panel ruling against the European Union's prohibition of beef imports from countries that use growth hormones is a demonstration of the value of this agreement. However, Canada must seek to ensure that countries' sanitary and phytosanitary requirements are science-based and that WTO panel decisions are implemented in a timely manner.

The approval of genetically modified organisms for food use in some countries, particularly the European Union, is meeting with considerable resistance. This resistance is occurring despite the existence of scientific evidence that such products are not harmful to either human health or the environment.

The federal government should be working to ensure that science, and science alone, is the basis on which countries assess the acceptability of genetically modified organisms and that any labelling requirements associated with these products do not constitute a non-tariff barrier to trade.

I would like to take this opportunity to discuss a Manitoba industry that has not flourished in the current trade environment.

On January 23, 1997, Rogers Sugar announced the closure of its Fort Garry plant. Being the sole market for Manitoba sugar beets, this effectively terminated Manitoba's sugar beet industry. It was an industry that I had a great deal of pride in, providing upwards of 350 of our farmers with an excellent cash crop. It did exactly what we as policy-makers often asked our producers to do; it was providing another 150 jobs in an industrial plant here in south Winnipeg. And we were exporting a refined value-added product.

The Canadian sugar market is one of the few sugar markets in the world where the domestic price of sugar is set on the basis of the world sugar price with only minimal tariff protection. This open border policy has created an industry that depends on imports of foreign raw sugar far more than any other country, which is somewhat in excess of 90% of our overall production.

High domestic support prices and export subsidies—especially in the European Union—distorted world markets, and reduced access to the United States were also significant factors in the loss of Manitoba's sugar industry. Studies have proven that Manitoba sugar beet production is cost-competitive. With appropriate domestic and international policies, a processing industry could be re-established in Manitoba.

We believe that Canada should remind WTO members that our sugar industry operates in an open market. We need the use of the upcoming WTO negotiation on agriculture to establish a level playing field for world sugar trade. If there was a level playing field with respect to sugar, Manitoba would be producing sugar again.

Finally, a number of recent actions in the United States has threatened Manitoba's exports to our largest export market. On September 16, 1998, the governor of South Dakota began by refusing to allow trucks carrying Canadian grain, cattle, or swine to travel through South Dakota. Canadian truck traffic, for the most part, rerouted travel through neighbouring states, bypassing South Dakota. A number of other states, Minnesota, Idaho, Iowa, North Dakota, Montana, Nebraska, supported South Dakota by conducting truck inspections for documentation. Although they did not issue travel restrictions, this issue was resolved, thankfully, in early October, and it led to the completion of a comprehensive record of understanding on trade between Canada and the United States. Nevertheless, the South Dakota blockade disrupted our exports and added increased costs for Manitoba exporters.

In the spring of 1999 the North Dakota legislature introduced several pieces of legislation that could restrict the export of Manitoba products. We were very pleased that on April 12, 1999, Governor Schafer vetoed the most serious of these bills that would have threatened all of our agricultural exports going to and through North Dakota.

However, we remain very concerned with the progress this bill made in the North Dakota legislature and the potential threat it had to our export interests. These actions by individual states placed the United States in violation of international trade obligations under both NAFTA and the WTO.

• 1100

We believe Canada should seek to obtain stronger rules in the upcoming WTO negotiations on agriculture to prevent individual states from undermining trade agreements to which national governments have agreed.

I will just cite another example. The Canadian beef industry is at this moment agreeing to a national check-off, for instance, to promote their industry, to develop beef markets for the industry.

That's what those moneys should be used for. It should not go to trade lawyers, mainly housed in Washington, who drag these issues on for months and months at great cost to the commodity organizations. I'm told that the people who have the greatest interest in maintaining the status quo are the trade lobbyist lawyers in Washington.

We ought to make our position very clear that we want to strengthen the regulations, clarify the regulations so that it doesn't take a team of Philadelphia lawyers to interpret them and to add to lengthy legal costs. These costs are largely borne by the individual commodities that they impact on, whether it's a beef producer, a pork producer, or the dairy industry.

Finally, we need a dispute settlement mechanism that is effective, efficient, and fast. The resolution of trade disputes can take too long. These result in the loss of markets and they can be very expensive to the commodity organizations involved, as I've just indicated. Further work is required to improve the dispute settlement mechanism currently in place.

Mr. Chairman, with these few comments, I do want to express my appreciation for allowing me to make this presentation to this committee. At the same time I would like to extend to you and your committee and your government every success in the very important upcoming World Trade Organization discussions. Thank you.

The Chairman: Thank you very much.

I would like to remind all members that we agreed to five minutes each, because we have eight other panellists between now and 12:30 p.m.

Before I turn it over to questions, Minister, I do want you to know that as a former professor of international trade law, I regret what my profession is doing in Washington. We're not as aggressive here in Canada, thank heavens.

Mr. Penson.

Mr. Charlie Penson: Thank you, Mr. Chairman, and thank you, Minister, for that informative presentation. I don't think there's anything I can disagree with there.

You have really captured the essence of what's needed in order to advance Canadian interests in further trade liberalization. It seems to me that the expectation was really created in the Uruguay Round, when a modest start could be achieved in agriculture to bring agriculture under trade rules for the first time, be it a modest start in 1994. The built-in round in the year 2000 would make some substantial gains.

I know that grain and oilseed and beef producers in particular are really looking for those gains to phase down subsidies worldwide. It's really interesting to hear your comments about the reductions in the Crow transportation subsidy and how it has changed the dynamics in agriculture here in Manitoba in terms of the value added. I think that's a very hopeful sign for all of us in terms of increasing jobs in rural areas.

You mentioned that livestock production is probably going to go up and the United States would be the home for a big portion of that.

I just came back with a number of my colleagues from meeting with U.S. senators in Montana and talking about some of those issues. A lot of the problems are based on myth rather than reality in terms of how they perceive Canadian live cattle or processed cattle coming into their country. Being border states, they see the trucks rolling through by the hundreds and thousands, so it is a bit of a problem that way.

So I would be interested to hear if there's anything we can do to improve the dispute settlement resolution process, to address the concerns you talked about, where a trade action is started or where borders are closed to our product for a number of reasons.

Our process is fairly...it's about a year and a half through the World Trade Organization if it is appealed. Therefore, I would ask the Government of Manitoba for any suggestions we as a committee can have to take that process further and to try to address the immediate problems when an action like that is taken against Canada, so we can can have that as a negotiating tool at the next round. I think that would be very helpful.

• 1105

I want to say one other thing, Mr. Minister. That is, the export enhancement program is still in effect in the United States. Export-enhancement barley is coming into southern Alberta. We know there's a trade action against Canadian cattlemen in terms of the dumping issue. Isn't it kind of ironic that if there's beef that's produced at low cost, the export enhancement program in the United States is partly responsible for that by providing that cheap barley through our livestock producers?

Mr. Harry Enns: There's one thing we can do, particularly with our biggest trading partner, the United States, and in your comments you were so accurate in saying that our good American friends—and I don't say this unkindly—operate with such a large measure of wrong information about what is occurring in Canada.

As we speak, as you know, there is this northwest agreement that allows Montana northwestern cattle to come into Canada. I'm told upwards of 50,000 to 60,000 American cattle are flowing into Alberta feedlots. It truly would be ironic if part of their being lured up there was the U.S. tax-supported barley under the EEP program.

I'm also advised, however, that the Americans have kept a handle on the EEP program and have not used it to any great extent with respect to overall trade. Perhaps somebody from the wheat board who's here this morning will be able to confirm that or not for us.

But what I think we can do and what Canada has to do is redouble our efforts in simply sitting down and discussing more, finding forums. I encourage our farm organizations both on this side of the border and on the American side of the border, supported perhaps by state and provincial governments, to clarify what in truth is happening in both our countries.

Mr. Charlie Penson: I have a short supplementary—

Mr. Harry Enns: If I might add, my deputy reminds me that in the last few years, actually since the event of NAFTA, we have been coming together formally, meeting with state American secretaries of agriculture, Mexican and American secretaries of agriculture, and Canadian ministers of agriculture, usually shortly after our own Canadian ministers' meeting.

Those kinds of forums, although they're not decision-making bodies, are important in clearing the deck, getting the right information, getting accurate information about what we do in our respective countries. That's very important, to nip in the bud this frustration that all of us feel, which is driven usually by low commodity prices. When commodity prices are where they should be, trade flows, more understandably, without difficulty. But when the American wheat farmers are hurting or our Canadian hog farmers are hurting, then we are only human and we tend to point fingers at a cause, and that's when this kind of traffic gets identified.

The Chairman: Thank you very much.

Mr. Blaikie.

Mr. Bill Blaikie: Thank you, Mr. Chairman, and thank you, Mr. Minister, for the presentation on behalf of the Government of Manitoba.

There are a couple of things. First of all, I want to say that I've had the opportunity to attend the last two ministerial meetings of the WTO, along with Mr. Penson. One of the things that struck me—and I don't raise this as a criticism but just as a point of information, if you like—is that Quebec and Alberta, those two provinces in particular, have always had somebody who's part of the delegation, like somebody at the deputy minister level in Quebec, and I'm not sure about Alberta, and they've been right there for the ministerial meetings.

It always struck me as odd that other provinces didn't do that. So I would certainly recommend to Manitoba that you consider having somebody at that level as part of the Canadian delegation, who would be there as an observer and there for the briefings in the morning. They're right on deck to put forward whatever interest Manitoba has in the context of that particular meeting. So it's certainly something I would suggest to you.

You've concentrated almost exclusively on agriculture, but as you know, the WTO negotiations that are coming up are much larger than agricultural, although that's obviously a key component of Manitoba's interest in the WTO.

• 1110

I wonder whether the Government of Manitoba has a position, for instance, on the investor-state dispute settlement process that is part of NAFTA, that was part of the MAI, which has now faded, but to the extent that the next round at the WTO could very well include an effort to create some kind of multilateral agreement on investment.

One of the concerns that a lot of people have had about the investor-state dispute settlement process is that it gives corporations the right to sue the government for things that are regarded as tantamount to expropriation. I wonder whether the Manitoba government has a position on that particular item and whether they'd like to see it modified, eliminated, carried on as is, or carried forward into any global agreement on investment. What has been the position of the Manitoba government on that?

Mr. Harry Enns: Mr. Blaikie, first of all, let me accept that good advice. I think it is good advice. I think there's a need for us, particularly in agriculture, to address the coming negotiations in a most serious way for all the reasons I put forward.

Obviously I'm here as the Minister of Agriculture on agriculture issues, but I can indicate to you that my government has expressed some considerable concern with respect to the MAI issue, and we are quite frankly pleased that it has been moved back or put on a lower burner. I think that issue will be one that my government will be watching very carefully and one that we have not embraced in the manner and way in which it was being put forward.

I believe there was a brief debate, a brief comment made on the issue by then Minister of Finance Eric Stefanson in the House during the latter part of the last session. My recollection of the discussion around cabinet is that we are watching it with considerable concern, in no way embracing it in the manner and way in which it has been put forward.

The Chairman: Thank you, Minister.

Mr. Pickard.

Mr. Jerry Pickard: Mr. Enns, I must congratulate you for your presentation. I think you did cover the points very well. Certainly there were a couple of issues in the presentation that I'm interested in looking at.

One of them was that Manitoba's exports have increased by 67%, which indicates that even though there are some things within our trade agreements that don't suit the bills and meet all the requirements that we're looking at, it emphasizes the point very clearly that we are very dependent on exports, and things that have been negotiated by the Canadian government seem to be very positive.

When the Boy Scout mentality comes up...and that was one that I think you really focused on, with the taking away of the Crow rate and the $90 million, was it, to Manitoba?

Mr. Harry Enns: I might just point out that it is Manitoba and eastern Saskatchewan on which that benefit withdrawal has most severely impacted. As you move closer to Vancouver and to seaports, it lessens.

Mr. Jerry Pickard: There's no question that Alberta had a very different viewpoint than Manitoba on the Crow rate. I certainly am aware of those differences, and I think many of our committee members are.

I wonder here about the diversification opportunities that have arisen or have developed or have not developed from those changes that occurred. My understanding was, when the Crow rate was to be eliminated, pasta development and other types of businesses would be able to start to move into the province and possibly thrive in the future.

Are we following those kinds of opportunities and are those opportunities developing, or are we finding it rather stagnant, that those things aren't happening?

• 1115

Mr. Harry Enns: It's a very important question for Manitoba and an intriguing one, but one that also opens up a considerable amount of debate. You will be hearing from representatives of the Canadian Wheat Board here momentarily. I am in support of the Canadian Wheat Board, but I have difficulty with their domestic policy, which indicates, for instance, that they wish to treat all millers in Canada equitably. That's an honourable goal, and it was an honourable goal as long as the Crow was in place. With the Crow no longer in place, to see the kind of growth you touch on, there ought to be recognition of the impact of the loss of the Crow on freight and on billing opportunities here in Manitoba, for instance.

I'm pleased to indicate that the first flour mill in 45 years was developed just a year ago in the province of Manitoba. But there was, of course, absolutely no reason to do any milling in western Canada when the Canadian taxpayer was moving the wheat to the waterfront in Ontario or Vancouver, where 85% or 90% of the wheat we mill is shipped internationally. Those are the kinds of gut-wrenching changes that have to take place as a result of that policy change, and we have a lot of work to do within our country to ensure that happens.

Mr. Jerry Pickard: With the feed lots and opportunities in other areas, do you see Manitoba's opportunity to become a greater world trader in finished products with more job opportunities, if that's happening—

Mr. Harry Enns: With every respect to Ontarians, Manitoba, for that simple reason, is rapidly becoming the pork centre of Canada. Our pork production is increasing by 12% to 15% annually. It's not because of the policies of this minister or my government or because we are putting any money into the pork industry, but because Manitoba and eastern Saskatchewan are the cheapest places in the world to produce pork. That includes Denmark, Holland, Ontario, Alberta, and the corn belt states of the United States.

Companies like Maple Leaf are investing $112 million into Brandon, Manitoba. The big American company that recently purchased Schneider's is investing another $50 million into Mitchell's plant in Saskatchewan, because Manitoba and Saskatchewan are where the majority of hogs, the majority of pork, is going to be produced by the end of the decade.

Mr. Jerry Pickard: There's just one other point I think you put out well, but I just want to emphasize it. The trade barriers that are coming up are causing our agriculture problems across the world. I would support your statement, with the minister, in suggesting that those non-tariff barriers have to be eliminated to a degree, as we move down in our negotiations.

Mr. Harry Enns: Thank you very much.

[Translation]

The Chairman: Mrs. Debien.

Mrs. Maud Debien: Good morning, Minister. During our tour, we heard from some large federations of Canadian agricultural producers, who have achieved a consensus in Canada, including in Quebec, to exhort the government to continue its support for supply management. We will probably hear other representatives of agricultural organizations telling us more or less the same thing, but I would like to know the position of the Manitoba government on this consensus with respect to supply management.

[English]

Mr. Harry Enns: I have no trouble unequivocally stating my government's support for the existing supply management system. We believe we can be astute enough and innovative enough to find opportunities for growth in that supplied or managed industry, where we have competitive opportunities anywhere in the world.

I believe the Canadian government, partly because of our contributions in the last go-round, should not feel any compulsion.... I know there are specific pressures from the United States and New Zealand.

• 1120

We have decided to order the production of these commodities in an orderly and very effective way. Tell a hog producer about how effective his counterparts in chicken broilers or milk have managed their commodities.

My government and I are very supportive. If you note from the few comments I made, I believe Canada should avoid getting into any trade-off situation. As far as I'm concerned, the last time we did it we traded off the sugar industry in Manitoba, and I don't wish that on anybody else. We go into these negotiations with a very strong position with respect to our supply-managed industries.

The Chairman: Thank you very much.

Minister, I have one quick question on pork. You mentioned the strength of the pork industry here in Manitoba. We heard from producers farther west, from Alberta particularly, that they've been very badly hurt because of the collapse of the Asian markets. Has that been your experience here in Manitoba?

Mr. Harry Enns: Certainly when a major market like the Asian market has the difficulties they've had, there are problems. Surprisingly, Manitoba has not been damaged to that extent.

I don't have access to the Alberta figures, but Alberta is, of course, considerably more aggressive in the beef market in Asia as well, and that contributed to the impact of the Asian flu.

We all suffered worldwide the unacceptable commodity drop in pork. The processing industry has some considerable things to answer for because not too many of us consumers saw any price decline in the pork products on the supermarket shelves. I'm pleased to see some investigation is being initiated in the U.S. on this very matter.

My pork producers are hoping they will come out of this experience with a better price discovery system, with more security and perhaps longer-term contracts with processors. A buoyant mood is developing in the pork industry again, and we have every reason to believe the light at the end of the tunnel is in fact a light. It may be a pretty strong beacon that will herald a good future for the pork industry in the coming months and years.

The Chairman: There was some virtue in using the pork cycle in Economics 101. It's always an example of how things go.

Thank you very much, Minister. We appreciate it. You may have to go, but members, I just want to remind you we have eight more presenters and we only have an hour and five minutes for them. If you could keep it to five minutes instead of ten minutes, that will make 40 minutes, and then we'll have 25 minutes for questions.

I'll just go to you in the order in which you're on the order paper here.

Minister, you may leave whenever you feel comfortable leaving, but again the committee very much appreciates your overall view of Manitoba's position.

I'll go to Mr. Saunderson next from the Agri-Food Exporters.

Mr. Saunderson.

Mr. Brian Saunderson (Vice-President, Canadian Alliance of Agri-Food Exporters (Agricore)): Thank you, Mr. Chairman, and welcome to your standing committee to Winnipeg. It's a pleasure to talk to you today.

I'm the vice-president of Agricore cooperative, and I also farm in the southwest corner of Manitoba.

I'm pleased to be here. I want to make a few comments about Agricore, but mostly I'm here to talk about trade. Agricore is a brand-new farmer-owned cooperative that was created by the merger of two long-established cooperatives, the Manitoba Pool Elevators and Alberta Wheat Pool.

Our core business is handling marketing and processing the products of our more than 50,000 members. As well, we supply them with inputs and technical support they need to grow those products.

The birth of Agricore fits in well with the approach the government has taken to improve Canada's place in world trade and make advances for the economy of all Canadians. Agricore was created to position ourselves to compete in the domestic and international marketplace on behalf of farmers. We will help farmers to become productive and we will handle higher volumes with greater efficiencies. We'll market and process more, and if the environment is right, we'll export more.

Our goal is to have our cooperative and our farmer-owners or members prosper and grow in the future. We know it can be done.

• 1125

In 1995, the Government of Canada set a target for agriculture and agri-food exports of $20 billion by 2000. We reached that target in one year, with the help of favourable markets. Now another target has been set. The Canadian Agri-Food Marketing Council, CAMC, says Canada should double its exports—that's $40 billion—to capture 4% of world agri-trade by 2005. We're getting ready to meet that goal, but this time we're going to need help. If we can't make some major breakthroughs on the international market, that goal will be virtually impossible to reach.

We had high hopes for the Uruguay Round when it was launched in 1986. It was historic. For the first time, rules were established for agricultural trade. However, as we approach the end of the implementation period, we still face insurmountable barriers to access. Export subsidies are still depressing world prices, and trade-distorting domestic support is still encouraging oversupply in world grain markets. Also, no one expected the extent to which countries would use health and environmental concerns to block imports.

As we look to the start of the next round, we must establish as a primary goal the achievement of freer and more open access to international markets and the elimination of unfair trading practices. We have to do it much quicker than we did last time. The Uruguay Round took seven years to negotiate and six years to implement. We need results earlier than that.

We urge the Government of Canada to push for a very tight negotiating timeframe and a short implementation period. In addition, we need to ensure that farmers benefit as soon as possible. Countries should be required to implement major portions of their commitments early in the transition round. Negotiations should be conducted on as broad a basis as possible. The larger the scope, the better the chance for significant results.

Now I want to spend some time talking about what Agricore believes should be included in Canada's negotiating position. Keep in mind the overall objective must be the achievement of greater access to world markets and the elimination of unfair trading practices. We urge the government to focus on the following areas.

First, we must make significant gains in market access. The Uruguay Round took a major step in this area and when import restrictions were converted to tariffs. However, due to the level at which some tariffs were established, the aggregation of products and the creative ways countries found to administer commitments, we have not achieved the access we originally intended.

In the coming round, Canada needs to achieve the maximum possible increase in minimum access commitments, and these commitments must be disaggregated, that is, applied to specific products or tariff lines rather than broad groupings of products.

We need to achieve the elimination of in-quota duties. The purpose of a minimum access commitment is to permit the importation of an amount of product, yet some countries continue to apply tariffs to the in-quota amount. In-quota duties are inconsistent with freer trade goals. Their application should be prohibited.

Hand in hand with market access is continuing to reduce tariffs. We will not make needed advances in exporting more of our products without the continued lowering of tariffs.

Some countries are administering their access commitments in such a way that they are not filled or access is skewed to favour certain suppliers. Canada must pursue clear and binding rules for the administration of tariff-rate quotas. We should demand the practice of tariff escalation be stopped.

Many countries apply much higher tariffs to value-added imports than they do to raw products. An example is Japan and their oil tariff. Canola seed enters Japan without duty, but canola oil is still subject to a prohibitive tariff. Refined canola oil is subject to an even higher tariff than crude oil. This places our value-added industry at a disadvantage.

Second, the use of export subsidies must be prohibited. The Uruguay Round attempted to bring some discipline on the use of export subsidies, but they continued to depress world prices, even at the end of the implementation period. Just as an example, the European Union is currently providing the equivalent of $36 U.S. per tonne of subsidized wheat exports. They subsidize barley to the tune of $78 U.S. per tonne, and oat exports are being subsidized by almost $70 U.S. per tonne. This is allowed under the current agreement.

The United States has budgeted $320 million U.S. for its EEP, although they've refrained from using it. In contrast, Canada has completely eliminated its only export subsidy for grains and oilseeds. While we may have set a good example for other WTO members, it has forced our producers to compete in a heavily subsidized market without tools of their own. Export subsidies depress world prices and they must be eliminated. It's also important that other measures that can and, we contend, have become export subsidies be subject to discipline.

• 1130

Export credit is a very useful tool for all exporters, including Canada. However, the escalation of its use without clear rules could spark a trade war.

Food aid is a commendable activity, and we support the provision of food aid to assist the world's hungry. However, when used in commercial markets, it has become an export subsidy. We were very concerned when the United States government purchased a large amount of wheat from its producers and donated it to Indonesia. In 1996 Indonesia was Canada's fourth largest commercial customer for wheat. So we need clear and enforceable rules to be implemented on the use of food aid.

Allowable spending on trade-distorting domestic subsidies must be reduced. While the Uruguay Round introduced some controls on domestic support programs that forced the EU and the U.S. to move away from direct price support programs, it still allowed very high spending levels on domestic support. For example, European farmers receive the equivalent of $175 Canadian per acre just to plant a crop. In addition their wheat producers are guaranteed a price of $205 Canadian per tonne, well above the current prices. This has resulted in the highest ever government-held stocks of wheat in the European Union. High stocks result in lower prices.

The next round of negotiations must result in maximum spending cuts in amber support programs. It must also result in the elimination of the blue box, which the minister referred to. This category was created late in the round to allow some countries, primarily the European Union, to implement changes to domestic support programs of their own. Most of their production-stimulating support falls into blue box.

Sanitary and phytosanitary rules and the trade of genetically modified organisms must be based on sound and proven science. I recently heard a trader say, give me a high tariff any time; at least it's predictable. The growing use of environmental and health concerns to block access to international markets is totally unpredictable and non-justified. Clear rules must be implemented that have their basis in science, not in emotion and politics.

I'll close by stressing again that we have high expectations for this round of trade negotiations. Our farmer members are getting ready to plant a crop now, and the level of optimism is very low. Producers, handlers, processors, marketers, and exporters are all working together to try to take advantage of a more open international market that's not distorted by unfair trading practices.

Thank you for your time.

The Chairman: Thank you very much, Mr. Saunderson, and thank you for your very helpful papers, which summarize very well phytosanitary issues. I notice you also mention access to China. We'll have a look at those. Thank you. We appreciate it.

We'll go next to Mr. Broeska.

Mr. Robert Broeska (President, Canadian Oilseed Processors Association): Thank you very much, Mr. Chairman, for allowing me the opportunity to present to you and your committee today. I represent the Canadian Oilseed Processors Association. It is an association of the four companies in Canada that own and operate 100% of the oilseed-crushing capacity in Canada and about 90% of the vegetable-oil-refining capacity in this country.

The forthcoming WTO agriculture trade negotiations are a matter of great importance to the oilseed industry in Canada. Approximately 75% of all oilseeds produced annually are traded to the export market, half in the form of unprocessed seed and about 25% in the form of vegetable oil and protein meal. So the terms of trade established and implemented for oilseeds and oilseed products under the WTO are of crucial importance to the profitability of Canada's trade in oilseeds and products.

In the Uruguay Round, through its membership in the International Association of Seed Crushers, our industry was active in pursuing a level playing field, zero-for-zero policy in oilseeds, which was very nearly successful. The zero-for-zero policy in oilseeds in an acronym for the removal and elimination of all export subsidies on oilseeds and oilseed products and the elimination of all tariff and non-tariff import barriers for the trade of oilseeds and oilseed products.

• 1135

As I say, that was very nearly successful in the Uruguay Round, and the ministers of both international trade and agriculture are supportive of continuing that quest into the new round beginning this year.

The Canadian oilseed processing industry has also established and fostered relationships with its counterpart processing organizations around the world, the majority of which are also active in supporting the zero-for-zero policy with their WTO membership for further liberalization in the oilseed product trade.

I'd like to say a few words about the industry overview for oilseed production and processing in Canada. Oilseed production and processing is a growth sector in Canadian agriculture and in the Canadian economy. With the demise of the subsidized rail rates for grain, the oilseed industry is responding with expanded investment in the production of seed and industrial processing plant capacities. In addition trade liberalization through CUSTA and NAFTA, as well as the initial phasing of trade distortions negotiated under the Uruguay Round, have been strongly supportive of further investment in oilseed processing.

In 1998 Canadian farmers produced 11 million tonnes of oilseeds, that is, canola, soybeans, sunflowers, and flax, with a farm gate value of approximately $3.7 billion. COPA members, the crushing industry, will process approximately 5 million tonnes of that, which is worth $1.7 billion to farmers, in processing plants located across Canada. The economic value of the oilseed processing industry in Canada is significant, and it is expanding. Economic benefits to Canada from oilseed processing will total $3.6 billion in 1998. When combined with the export of unprocessed seed, the direct economic value of the industry in Canada totals almost $6 billion. The industry's contribution to the nation's balance of payment from exports and import replacement is large, at $2.5 billion. Combined with the value of the seed exports, the oilseed industry in Canada contributes over $6.5 billion to the Canadian balance of payments. Hence, trade policy is critical to maintaining this economic engine of growth in Canada.

I'd like to say a few words on emerging industry patterns. To explain the link between the direction of industry development and oilseed processing and trade liberalization, it is useful to describe the current forces driving the industry. There are five drivers. The first of those can be described as rapid technological developments, that is, biotechnology. The pursuit of genetically modified seed is a quest by producers for efficiency, competitiveness, the reduction of field costs, and improvement in yield. We are in the first wave of biotechnology development, and we expect that this will be a large and expanding area of interest, not only in terms of the development of the technology itself but also as an issue of trade.

The second driver is the combined effects of population expansion, income growth, and per capita consumption, which is a positive stimulus for the demand for vegetable oil and protein meal consumption, especially in the Asian and sub-Asian markets, including China.

The third driver is the changing nature of consumer demand internationally. Rising demand for safer, nutritional, and healthy food products drives the demand for decommoditized, more value-added processed product in specific niche markets, rather than the export of raw or only semi-processed oils and meals. In the early eighties, for instance, four main oils—soya, sun, palm, and rape or canola—accounted for half of all consumption. Today they account for 60%. Canada is an efficient competitor and producer in three of those four oils.

The fourth driver of industry development is the gradual liberalization of trade in oilseeds and oilseed products, which increases market access for imports.

The fifth driver in the changing pattern of industry development in our sector is the globalization of the industry, with liberalization, trade, and investment. Continuing to see a trend toward the concentration of ownership and competition in the oilseed sector, declining barriers to market access, economic pressure on processing margins, and expanding linkages from the origin of seed production to final distribution will further lead the industry to expanding operating scales and market concentration. Canada is actively engaged in this process as it pertains to oilseeds. I could say that it probably applies to most other agriculture commodity sectors in Canadian development.

Next I'd like to make some comments on the Uruguay Round and subsequent developments. That round produced a body of commitments and disciplines for trade and agriculture products that provided WTO members with a legitimate expectation of a legal right to expect implementation and continuing commitments to honour the same.

• 1140

All told, the agreement on agriculture contributes to a sense of stability, security, predictability, and transparency. It encourages investment in the sector, and the oilseed business in Canada is an example of that. However, there are major barriers to market access, such as high tariffs and escalating tariffs on higher-value food products that continue to remain a problem for the Canadian oilseed processing industry. Hence the interest in the WTO 1999 round.

Mr. Chairman, I'll keep my comments brief.

Our expectation and the pursuit of our industry, in conjunction with our counterparts in all other oilseed-producing regions of the world, is the pursuit of the zero-for-zero trade agreement. As I indicated earlier, the federal negotiators are in support of this objective, and we would welcome a recommendation from your committee that pursuit of oilseed, zero for zero, be a part of Canada's initial negotiating position in the forthcoming WTO round.

Specifically, on export subsidies, the members of COPA support the Canadian official position that pursues the total elimination of all export subsidies. This is an integral part of the industry's position on zero-for-zero trade policy for oilseed and oilseed products. There is strong support for this objective in Canada, and the oilseed industry stands firmly behind that.

On market access, the elimination of tariff and non-tariff barriers to trade in oilseed products is the other side of the zero-for-zero quest. Surely this is also supportable in the Canadian position, and again, we would ask the support of your committee for support of the total elimination of all barriers to market penetration. In our submission to you, we've provided a list in some detail of the various barriers to market access.

On domestic support, the oilseed industry in Canada seeks a reduction of domestic supports that adversely influence trade. I think the two previous speakers who spoke to that issue reflected the position of the oilseed processing industry in that area.

I have a point on another issue that is extremely important to the oilseed processing industry in Canada, and that is the terms of agreement for China's accession into the WTO. Most recently, members of a negotiating team from Foreign Affairs and International Trade and Agriculture Canada have negotiated with China on a very liberal offer, we believe; an offer that gives us a great deal of optimism about where China perceives itself going in the oilseed industry and also gives us a great deal of optimism about their support for engaging in the dialogue on zero-for-zero on the basis on which Canadian industry is heading.

The Chairman: Could I ask you, Mr. Broeska, if you could summarize the rest?

Mr. Robert Broeska: Yes. In the last two pages of my presentation, what we have tried to clarify for you is an industry estimate of what zero-for-zero liberalization means to our industry in this round.

Essentially, based on studies that we've participated in, Ag Canada has done, the George Morris Centre in Guelph has done, and Rabobank International and Landow Mills International have completed, we see export growth potential in the export trade of oilseeds in the period to 2008 rising from $2.35 billion to $3.35 billion. That's an increase of $1 billion in terms of the export trade in seed—that is by value and by volume. In the oilseed products business we see a rise from $1.4 billion to $3.4 billion, a rise of $2 billion in the period projected to the year 2008. In total, this is an increased export trade of $3 billion up to $6.77 billion. Addressing the issue of expanding Canada's share of international trade and agri-food products to $40 billion, our industry estimates we can increase our share of that $40 billion trade from the current 9.5%, $3.7 billion, up to 16.9%, at $6.77 billion. So the opportunity cost of the zero-for-zero is extremely significant to the oilseed industry and to the Canadian economy. Thank you.

• 1145

The Chairman: Thank you very much, Mr. Broeska.

We'll now go to the Keystone Agricultural Producers, Mr. Dewar.

Mr. Donald R. Dewar (President, Keystone Agricultural Producers): Thank you very much, Mr. Chairman. The Keystone Agricultural Producers would like to thank you for the opportunity to present our views to you on the upcoming World Trade Organization negotiations and the position Canada must take to negotiations relating to agriculture.

Keystone Agricultural Producers, or KAP, is Manitoba's farm policy organizations. We represent approximately 6,800 individual farm units, plus our membership includes 19 farm commodity organizations, representing commodities ranging from pork, cattle, and sheep to the supply-managed commodities and special crops. We are a democratically run organization, with 12 districts throughout the province, whose representatives set policy for our organization. We can truly say we represent the whole range of producers and commodities from across Canada.

We are also a member of the Canadian Federation of Agriculture, which allows us the opportunity to work with your fellow farm organizations from across Canada to establish trade policy that is in the best interests of our country as a whole. As KAP's primary interest is agricultural trade, we'll limit our comments to negotiations related to market access and trade in goods.

As you heard, Manitoba is primarily a trading province, and most of the non-supply-managed commodities in Manitoba, which include crops such as flax, oats, peas, sunflowers, canola, and edible beans, rely on export markets. Some 80% of our wheat and more than 40% of our barley goes out of Manitoba; 87% of our slaughtered cattle and 88% of our hog production sold in 1997 went out of the province, either live or as meat or meat products. Because of the reliance on export markets, trade rules are very important.

We concur with Minister Marchi's observation that what happens at faraway negotiating tables has consequences that reach into the kitchen table and other domains of daily life. We in Manitoba experienced first-hand the effects of trade disputes when South Dakota arbitrarily chose to prevent foreign products from entering their state without onerous and unreasonable sanitary and phytosanitary documentation, a move that forced Manitoba's lifestock industry to reroute hog and cattle exports to avoid shipping through or into South Dakota.

While the current GATT agreement, which governs our trading practices, along with such bilateral agreements as NAFTA and CUSTA, are not perfect, they do form a framework that has enabled Canada to participate in the world trade arena. We believe one of the primary goals of the upcoming WTO round should be to improve and build upon the framework the GATT put into place. We must strive to achieve clear and concise rules-based trade. Because we are a trading province within a trading nation, clearly increased access to foreign markets is for us a key goal under WTO.

KAP maintains that one of the primary issues that needs to be addressed is clarification and full implementation of minimum access commitments to achieve the Uruguay Round goal of 5% minimum access. We find it ironic that Canada is often accused of being protectionist, and yet 91% of our minimum access is being filled, while the U.S. has only allowed 54% of its access to be achieved.

We have only 21 lines of the 1,370 tariff quotas inside the WTO. Norway, for example, has over 200 TRQs.

At present there are a number of conflicts surrounding access that must be resolved and goals that could be pursued. These include the tariff issues where Canada must deal with the practice of aggregation of tariff lines. This is a practice in some markets in which a number of basic agricultural products are included in a single minimum access calculation. This lumping together of different products reduces the level of intended access for each of these products, and in some cases has eliminated access for some products entirely.

We must address some tariff rate quota administration practices in which import permits were allocated according to the requirements, but were allocated to producer organizations, which in fact had no interest in importing the product. There must be resolution of some within-quota tariff practices in which some quotas are setting within-quota tariffs so high they're effectively eliminating any access.

KAP believes that the next WTO round should strive to reduce within-quota tariffs to zero, to allow the full 5% minimum access and live up to the spirit of the agreement made in the Uruguay Round.

The non-tariff barriers, as you've heard, such as the sanitary and phytosanitary requirements, road and rail safety requirements, are increasingly emerging as significant trade issues impacting Canada's access to foreign markets. For example, again, North Dakota recently threatened to pass legislation requiring stringent and unreasonable sanitary and phytosanitary certification on foreign products moving into their market, clearly aimed at Canadian products. The legislation passed through both the House and the Senate before the governor complied with current agreements and vetoed the bill.

• 1150

Draft legislation in Minnesota is calling for safety inspections of every foreign rail car entering the state as well as charging a $100 levy per rail car.

Canada must stand up for Canadian producers by opposing this type of action under our current agreements; by negotiating improved clarifications that strengthen our recourse against ad hoc actions that are contrary to existing commitments; set out clear-cut agreements on veterinarian inspection standards; protect against unrealistic trade provisions, which could arise out of environmental agreements such as the bio-safety protocol; eliminate barriers to the import of product from genetically modified seed where good science shows there is no risk; protect against unreasonable changes of standards where the need for those changes is not supported by accepted scientific proof; and accept international pesticide and residue standards.

With parity of access for grains, oilseeds, meats, and other products—

The Chairman: I'm sorry to interrupt you, but I'm getting a little concerned. You're over the five minutes and you're into page 4 of an eight-page paper. So I wonder if you could fly over it a bit, maybe just draw things to our attention, because we'll have the paper and we'll make sure everybody gets it. At this rate we won't get everybody on. That's my problem. I'm sorry to interrupt—I don't like to interrupt witnesses—but it's a problem we have in terms of time.

Mr. Donald Dewar: On parity of access, again, zero-for-zero agreements should be pursued, which are very important in looking for equal access for, for example, canola and canola products and soybeans.

Together with Canada's domestic interests, we need trade access, but we also need to protect our sensitive commodities, and it's very important that we can maintain our orderly marketing systems to have stability in those markets and supply of our food. Again, I'm happy to say that we do agree with almost everything our minister told you earlier, which may be a rare occasion. We don't believe commodities should be traded off one for the other, and domestic support programs should be clearly defined. The green box has to be set up so that it's clearly understood, and no domestic subsidies should be trade distorting.

Our Canadian fiscal policy has left Canadian producers with anything but a level playing field, as is often alluded to. Canada's domestic support level is 16% of our production value, while that of the United States, when they include their domestic food aid package, which they include as an agriculture subsidy, is 32%. I think it's important to note that we are far from level in this case.

We do not have the lucrative support programs such as have been outlined and referred to—the loan rate program—and we have to live with the consequences. Even where domestic support is decoupled, it has to be decoupled enough to not affect production, because if you put money into the industry in any way, shape or form, ultimately it affects the decisions and in most cases the marketplace.

Our trading partners at the WTO—and this is another call for the rules-based system—have tended to stretch the rules to give their producers maximum support and different interpretations of the rules, and we encourage that to be more strongly clarified and understood by all...and the intent of the regulation as meant.

On the Crow subsidy...you've heard the devastating effects of that to Canadian agriculture. It's just an example of where Canada has gone much farther than needed to meet our commitments under the WTO. Even though it was stipulated that it had to be reduced, it did not have to be eliminated, and in fact that money could have stayed in agriculture and been shifted to the green box, as other countries have done.

• 1155

The rest of our presentation refers to trade actions or nuisance actions, and we clearly have to have the rules and the intent and the will of the governments to live up to the rules.

As a short comment on the free trade area of the Americas agreement, which is just now underway, Canada is moving to negotiate free trade in the Americas, and we believe they must apply the same principles as in the WTO. It must be equitable and clear, with definitions and conditions precisely defined. Commodities and sectors can't be traded off, and the goal should be increased access while still allowing parties to protect their domestic interest. We believe caution should be used to avoid allowing any of the parties involved in this negotiation to limit or direct the areas of negotiation before the formal discussions begin. We don't want to start this too early.

In conclusion, because agriculture is very important to our economy and because of its significant role in the balance of trade and the jobs it creates, we believe these trade negotiations must be taken very seriously and continue to expand the markets for Canadians, while we can still enjoy abundant access to some of the healthiest and most affordable food in the world.

Because we cannot be at the trade negotiation table to protect ourselves, each and every one of Canada's farmers is relying on our government to actively pursue our interest at the next round of the WTO. A fair and equitable agreement in the world trade of agricultural products is arguably the most important issue for agriculture in Canada today. The strength and viability of our industry is at stake. It is imperative that Canada take a strong stand to ensure that future trade agreements meet our needs.

Thank you very much.

The Chairman: Thank you, Mr. Dewar.

Mr. Tait.

Mr. Fred Tait (Vice-President, NFU Region 5 (Manitoba) Coordinator, National Farmers Union): Mr. Chairman, the first point I would like to make is that there are several of us around this table who are active farmers. This is probably the busiest time of the year. We're preparing for seeding, or are into seeding. Many of us have travelled several hours to get to this meeting, and to find then that we are to discuss an issue of such complexity in a time limit of five to ten minutes is kind of discouraging.

The National Farmers Union looks primarily at issues of trade or any agricultural policy, domestic or otherwise, in terms of how it impacts on net income of the farm community.

I would refer you to page 2 of our brief. There's a copy of a graph from Statistics Canada there, and it clearly demonstrates that farmers have not benefited from the manifold increase in agricultural food exports. Since 1989, exports have doubled and net farm realized income has declined 19%.

In this brief, and in this short time, we'll attempt to solve the riddle as to why increased exports do not translate into increased farm prosperity. From this riddle comes the essential insights upon which Canada must build its WTO negotiating position.

Harry Enns mentioned, and it has been repeated thousands of times, how our objective was to double agricultural food exports. We set a target in 1993 of $20 billion by the year 2000. Not only did we reach those goals, but we reached them ahead of schedule, and I point you to the impact on net farm income on the bottom line of that graph.

We've set a new goal of $40 billion in exports by 2005, and the most single-minded focus on export expansion has led some farmers to criticize the ministers for having no real agricultural policy at all, but merely a trade policy that occasionally disguises itself as an agricultural policy. While the ministers of provincial and federal governments have focused on this net export position, we think they should also put some focus on exports and imports and our net position.

You'll note on the graph on page 3 that our position in net has not changed substantially. In fact, it has occurred to the National Farmers Union that indeed our export policy may be pursuing low-return international markets, and while doing that we are sacrificing our higher-paid domestic markets.

If you look at our graph on page 4, you'll see the projections put forward in pork production. Here, earlier this morning, the Minister of Agriculture made a very strong statement about our increased production. It shows basically that from about 1996 to the year 2007 we're going to double the tonnage of pork exports. But then we start to look at the statistics as to what this means to us as farmers. We look at a publication that quotes from an Alberta perspective—and we believe this would be relevant for Manitoba or Saskatchewan—that a 640-acre farm with 140 sows, raising wheat, malt and feed barley and canola in addition to hogs, will see its net income drop steadily in the foreseeable future, declining from $83,000 in 1997 to $28,000 in 2005. While the report lists only Alberta hog farmers, we believe you could spread this figure across the provinces.

• 1200

If you look on page 5, we have a graph, again from Agriculture and Agri-Food Canada, predicting net farm income in the hog sector. It shows again a rapid decline. The decline depicted in this figure is not a result of the failure of the export expansion model. To the contrary, all indicators point to continued success. Pork production and exports continue to rise. Pork-packing companies, having pushed wages down by 40% and having benefited from a sharp decline in pig prices, are more profitable than ever. World demand continues to rise. At the same time, however, farm-family hog producers are being bankrupted and forced out of business.

Farmers particularly lose if we exchange domestic markets for foreign ones. Increased transportation costs and larger numbers of intermediaries combine to reduce farm share and the final retail price that farmers get. They get a smaller portion in a more volatile market.

On page 6, we point out the power that some of the transnational corporations possess in the food sector as it becomes more and more concentrated. We point out that Canada's gross farm revenues were $29 million in 1997, and Cargill's, during the same year, were $56 billion. There's a list of other companies. I won't go through them because of the time constraint.

Agriculture and Agri-Food Canada's September 1994 publication, Future Directions for Canadian Agriculture and Agri-Food, lists the benefits of realized Canadian exports targeted to $20 billion by the year 2000, a target we have since exceeded. I draw that to your attention. One of the benefits stated in that report was that for every $1 billion increase in exports, realized net income would rise by $235 million. If this prediction were true, 1998 realized net farm income would have been $4.36 billion and not the $2.6 billion forecast. The effects of increased export are not matched in these predictions.

Despite failure to meet the projections contained in Future Directions for Canadian Agriculture and Agri-Food, such predictions are extremely useful. Before entering into further negotiations, the Canadian and federal provincial ministers of agriculture should publish extensive projections regarding the effects that successful negotiations and resulting increases in trade exports will have on all sectors of the agricultural economy.

It has become a standard business practice, before embarking in new directions, to identify measurable objectives against which progress can be evaluated. Eleven years after signing CUSTA and on the verge of a new WTO round of negotiations, Canadians still lack that framework for evaluating the effects of such trade agreements on farmers in the agri-food sector.

In that regard, we make two recommendations. We recommend that the Canadian government work with farmers to develop a numerical objective to serve as benchmarks by which Canadians can measure the success or failure of Canada's agricultural and agri-food policies. Further, because the benchmarks identified by the National Farmers Union in this brief all point towards the failure of trade and investment agreements to benefit Canadian farm families, the NFU recommends that the Canadian government refrain from negotiating further agreements until they can assure farmers that the situation will reverse.

On page 7 we go into a bit about consumer prices and the share of the consumer's dollar that the Canadian farmer has been able to receive. You will see in the graph, figure 5, that our share of the Canadian consumer's dollar is declining.

I would point out that the commonly used description of “efficiency” is fewer people producing more product for a lower margin. We fit that model. The model with the concentrated ownership of food processing fits another model—fewer people producing more product for larger profits and not transferring those profits back to the farm gate.

• 1205

There was a presentation here this morning again about the investment and the expansion in the food processing sector. I would refer you to page 8. We list some of the corporations that now control almost all of our food processing sector—Canadian wheat and flour mills, 79% foreign-owned; Canadian malting, 93% U.S.-owned; Canadian durum flour mills, 66% foreign/U.S.-owned; Canadian pasta mills, 90%...; and most sinister of all when we get into the red meat sector, Canadian beef-packing plants, 66% foreign-owned. Cargill and IBP together own 66% of the Canadian capacity.

I'll skip over to page 10. We asked the question, has increased agricultural trade benefited farmers from around the world? There is absolutely no evidence that it has; in fact, the evidence is the other way.

I had an opportunity to spend two weeks in the Philippines two years ago this spring. I saw first-hand what globalized trade in agriculture is not only doing but has the potential to do—a whole area causing social disruption and probably civil disobedience that will end in violence. You're probably aware there is a major strike among farmers going on in, I believe, Argentina or Brazil as we meet.

We, the National Farmers Union, are a very active member in an international farmers' organization called Via Campesina, so we're in constant contact with farmers' organizations around the world.

There's a small statement here that I'd like to quote that came out of a meeting:

The loss of national food sovereignty within the WTO is dangerous and unacceptable. Via Campesina strongly objects to the conduct of negotiations in agriculture under the terms of the World Trade Organization. The WTO policy is above all organized in the interests of multinational companies that dominate international trade destroying our capacity for food production, our communities, and our natural environments.

We're not excluded from that; in fact, we're a prime example. If I had one bit of advice when I met with Philippine farm groups, I said, whatever you do, don't look to our model as a model of success.

We, the National Farmers Union, recommend that the Canadian government would be very wise to take advantage of the international dissatisfaction with the WTO process to strengthen its negotiating position.

We further recommend that the Government of Canada take a pro-farmer position in the upcoming round of the WTO negotiations and align ourselves with nations around the world that are working to change the focus of these talks. The NFU recommends that this committee send an observer to the third international Via Campesina assembly, October 3 to 6, 1999, in Bangalore, India, and see the effects of export acceleration on peasants around the world.

In conclusion, Canadian negotiators must defend Canada's right to safeguard, create, and expand orderly marketing and supply-management agencies and must not trade these agencies away in the upcoming WTO round. Further, given the volatile commodity prices, Canada must not further restrict its ability to create safety nets that stabilize farmers' incomes or programs that safeguard their interests. Finally, Canada must protect its land ownership laws and other laws important to fostering farm families.

I would add to this that considering the current farm crisis we're in, if we are to believe what the provincial governments and federal government are telling us, they cannot assist farmers in the worst economic crisis we've had in 60 years because they've negotiated a free trade agreement that prohibits them from doing so.

The Chairman: Thank you, Mr. Tait.

We'll turn next to Mr. Swan of the Manitoba Milk Producers.

Mr. William Swan (Chairman and Chief Executive Officer, Manitoba Milk Producers): Thank you, Mr. Chairman. I certainly appreciate the opportunity to make a presentation here today.

The Manitoba Milk Producers believe the first five years of the World Trade Organization has been a good deal for traders and a bad deal for farmers. An examination of commodity prices since 1994 is clear evidence that farmers have not benefited from the World Trade Organization.

• 1210

The World Trade Organization has not done a good job of reducing subsidized exports or reducing internal supports to agriculture, except in Canada. Market access targets are only partly achieved, except in Canada. Canada has led the way. Other larger traders have ignored the rules and done what they liked, calling the rules guidelines and not respecting their implementation.

Manitoba Milk Producers have ten objectives for the next round of talks. These ten objectives have been adopted by all supply-managed commodities in the Canadian Federation of Agriculture.

Number one, Canadian egg, dairy, and poultry farmers believe Canada should approach the next World Trade Organization round of multilateral negotiations with the objective of achieving positive results for Canadian farmers.

Number two, egg, dairy, and poultry farmers support further trade negotiations for agriculture only if they result in better-functioning international and domestic markets and contribute to the improvement of Canadian farm incomes.

Number three, the World Trade Organization should be the principal vehicle for the establishment of fair and effective trade rules.

Number four, trade commitments affecting egg, dairy, and poultry farmers in other trade agreements into which Canada may enter must not go beyond World Trade Organization commitments and discipline.

Number five, there must be no trade-off between Canadian agriculture sectors as well as no trade-off between agriculture and another industrial sector.

Number six, the next World Trade Organization negotiations in agriculture must focus primarily on the elimination of export subsidies.

Number seven, Canada must obtain full equivalency of rules-based, minimum-access levels.

Number eight, TRQ administration must be subject to rules that ensure the level of access committed is achievable.

Number nine, sanitary and phytosanitary measures that are not science-based must be eliminated.

Number ten, Canada must seek greater discipline governing domestic support.

Our expectations can be nothing less than the following. Reduce the in-quota tariffs to zero. Some countries still maintain a level for in-quotas.

Reduce internal support to agriculture. A good example is that Americans and the EU are far beyond what Canada's at.

Reduce subsidized exports. The U.S. and EU account for 90% of the export subsidies.

Maintain over-quota tariffs. This is needed to maintain domestic support programs such as supply management. Supply management serves the producers, processors, and consumers very well. For producers, it provides predictability based on cost of production for efficient producers. For processors, it guarantees regular plant supply of high-quality raw product, and for consumers a high-quality product at affordable prices.

Dairy Farmers of Canada have done price surveys for the last three years and they continue to show that the retail prices in Canada are second lowest in the world. I think all producers prefer to receive their returns from the marketplace rather than the mailbox. Unfortunately, it has not been possible for some of the commodities in the past year. The federal and provincial governments have met that need with the AIDA program. Even though there seem to be some administration problems with the program, certainly it was welcomed by producers. Supply-managed commodities do not qualify for this program but need government support, not in dollars and cents but in commitments that they will be protected in the next round of trade negotiations.

The Chairman: Thank you very much, Mr. Swan.

From the Canadian Wheat Board, Mr. Hill, please.

Mr. Larry Hill (Director, Canadian Wheat Board): Thank you, Mr. Chairman and committee members for this opportunity to meet with you today. I'll condense my presentation from the circulated paper and leave the whole paper with you for your use.

Just as a highlight, in 1997 the OECD calculated the EU producer subsidy equivalent for crops at $318 per acre. For the U.S. the figure was $68 per acre—these are Canadian dollars. These compare to Canada and Australia at $15 and $11 per acre, respectively. In Argentina it would be lower still. One would expect the U.S. figure to be higher than this given the recent domestic expenditure on farm aid.

What we hope for, and we do agree with a lot of the presentations other people have made here today, is that future agreements must work toward the eventual goal of elimination of all trade-distorting programs currently under the amber and blue box categories of support. Moreover, the green box expenditures should also have a cap put on them. In pursuit of this goal, Canada has to clarify the definition of green box support with regard to safety net and crop insurance programs in both Canada and competing export nations.

• 1215

We also recommend that Canada's position should be to completely eliminate export subsidies as quickly as possible. The EU's Agenda 2000 will result in lower export subsidies. It will not result in the complete removal of export subsidies. The U.S. has not used the EEP program in any significant way since 1995, but they do have the authority to use it today. Reforms must press on until subsidies are fully eliminated.

We also recommend that effective rules for officially supported export credits be established. In 1998-99, food aid and export credit programs heavily influenced world grain markets. And while export credit rules have been discussed in international forums for almost 20 years, little progress has been made. The Canadian Wheat Board remains committed to negotiating an international agreement on officially supported export credits. It should impose real discipline on exporting countries and an agreement should not merely institutionalize current practices. The Canadian Wheat Board believes strongly that maximum repayment terms for wheat and barley should be as short as possible and in any case not exceed the useful life of the product.

We also recommend that rules for market promotion and food aid programs be established, as suggested by the other speakers. The use of aid in Indonesia was a significant concern for Canadian farmers. We recommend that Canada also press for clear and open access for wheat and barley. Market access must continue to increase towards the ultimate goal of full access. In working towards this goal, Canada must strive to ensure that the rules of access do not discriminate between supplying countries, competing products, and primary and processed forms of a product. The Canadian Wheat Board would like to see increased market access to Brazil and the EU.

With regard to non-tariff barriers, we also agree with earlier presenters.

Coming down to one of the issues that's closer to our core values, the Canadian Wheat Board is a commercial enterprise that markets wheat and barley on behalf of western Canadian farmers. The Canadian Wheat Board operates according to established trading rules and fulfils all reporting requirements of the WTO.

Six reports and one audit have proved that the Canadian Wheat Board operates fairly in export markets. The objection to state trading enterprises, and specifically the Canadian Wheat Board, has thus far been based on hypothetical grounds and unproven allegations of non-commercial sales behaviour. The Canadian Wheat Board has undergone repeated investigations by the U.S. and it has been shown to operate within trading rules each time. I might note that all of these actions require significant input and effort on behalf of the Wheat Board staff.

The U.S. has been calling for the disclosure of commercially sensitive information. This would place Canadian Wheat Board customers and farmers at a commercial disadvantage. We would suggest that if increased information is needed, both private sector and STEs face the same information requirements.

Currently, the Canadian Wheat Board reveals more information about its operation than most other grain marketers. Our position is that business enterprises should be assessed on the basis of what they do and not on how they are structured. In that regard the debate over STEs should be objective rather than based on philosophical or political views.

We also have some comments on the free trade of the Americas in our paper, and I'll leave that for your perusal.

In conclusion, as we consider the upcoming round of international trade talks and the future prospects for agriculture, we must ensure that we do not once again acquiesce to a watered down agreement for subsidy reduction. We need to re-evaluate what should be considered acceptable levels and conditions of domestic support for agriculture if producers are to compete fairly on a global scale.

• 1220

We must establish clear guidelines for the application of export credit and market promotion programs to avoid circumvention of other subsidy reduction commitments. We would continue to seek greater market access, including improved regulations governing tariff reduction procedures and non-tariff barriers.

Finally, the type of marketing system a country chooses to operate is a domestic decision. STEs are a legitimate element of the world trading framework and they should be evaluated based on their actions. We recommend that the government strongly defend Canada's right to structure its domestic industry in a manner that it decides.

We do have a short handout here. If you want to take some time at your leisure to go through this, it only takes about three minutes to go through the highlights, and it does give some significant statistical data that the Wheat Board feels is important.

Again, thank you very much for your time this morning.

The Chairman: Thank you very much, Mr. Hill.

Mr. Penner.

Mr. Dave Penner (Vice-President, Manitoba Chamber of Commerce): Thank you, Mr. Chairman and committee members.

First of all, as the vice-chairman of the Manitoba Chamber of Commerce, I'd like to extend to you our welcome to Manitoba, as well as to thank you for the opportunity to present one of the many resolutions that could have been passed at a Manitoba chamber level, but at this point this is the one that has been passed.

I will be brief. Canada's sugar beet industry was touched on by the Minister of Agriculture. Canada's sugar beet industry is a low-cost supplier and it is able to compete successfully in a fair and free international market. This industry has made significant contributions to the national economy, providing thousands of jobs in both the production and processing of a high value-added product.

However, two provinces' plants have now been closed, one in New Brunswick and one in Manitoba. And the national industry is operating far below the level that would occur under free and fair trade. Action is required to allow this industry to contribute to its full potential to the Canadian economy.

The Canadian sugar beet industry has the competitive advantage to prosper under a free trade environment, but presently only 7% of Canada's domestic consumption is supplied by the sugar produced in Canada, even though we are a low-cost producer. This is because the industry faces significant competition from foreign treasuries throughout the world and prohibitive trade barriers to our nearest export market, the United States.

A report to the Manitoba government called Manitoba's Sugar Industry, An Opportunity in Manitoba's Long Term Plan confirms that the international price of sugar has been highly distorted due to the actions of the government in nearly every sugar-producing country in the world.

As a result, the average sugar price in the domestic markets of developed countries that export sugar has been two to three times as high as the price for sugar traded in the international market. This is well-documented.

Canadian sugar beet producers want to promote free and fair trade in sugar with the U.S. and other countries throughout the world. Creating the jobs and significant economic development for Canada from the sugar beet industry is dependent upon reaching new trade rules, both in the long-term and the short-term.

These new rules must allow the Canadian sugar beet industry to realize its potential through free trade, or at least fairer trade. The Canadian International Trade Tribunal has placed countervailing duties on refined white sugar being dumped in Canada. These do not cover raw sugar that forms the vast majority of imports, and these non-permanent measures do not address the substantial restrictions on Canadian exports of refined beet sugar.

Specifically, regarding access to the U.S. sugar market, Canada has faced restrictions that have reduced refined sugar shipments from 56,000 tonnes in 1994 to 12,500 tonnes in 1997-98, with no increased access from the current levels to occur in the future. This reduction happened at the same time the NAFTA and WTO negotiations were taking place.

Mexico gained an increased access to the U.S. from their base level of 7,000 tonnes to 25,000 tonnes in their first year starting in 1994, to 250,000, or a quarter of a million tonnes yearly, nearly 20 times as high as Canada, in the year 2001, with unrestricted access in the year 2009. With Mexico's sugar production in the range of five million tonnes per year, this will not be hard for them to fill.

• 1225

It is estimated that with an improved national trade policy, the Canadian sugar beet industry could create added employment for up to 15,000 people in the equivalent of 3,000 full-time jobs, with tax revenues of up to $30 million per year to the provincial governments and much more at the federal level. These new jobs would be in a high value-added industry, where the final product is ready for the end user fully processed and packaged.

So we have two recommendations. One is that the federal government should prepare to negotiate for other countries to implement free trade policies for sugar during the upcoming WTO negotiations. Our second recommendation is to negotiate with our U.S. neighbour under NAFTA to allow increased exports of Canadian sugar to the United States.

This is the same paper I presented at the Canadian Chamber of Commerce in the fall, and it was adopted there in its entirety.

All of my aforementioned arguments in this presentation are supported by the Canadian Sugar Beet Producers' Association in a paper called “Positioning the Canadian Sugar Beet Industry for the Future”. very importantly, our resolution does not request any government subsidy.

The Chairman: Thank very much, sir.

We may run over time, but we'll go to questions. Try to keep them to five minutes.

Mr. Charlie Penson: Thank you to the panel for being here. I certainly sympathize with members having to be restricted to a five-minute presentation. It is very difficult. I've made presentations to committees like this in the past myself.

I think everybody knows the historical background to agriculture, but it's important just to recap it briefly.

Agriculture was not part of the trade rules until this last Uruguay Round. It's always been a difficult sector to try to harness that way. Especially on the basis of the trade wars between the United States and Europe in the mid-1980s, there was a recognition that led to the Uruguay Round being successfully achieved with a modest start for agriculture.

So the modest start meant, let's get agriculture started. We realize it could only probably get about a 15% reduction in tariffs and subsidies, but let's convert everything to tariffs. We'll try to achieve the bulk of the work in the millennium round, in the round of 2000.

That's where we're at now. So those significant expectations have been created for the export-oriented industries. Beef, oilseeds, grain producers, these export-oriented industries need to have these subsidies very badly in Europe, in the United States, Japan...market access improved.

Just a reminder. There was about $70 billion in subsidies by the European Union alone last year. And we wonder why our Canadian products being sold into third countries are meeting stiff opposition and they can't compete on price.

So that's the background.

Both in Ottawa and in other places I've heard a lot of people come and say they want market access, tariff reduction, subsidy reduction by other countries. But don't touch us here; leave us alone. And let us decide domestically how we're going to achieve those goals ourselves. Isn't that a bit contradictory? We're asking for other countries to give us market access and to reduce their subsidies. Don't we have to do that ourselves?

Mr. Chairman, basically the question is whether or not this so-called balanced position for Canadian agriculture is possible. If you imagine yourself as a trade minister or a negotiator going to the table and asking for others to give up their big subsidies on agricultural products, domestic and export, to reduce their tariffs, and then they ask us, what about you, what are you going to do.... Can we have a balanced policy and try to achieve the very things that have been mentioned here—market access, tariff reduction, and subsidy reduction? I put it to you.

• 1230

The Chairman: Do you want to pick up the challenge, Mr. Tait? Your presentation seemed to be in fundamental disagreement with some of the premises.

Mr. Fred Tait: Yes. I've heard this argument before. The argument is made that we, as the farm community, should give up market power for market access. Our brief explained how powerful some of the players are in that international market. The evidence is that in any place we give up market power in return for increased market share, we end up with a lower net farm income as a result of that exchange, and every other player in the system does better. Any power that we as farmers relinquish doesn't run off into a vacuum; it's transferred to other players in the food system.

That's why I'm so very adamantly opposed to any tinkering with supply management and with the single-desk powers of the Canadian Wheat Board, etc.

The Chairman: Okay.

Mr. Swan.

Mr. William Swan: Referring to the market access in dairy, everybody agreed to go to 5%. Canada is at 4%, the Americans are at 2%, and Europe is at 3%. We're asking everybody else to get to the same level before we start reducing our levels any further.

The Chairman: Mr. Saunderson.

Mr. Brian Saunderson: I just want to make reference to the fact that other countries will probably be asking for the same thing. Probably the Americans will be out front asking for subsidy reduction and access improvement, but they also have sensitive, protected industries, namely dairy, sugar, and peanuts. I don't think we'd be the only ones who would talk with some sensitivity over some sectors.

The Chairman: Mr. Dewar.

Mr. Donald Dewar: I think Mr. Swan said pretty much what I was going to say. We're there, whereas the other countries aren't. We've got 91% of our quota fill, and the Americans, for example, are at 54%. So why do we go farther until they catch up?

The Chairman: Mr. Broeska.

Mr. Robert Broeska: Yes. I guess the question for exporters as opposed to the supply-managed side has garnered two different responses. But if we're going to negotiations, the export side of the industry, especially the oilseed sector, does not have anything to give. So our position in this round is to seek the zero-for-zero. We think that's the perfect balance. Zero export subsidies on one side, zero import controls or tariff or non-tariff barriers on the other. If balance means those pursuing liberalization, such as the export sector, are to give or to be compromised, our negotiators tell us that is really a non-position. Their hands would be tied and the negotiation would be between those who are prepared to negotiate something in exchange for that market access.

The Chairman: Thank you very much.

Madame Debien.

[Translation]

Mrs. Maud Debien: Good morning, ladies and gentlemen. My comment is for Mr. Saunderson. It concerns your document on Sanitary and Phytosanitary Measures. You know that the application of biotechnologies in agriculture is one of the most controversial questions in our society at the present time, not only in Europe but also in Canada and Quebec. The SPS Agreement on sanitary and phytosanitary measures deals with the safety and security of food, and aims to protect human, animal and plant health.

Your document states that science has clearly demonstrated that GMOs do not damage human health and the environment. We have heard researchers and scientists tell us that recombinant DNA could even, in some cases, be a pathogenic factor. We were given examples of genetically modified grain that had been sold in some countries and completely destroyed the crops. I do not want to say that always has this effect, but I was surprised to read that science had clearly demonstrated that there was no pathogenic factor.

• 1235

These researchers also emphasized that the WTO had no precautionary measures to consider the pathogenetic aspect of GMOs. Shouldn't the WTO introduce a precautionary measure in the SPS Agreement to the effect that these controversial genetically modified products could be pathogenic?

Another small sentence in your document surprises me; it deals with labelling. You said that labelling requirements worry consumers and constitute non-tariff barriers to trade. I would suggest that it would be better stated that labelling requirements worry producers. They are worried about labelling, not consumers, who, on the contrary, would like these products to be clearly identified as being genetically modified. These two statements in your document surprise me, because I recently heard the opposite.

[English]

The Chairman: Mr. Saunderson.

Mr. Brian Saunderson: Thank you for your question, Madam. It's a very important area—biotechnology and GMOs. I guess I've got a few comments.

Number one, I don't think we can address in any blanket statement all the products in this range. It has to be specific, on a one-product basis, and as we said in our paper, good science has to prevail. But the comment that the customer is always right is something producers have respect for. And the fact that canola has been locked out of Europe is something we are acutely aware of. I think producers have even spoken out about having some breaks on developments in pea technology, because Europe is so sensitive to the introduction of these products.

I have one more comment on canola, by the way. Most of the biotechnology work thus far has been on lowering the amount of what we call “active ingredient” of chemical applied to the crops, so the fact that less product is actually used to grow that product should be of interest to consumers.

On the subject of labelling, we threw out some caution in the paper about labelling, but I think if the customer demands it, worldwide, what we're saying is there have to be standards and discipline on labelling. We could look only to the WTO to apply that, because you can't have one country making outlandish statements on labelling, which might not be factual, that can't be checked by some world discipline.

The Chairman: Thank you.

Mr. Blaikie, sir.

Mr. Bill Blaikie: Thank you.

I have just a quick comment really, Mr. Chairman. People can respond if they like, but it seems to me that we see a parallel here between what is happening in the farm community and what is happening in many respects in the industrial community, if you like. Our exports are up, but workers' wages are not up over time as a result of the free trade agreement.

The same is true with farmers. Exports are up. The people who are doing the exporting...somebody at some level is doing well in this, but at another level people aren't. When it comes to making things and exporting them, the people who are actually making the things aren't doing all that well. There was an article in the paper just the other day that said Canadian workers aren't any better off in real dollars than they were 20 years ago. A similar thing is happening in the agricultural community, and it seems to me it's worth exploring. It certainly reinforces my own skepticism about the worthwhileness of these agreements.

It seems to me...and I refer to something Mr. Hill said about wanting to have negotiations that have no political or philosophical dimension. This is an illusion. This is a complete dream. This is all about politics and philosophy. As far as I'm concerned, the WTO is all about imposing a certain view of economic activity on the rest of the world. It's the American model of what is “right” economic activity and what is “wrong” economic activity.

• 1240

The attack on the Canadian Wheat Board and on orderly marketing, and on all other kinds of things, is just politically and philosophically motivated. That's what's going on at the WTO. I know you have to say these things, but this is what's really happening there.

STEs are targeted, and there will be trade-offs, and until the rest of the world says we don't want to be coerced over time into modelling ourselves after America, we're all going to end up having exactly the same kind of economy as they do. That's what the whole thing is about. No one is willing to bell the cat and say that's what's going on. I think it's something that people should maybe come to terms with and be franker about. That's what I'm trying to do.

The Chairman: Does anyone want to pick that up, or will we take that as a statement rather than a question?

Mr. Hill.

Mr. Larry Hill: I'm guessing with this number, but I suspect that 80% of the durum that's grown in western Canada comes from district three, which I represent.

When the producers in that area saw one U.S. government move take the incentive to grow durum away from them, they were very cynical about this. The price of durum dropped about $40 a tonne in a matter of days. There were negotiations. I don't recall the exact numbers, but it started out at $1.85 a bushel over dark northern spring. Through negotiations it came down to $1.65 over, and it went down to $1.18 over. There was a court ruling, and it's back up to $1.65 over.

The producers in my area are very, very cynical about the value they're getting out of these agreements. That's why they want to urge Canada's negotiators not to give away anything else. They're down to the bottom line; they don't have anything to give.

The Chairman: Thank you very much.

Mr. Broeska, you want to add something.

Mr. Robert Broeska: Yes, I would like to say a couple of words in response to Mr. Blaikie's statement. I don't think you can make a blanket statement like that on all sectors of agriculture.

Certainly in the oilseeds sector, under the Canada-U.S. Free Trade Agreement, the NAFTA, and the first phasing of the Uruguay Round implementation, investment in oilseeds at the farm level and at the processing level has doubled in about a 13-year period. That investment has not been made because of poor or negative returns. It has been made because it's a growth sector, and free trade has enhanced the ability of the industry to grow on the basis of exports.

The Chairman: Thank you.

Mr. Tait.

Mr. Fred Tait: This whole discussion about value-added processing needs to be brought into some reality. The price a processor will pay, whether it's for canola, whether it's for wheat, or any other grain here in Manitoba, will be world price, backed off for freight. That's the formula.

Also, it's difficult for us to come up with any farm statistics that show that value-added processing on the prairies has given any change in positive terms to net income in the farm community because of that formula, world trade backed off for freight.

The Chairman: Mr. Saunderson.

Mr. Brian Saunderson: To address this premise that increasing exports is not helping farmers, I have some sensitivity to the remarks. But to support what Larry has said, farmers in countries that don't have the domestic supports and the export subsidies on their behalf are probably the most astute market watchers in making their decisions based on solid market signals. We are very keyed into supply and demand. If the supply is there, the market will follow with price and we'll be rewarded. The more we can achieve the goal of diminishing export subsidies and trade-distorting domestic support, the more we'll get to a true market economy in the world, and that does help producers.

The Chairman: Mr. Pickard.

Mr. Jerry Pickard: I think there's quite a debate going on right now about trade and how it's happening.

When it comes to the supply-managed sector in Canada, it has been under attack, and I think that's unjust. I think the supply-managed sector in Canada is very much a domestic sector and only a domestic sector. It's not enhanced by trying to trade outside Canada or deal outside Canada. As a result, I think that system has served this country extremely well and is very important to this country.

• 1245

Most of our products come from trade areas and we then compete with other countries. I'm hearing, from those in production that are competitive with other countries, that it's very important that we make opportunity equal, for Canadian producers and Canadian industry, to other countries. I totally support that.

I well support the fact that Mr. Enns made it very clear that Manitoba is much better off, and he talked about the economy in general. As the agriculture minister, he said very clearly that value-added production and our sales abroad have increased and have made this province much better, much more competitive—looking at going ahead in the future.

I was very concerned when I saw a statement from the National Farmers Union from Mr. Tait that suggested we refrain from negotiating any further trade agreements. Every commodity organization that has come in here has said there are areas we must negotiate. We must negotiate fairness. We must get rid of the trade barriers we have to other countries.

I have difficulty because I interpret Mr. Tait's comment as saying the status quo or nothing. I'm hearing from everyone else that the status quo is not good enough. As a matter of fact, I thought I heard from Mr. Tait that the status quo was not good enough because the farm income was dropping substantially.

How do you rectify Canada taking a position of the status quo and not negotiating and saying the farmers aren't benefiting, and the rest of these industries saying that getting rid of the barriers would be good for them?

I direct that to Mr. Tait, and possibly others might comment.

Mr. Fred Tait: That may have been partially my fault, due to time constraints and the complexity of the issue, which is different from what we're saying. We're saying in this brief, it's very clear—they're not our statistics, they come from Agri-Food and Statistics Canada—that so far the direction we have followed in international trade negotiations and agricultural goods has led to declining net farm incomes.

In our brief on page 6 we said let's do what a business normally does. We said let's evaluate the success of what we've done so far in meeting the objective of increasing net farm incomes. It's obvious that hasn't happened, so let us not proceed along the same path of total deregulation in agricultural food, when we know from past evidence that fails my community. We're saying let's evaluate and find out why it failed my community.

I cannot come here before you and tell you I would ever endorse following the same path, because I live every day with the destruction. I live every day with the loss of neighbours. I have lived through the suicide of two very close acquaintances. If projections are right, over the next five years, as a result of what we've achieved so far without any further negotiation, I should lose 25% of my neighbours.

If I don't progress any further and I look at what Agri-Food Canada says about the projected profits in the hog industry, they should drop dramatically, according to the graphics in this report. If we don't progress any further at all in the direction we're going, as sure as you and I are in this room, and we follow this same agenda of trading off our marketing power.... As producers, we've had marketing power on occasion. Single-desk selling is marketing power. Supply management is marketing power. Regulation of freight rates is market power. We're trading those things away. As I said, they don't disappear; they go to another player that's better positioned in this structure.

So when we trade away market power for increased market access, we trade away net income. We trade away net income for increased market access so we produce more for less. The statistics are clear. This is not something we fabricated. This came from Agriculture and Agri-Food Canada; it came from Statistics Canada. We're urging you not to proceed along this route any further.

• 1250

Find out why it turned out this way. How come everybody else in this food system has done enormously well? In 1998 we had new all-time records in profitability in the food processing sector, at a time when farm incomes in real terms were as low as they'd been in 1932. In 1999 it's worse, where we're projecting no income at all in the province of Saskatchewan.

That's where I'm coming from, and I don't think it's an unreasonable position to ask you, as our elected representatives, to find out why this enhanced trade has had such a negative impact on only the one sector in the food system.

The Chairman: Mr. Dewar.

Mr. Donald Dewar: I don't disagree a bit with Mr. Tait on the economic effects we're seeing in the countryside. Again, I look at it maybe a little differently as to the causes; I think the Canadian government has virtually abandoned domestic support to most areas of agri-food. Mr. Swan could comment on the level of domestic support received in dairy once they finish the dairy subsidy cut in three years, I believe it is.

I think the point that has to be clearly made is that our government is far and beyond ahead of every other country out there in levels of support. We have reduced our support, and in our view at Keystone Agricultural Producers, that's part of the reason we are suffering vis-à-vis other countries, because other countries have continued to support at levels beyond that which is acceptable. The GATT set some rules up and set some ground rules. We went way and beyond. We had to reduce our export subsidies by 37%, I believe it was. The Crow disappeared—that's 100%—and it disappeared from agriculture, which was worse yet.

So I think we have to look at the effects of what we've been doing at home while we're in this world economy, and yes, perhaps increased trade can help us, but we need to work toward a level playing field. If we go further down the road without bringing other countries closer to us, that's going to be disastrous in the countryside.

The Chairman: We've got to wrap up now, but maybe I could just ask Mr. Tait the last question, because this is what we're trying to struggle with. I didn't understand you saying in your brief about staying with the status quo, but we're either going to have to move forward or move back. We're either going to get out of these agreements or we're going to have to try to go forward.

Picking up on Mr. Dewar's point, and what we've heard from many others, the reason the farm producers themselves are not getting the benefit of these free trade agreements is precisely because other countries haven't...they may have open markets, but the European Union continues to subsidize exports so that we don't get decent prices in our export markets. The United States has subsidizing programs. They disguise them as loans; they call them whatever they like. They haven't given up these practices, and as a result the world prices are not reflecting what the level playing field should be.

So do you believe there's a future—if we could go forward and actually get other countries to discipline themselves, then those prices would start to flow through to your members and flow through to the benefit of farmers. Or do you say we should try to somehow opt out of the world and go back and sort of put a closed border around ourselves? I know I'm positing it in a way that makes it impossible to do. But do you understand what we're trying to struggle with here?

Mr. Fred Tait: I understand exactly what you're trying to struggle with. But what evidence is there that we have achieved any degree of success for my community since we went into this round of deregulation in agricultural goods?

People also say to me what we want to do is put in place a rule-based system, yet free markets are about not having rules. There's a contradiction even in that approach that I see.

The other issue, and I think it's an issue you as members of this committee really should look at, is what the stabilizing will be in the developing and third world as we increase this sort of market-driven agriculture.

I'll share with you my own observation. I was in the Philippines for two weeks. They have 23 million people supported by basic agriculture out of a population of some 65 million. The average farm is 1.4 hectares. The theory is if they were to go into an international trade agreement in agriculture, they could import their foodstuffs, export some other higher-value crops, displace probably in excess of 21 million people from the land, and put those people into industry. Then you ask the question, which industry? Are we going to replace another higher-wage industry from some place else in the region? Then it starts to get dicey. Or you ask, is it going to be new industry? If it's new industry, where is the increase in consumer income and demand in this globe that could absorb that level of industrial production?

• 1255

Then you say, well, surely to make this sort of change needs a lot of planning. Planning is certainly against this deregulated sort of model, but planning would be needed in infrastructure, in education and schools, the whole thing. You could do it over 20 years, but market forces cannot make the changes we're talking about making on a global scale without some enormous uprising and violence.

I am not opposed to making this world a better place to live in, but I believe we collectively, through our elected officials, through our community organizations and groups like KAP and the Farmers Union and so on, can go a long way in helping you design that system.

I think too often in our whole discussion—you heard it here presentation after presentation today—the answer is production and market access, more production, more market access.

The signals are all here. It's been a disaster for my community. It's been a disaster for all the communities around the world in agriculture that have been affected by this. Let us not proceed any further down this road until we can rearrange the benefits so that we come out equal players in this, not devastated communities.

The Chairman: Thank you all very much. I appreciate everybody condensing their papers under the exigencies of time.

I'm very conscious of Mr. Tait's criticism when he started his paper, but I hope you'll understand our problem. We've split our committee in two, so half are out west and half are here. We've been in Quebec and the Maritimes. Believe me, we will have heard a great deal from agricultural communities all through the country. We've heard a great deal in Quebec and we will be hearing out west as well. Through that we hope we can distill some wisdom that we'll be able to put into our report to the minister to try to guide our negotiators when the negotiations commence in November, if they do commence, in the WTO.

I think agriculture and some of the services industries are on the table, so we'll have to get involved in those negotiations anyway, and we hope we can have some wise advice for them when we go into it.

Thank you all very much for coming. We appreciate that.

Members, I just want to remind you that we really will have to start again at 1.30 p.m. I know we're running behind, but if we don't start at 1.30 p.m. we'll be in serious problems. We have a 33-minute lunch break, no longer.

• 1258

• 1341

The Chairman: I'd like to call this session to order. I won't spend a long time on introductory remarks because we're running a bit late, and as you may have seen, we have a very crowded agenda this afternoon.

I'd like to say thank you very much to the three groups that are with us this afternoon. I don't know if you had an opportunity to watch this morning's session. If you could keep your introductory remarks to around ten minutes, that would give the committee members a chance to ask questions. We appreciate very much your being here.

I'll just go with the order on the witness list. I'd like to ask Madam Meyer or Mr. Clark from the Mennonite Central Committee Canada to start.

Mr. Stuart Clark (Program Services Director, Canadian Foodgrains Bank): Thank you very much, Mr. Chairman. Honourable members of Parliament, ladies and gentlemen, thank you for the opportunity to speak to you about our country's position at the upcoming millennium round of negotiations on the development of the World Trade Organization.

Let me start by introducing ourselves. I am Stuart Clark, the program services director of the Canadian Foodgrains Bank. My colleague, Marion Meyer, is the disaster and material aid response policy analyst for the Mennonite Central Committee Canada, the largest member of the Canadian Foodgrains Bank. We are presenting together because we work together.

It is often said that where you stand depends on where you sit, so I'd like to say a few words about our institutions and our reasons for taking time to be part of your consultation. The Canadian Foodgrains Bank is a consortium of 13 church-based relief and development organizations, which was first established by and for Canadian farmers in the late 1970s. The Foodgrains Bank is driven by the desire of Canadians, both farmers and non-farmers, to share food with those who are hungry and to work for their food security. We understand food security to be the promise of secure and reliable access to appropriate food at all times. Over the past ten years the work of the Canadian Foodgrains Bank has become increasingly focused on food security rather than on the simple provision of food aid.

The Mennonite Central Committee Canada is the relief and development arm of Canadian Mennonite and Brethren-in-Christ churches. Now 35 years old, the MCCC has a long experience working in both agriculture and food aid in over 50 countries in the world. Like the Foodgrains Bank, MCCC has a strong commitment to food security for the poor and marginalized.

During our work in the past two decades we have seen the profound effect macroeconomic policy can have on the lives of the poor. Hundreds of Canadians working with MCCC have had first-hand experience with the increasing vulnerability of the poor and marginalized as first structural adjustment and now trade liberalization have tended to tip the tables against them. It would not be an exaggeration to say that much of the work with marginalized people to strengthen their ability to feed themselves through agricultural development programs has in many situations been completely negated by macroeconomic forces.

• 1345

Our interest, however, goes beyond strictly the international. Those who are the backbone of the Canadian Foodgrains Bank and a very significant part of the MCCC constituency are themselves farmers. In many cases their farms produce products for export, and they are vitally interested in Canada's ability to compete fairly with other agricultural product exporters. Here, too, appropriate and fair macroeconomic and trade policy is vital, particularly for the relatively smaller farming operations. The issues surrounding the liberalization of trade in agricultural products are complex, and we recognize that different stakeholders sometimes have competing objectives.

We wish to bring to your attention three food security-related issues on agricultural trade liberalization that effect particularly the poor and marginalized in developing countries. We recognize that as a constituency, these people are not of direct political significance. However, in addition to our moral obligation as Christians to do all we can to support their right to food, in a globalizing world the poor and marginalized have a real and immediate impact on the welfare of all of us. Poverty and alienation are the precursors of a conflict of war, a reality we face each day in the Balkans. Those with no prospects do not sit idly by and wait. They move in search of better prospects and face us with the painful choice of barricading our borders.

With regard to our other points, Marion Meyer will address the first area.

Ms. Marion Meyer (Program Officer; Food, Disaster and Material Resources, Mennonite Central Committee Canada): The first area I would like to address is freezing further negotiations on the agreement on agriculture. There are a number of concerns around the implementation of the Uruguay Round agreement on agriculture and the future of the UN negotiation of the agreement on agriculture in the upcoming millennium round of World Trade Organization talks. The agreement on agriculture was designed as a set of rules for international trade in agricultural products in a way that is fair and that establishes a market-oriented agricultural trading system. The assumption behind this agreement is that trade liberalization has economic benefits for all, including the poor, although these benefits will trickle down to the poor after some time.

Trade liberalization is also based on the assumption that southern countries will be able to use their comparative advantage to export their products to other countries, including the north. This is only possible if the countries of the south have access to the same information as the countries of the north and have similar resources for gaining market share. In practice, it appears that trade liberalization has not delivered the promised benefits to the south. The developing countries' share of agricultural trade has remained at 5% from 1990 to 1996. Price volatility of agricultural products has meant that the poorest countries are suffering increased food insecurity.

While the Marrakesh decision on measures concerning the possible negative effects of the reform program on the least developed and net food importing developing countries makes room for compensation in such a situation, the developed countries have argued that there is no proof the agreement on agriculture has any causal effect, and they have refused to provide compensation.

Developing countries do not have the financial resources to devote to studies that can test the findings of the World Trade Organization or prove the negative effects of trade on food security. This places them at a disadvantage at the negotiating table. Many nations that formerly were self-sufficient in staple foods have become import dependent due to their compliance with the Uruguay Round rules, including required imports of all basic foods.

There is also a clash between the objectives of small farmers and export-oriented agribusiness. Low commodity prices have forced many small farmers off the land throughout the world, leaving the land available to large and wealthy agribusiness corporations. Structural adjustment policies of the World Bank and the International Monetary Fund have required that parastatal trading enterprises be dismantled in the name of trade liberalization, which has the further effect of exposing vulnerable small farmers to the volatility of international markets.

• 1350

While state trading enterprises in a democratic setting are accountable to the public they serve, trans-international companies are accountable to their shareholders, whose motivation is profit, not food security.

State trading enterprises in democratic settings play an important role in the food security of the poor by stabilizing prices and providing a price flow that ensures peasants' costs are covered. This aspect of state trading enterprises may be more clearly documented by doing an impact assessment of their role in the food security of the poor.

The topic of state trading enterprises is one that will be pushed at the next round of talks, particularly by the U.S.A., who would like to see these organizations of Canada, Australia, and New Zealand dismantled as a way to increase the market share of U.S.-based trans-international corporations.

Article 20 of the agreement on agriculture has made provision for reviewing the impacts of trade liberalization on the agriculture sector and on food security and environmental concerns. To date, no review has taken place. Canada has made a commitment to continue research on the impacts of trade liberalization in order to improve understanding of the elements contributing to food security and the measures needed to provide better access to food by all countries as part of Canada's commitment made at the World Food Summit.

Our recommendations for Canada's negotiating position at the next round of world trade talks are twofold. One, freeze negotiations on the agreements on agriculture for a period of at least two years. Resume negotiations once a thorough evaluation of the effects of trade liberalization on food security and agriculture has been conducted.

Two, provide funding for research on the impacts of trade liberalization on food security, especially that of the least developed and net-food-importing developing countries. This funding should first and foremost be provided to those countries for that research. Research conducted by developing countries provides them with the information that will strengthen their ability to negotiate more effectively at World Trade Organization talks.

Without research on the impact of trade liberalization, it makes no sense to freeze the negotiation of the agreement on agriculture. Freezing negotiations without food security impact assessment makes it possible for those countries the agreement on agriculture benefits the most to continue to gain market power while further disadvantaging those countries who have less resources.

Stuart will now speak to our second area of concern.

The Chairman: I don't want to interrupt you, Mr. Clark, but I'm trying to keep you to ten minutes.

Mr. Stuart Clark: How much time have we had?

The Chairman: You've already had 12 minutes, and you haven't even got to page three of nine pages. There won't be any time left for anybody else to make a presentation. So you just can't read what's left. I'm sorry. I'll give you two minutes.

Mr. Stuart Clark: That's perfectly acceptable to us.

The Chairman: Great. Thank you very much.

Mr. Stuart Clark: There are two areas we wish to finish with. First is the area of support to small farmers. Most of our work in the field of agricultural development has been on the topic of small farmers. Many of these small farmers are the main sources of food for themselves and their compatriots. They face increasing threats when agricultural supports, both technical and financial, are removed, and in some cases from dumping of agriculture products from the U.S.A. and the European Union.

Trade liberalization, as it's currently practised, has a built-in bias against these small farmers. We therefore recommend that the overseas development assistance to small farmers, an area which is peripheral to but still linked to your committee's considerations, be increased. While this is not directly a part of the World Trade Organization negotiations, it's key in offsetting the negative food security implications of trade liberalization on the poor. CIDA, over the past ten years, has reduced its support of food security programs by more than 60%. This should be corrected by restoring support to this sector to the level of the 1980s.

Our third point relates to the very complex area of the trade-related aspects of intellectual property rights. In summary, 70% of the world's farmers depend upon farmer-supplied seeds, often their own seeds. The assurance that they will continue to have access to that seed is vital to their food security. We therefore recommend that World Trade Organization members should have the right to exclude living organisms from patenting, and farmers' rights to collect, use, exchange, and sell harvested seed—as they have done for generations—must be protected.

• 1355

In closing, I simply want to say that the other pages attached are a declaration of a consultation held last week in Zeist, Holland. I was the representative and observer from the Canadian Foodgrains Bank. This brought together civil society representatives from 57 countries to reflect very deliberately on the impact of trade liberalization and structural adjustment on food security. It's not a long document, but it reflects the only civil society position from the south on food security and trade liberalization I'm aware of, and I recommend it to your committee. Thank you.

The Chairman: Thank you very much, Mr. Clark.

When we were in Quebec we heard quite a bit about the problems of genetically altered products, particularly the grains that cannot be reproduced and things like that. This is very helpful and will reinforce our understanding of that issue. We appreciate that.

The next presenter is from the Appraisal Institute of Canada, Mr. Peter Clark.

Mr. Peter Clark (President, Appraisal Institute of Canada): Thank you very much, Mr. Chairman and members of the standing committee.

I am the president of the Appraisal Institute of Canada, and I have with me, Mr. Terry Gifford, who is our executive vice-president. Our institute was established in Winnipeg over 60 years ago, so we feel very comfortable being here, and we can probably extend our best wishes for you being here too. Thank you for coming to Winnipeg.

We've distributed copies of our submission in both official languages. Therefore I'd like to take a few minutes to draw your attention to what we see as the major issues that should be addressed in support of Canadian interests and negotiating objectives, particularly in the services sector. Then I'll be glad to answer questions.

The Appraisal Institute of Canada represents about 5,000 professional real property appraisers. Many of them are employed in major international real property consulting companies, major financial institutions, and federal government agencies.

The institute is dedicated to serving the public interest by maintaining high national standards of professional practice in the analysis and evaluation of and counselling on real property matters. Our members are active worldwide. Naturally, the large markets of the United States and the Pacific Rim are highly important in trade terms, but many of our members work in or have strong alliances with developing countries.

The valuation and appraising profession provides vital services in developing economies, investing in the development and expansion of their infrastructures, for instance, buildings, construction, property assessment, taxation, and supportive services. In this current environment of the liberalization of investment regimes and negotiations toward international agreements on investment-related issues, the real estate sector and the regulatory environment are of central importance.

Property typically composes the largest single element of fixed capital in a developed country, where the value of development and construction will be 10% to 20% of the gross national product. There is, however, a danger of a mismatch between a liberalized global economy with strong, free capital flows and a heavily restricted property sector burdened by particular countries' restrictions.

Little attention has been paid to the confusion the mass of differing regulations can cause investors. Despite the relatively high levels of funds flowing into property markets around the world, the real estate sector continues to be governed by very complex, state-specific regulations that can easily distort, deter, or penalize capital flow.

In the Philippines, for example, land ownership is limited to entities that are at least 60% Filipino-owned, and foreigners cannot own more than 40% of the units in any condominium or residential project. In the Gulf Cooperation Council countries, investment from non-council countries is banned. For the acquisition of non-industrial real estate, Malaysia's land code requires foreign companies or individuals to obtain approval from the state authorities, who have been reluctant to transfer properties to non-nationals. In China, for instance, foreign-invested enterprises may obtain, at best, land-use rights, but may not own land.

• 1400

Within the World Trade Organization forum, the Appraisal Institute of Canada has a number of aims. One is to ensure that in any agreement on investment there are guarantees of property rights, investor control, investor protection, adequate dispute settlement procedures, and guaranteed compensation for all confiscations. Any agreement on investment must remove all national restrictions on foreign ownership of property and other real estate investment barriers. The second is to develop a transparent set of international standards that will attract investors while acknowledging the principle of government control over territory—the two needs are mutually consistent. The next is to harmonize property market services. There has to be equal and fair access for property market service providers worldwide. This must also include a degree of harmonization of standards to create, at the least, a minimum standard. We need to encourage the real property profession to reach an agreement on harmonizing their valuation methodologies. We need to encourage global ethical standards in the real property profession and to increase market transparency in order to reduce the potential for corruption. And finally, we need to encourage the harmonization of planning and development procedures, as well as environmental, health, and safety standards.

We understand that the World Trade Organization has a working party on professional services to develop more specific measures for implementing the General Agreement on Tariffs and Trade as it affects professions, and earlier this year the working party issued guidelines for mutual-recognition agreements on arrangements in the accounting sector. We recommend that the working party be asked to extend the scope of their mandate to develop complementary and consistent guidelines to cover the real property sector.

We hope you find these comments useful. We'd be happy to discuss them with officials and would appreciate being kept in touch for any new developments relating to the World Trade Organization and the free trade area of the Americas. Thank you very much.

The Chairman: Thank you, sir.

Next is the Canadian Union of Public Employees, Mr. Moist.

Mr. Paul Moist (President, Canadian Union of Public Employees): My name is Paul Moist. I'm glad we didn't have to come through the picket lines to get here, Mr. Chairman. It might have been different a few weeks ago in Ottawa.

The Chairman: I hope you're observing them all.

Mr. Paul Moist: Mr. Chairman and members of the committee, CUPE represents about one out of every 65 Canadians in all ten provinces in the broader public sector, and we're pleased to have the opportunity to be here today to speak to this parliamentary committee.

I'll run quickly through to the recommendations section of our brief, but on the first page, we urge you to use this so-called millennium round of negotiations to give priority to negotiating a new framework that makes social and environmental considerations integral to any new agreements. We also mention at the bottom of our first page that our country's participation in regional trade negotiations can and should contribute to developing a new framework for international trade. We urge you in the FTAA negotiations to incorporate enforceable commitment to core labour standards. Our country ought to be supporting a levelling-up of living standards throughout the Americas.

In the body of our brief, Mr. Chairman, we talk about concerns with the NAFTA and MAI models—and I'll run through those very quickly—those being top-down processes. By that we mean governments have to anticipate all possible areas of social and environmental policy that could be impaired by broad trade obligations and then draft safeguards. We think it needs to be much more of a bottom-up process.

• 1405

In regard to inadequate protection for health and social services and environmental protection, at the bottom of page 2 we talk about Canada's reservations for health and social services within NAFTA, and as of yet there have been no interpretations under any NAFTA rulings on the meanings of “social service” and “public purpose”, which concerns us greatly.

Thirdly, we are concerned with those two previous agreements and their restrictions on performance requirements and prohibitions on national content laws.

Fourthly, under the heading of expropriation and compensation, NAFTA rules regarding expropriation create formidable obstacles to a government planning to establish new public health and social services or to expand existing services—key priorities of all Canadians.

Finally, under the heading of concerns with those previous agreements is the issue of unaccountable dispute settlement procedures, and we make some comments on NAFTA chapter 20 and other provisions.

Mr. Chairman, we talk about Canada's experience under NAFTA and some of the negative experiences. The first term of the current federal government introduced plain packaging legislation for tobacco products. That legislation had to be shelved and hasn't been reintroduced because of the threat of NAFTA sanctions. That's putting a chilling effect on desired public policy.

Take for example the Ethyl Corporation settlement. Our government banned the use of this gasoline additive, MMT, to protect the public and our environment, and last July the federal government announced it would lift its ban on importing and transporting MMT and settle with Ethyl out of court for about $13 million. That settlement confirmed the worst fears of us and others under NAFTA.

One impending national issue, in our view, is water and the pressure on Canada to export drinking water, which will have an impact on our freshwater systems. We mention on page 6 of our submission that the Sun Belt Water Inc. currently is seeking $400 million in compensation from the B.C. government in response to their banning the bulk export of water. Our country, at the federal and the provincial levels, needs identified water policies. There are NAFTA overtones to water.

Mr. Chairman, we'll conclude with our recommendations for elements of a new framework for international trade and investment agreements. There are nine of them, and I'll run through them very quickly.

One, withhold support for new liberalization initiatives until a strong social and environmental framework has been established at the World Trade Organization.

Two, insist that future trade and investment negotiations are a bottom-up process, requiring positive commitments for trade obligations.

Three, require any future agreement to include a narrow definition of “expropriation”, consistent with the meaning of the term in Canadian law.

Four, oppose the inclusion of any investor-state dispute settlement mechanism to avoid the Ethyl-type situation I just spoke of.

Five, propose more accountable procedures for resolving trade and investment disputes. And we say here that international trade and investment disputes should be resolved through mechanisms that more closely resemble democratic judicial proceedings, including, among other things, making proceedings public, allowing for third-party interventions by individuals and NGOs, and providing for appeals.

Six, negotiate an enforceable workers' rights clause as an integral part of any future agreements.

Seven, negotiate environmental provisions that take precedence over trade obligations.

There are two more. Link liberalization measures to the trade and transfer of resources to support improved living standards in less-developed regions. Our country has a responsibility to raise those issues on behalf of trading partners who need those standards.

Finally, improve consultation with all Canadians. These current consultations are an improvement on those that didn't exist under NAFTA and MAI; however, there is no formal process that ensures adequate public consultation and review of future trade and investment agreements. We cite the Australian government's recent introduction of legislation that establishes a formal review process involving both the Commonwealth and state legislatures.

• 1410

As is the case in water, we can't talk about water just at the federal level. All three levels, the civic/municipal, provincial, and federal levels need to be involved in those consultations.

Thank you, Mr. Chairman.

The Chairman: Thank you very much, sir.

We turn to questions then.

Mr. Charlie Penson: I'd like to direct my questions and my comments, to begin with, to Ms. Meyer.

I notice you've said in your brief that a very significant part of the Mennonite Central Committee's constituency are themselves farmers. In many cases they produce products for export, and they are vitally interested in Canada's ability to compete fairly with other agricultural exporters. You go on to say that our trade agreements have not delivered the benefits.

I would just like to remind you that agriculture was only brought under trade rules for the first time in the Uruguay Round, and then it just had a very modest start. So there was roughly a 15% start in order to encourage countries to think about trade liberalization with the idea of having substantial reductions in subsidies and tariffs in this next round. Therefore, the point was brought up this morning by other people that the benefits haven't been delivered, and I would agree with you, but I can't quite understand what you're proposing.

In my constituency I have a lot of grain farmers who want this negotiation to happen very badly. They see benefits coming to themselves if we can phase down subsidies and tariffs worldwide so that we can compete on the basis of production, rather than fight the treasuries of the European Union or the United States.

There's a lot of Mennonite farmers living in my constituency who are very interested in pushing for that. So I can't quite understand how you would make the association that the farmers from your constituency, the Mennonite Central Committee, would want to take that approach to freeze negotiations.

Ms. Marion Meyer: Mennonite farmers are concerned about two things. One concern, of course, is meeting their own bottom line and being able to compete in international markets. Their second concern is an ethical issue about the fairness of trade liberalization, which goes beyond just dealing with the issue of subsidies and tariffs. This is why I believe that Mennonite farmers are concerned about the fairness of trade liberalization. So it's a complex issue.

Yes, they believe we need to push for these issues of subsidies, for instance, but there are so many more issues to the agreements on agriculture than just subsidies and tariffs and tariff quotas.

With the European Union's decision last week to continue CAP, their common agricultural policy, for the next ten years, in any event, the question becomes, how easily are we going to be able to dismantle those subsidies anyway in this next round? So why not freeze negotiations and discuss all the other issues at the same time anyway?

Mr. Charlie Penson: Further to that, you seem to be suggesting that in order to help farmers in developing countries...that trade liberalization hasn't helped them, and I gather from this that you think it's not going to help them.

My understanding is that a lot of these people would rather have market access into countries like Canada and the United States rather than aid. They would like to be able to produce products. If they can compete on the basis of production in those developing countries, they would be far better off than being on the dole, if you like, in terms of accepting handouts. How would you respond to that?

Ms. Marion Meyer: I would say that is accurate; people don't want to be receiving handouts. However, our experience in Mexico with NAFTA has shown that as long as you can be producing products there is a market for, particularly in the States, but that also includes Canada in North America, that's fine. In the case of industrialized agriculture in corn and beans, for instance, which is what the subsistence farmers in Mexico produce, they have completely lost their market even within Mexico. So the food security of those people has been severely jeopardized by the rules of NAFTA and the ability of industrialized corn production, particularly in the States, but that includes Canada, to undermine what they can get for a stable production in Mexico.

• 1415

Mr. Charlie Penson: So is the answer to have CIDA give them aid then?

Ms. Marion Meyer: The answer is not for CIDA to just give them handouts, but for CIDA to promote food-security-enhancing projects that include agricultural techniques and strengthening civil society in those countries to lobby for a better policy. It includes a number of things.

Do you have anything to add to that, Stuart?

Mr. Stuart Clark: It's very clear that trade liberalization does benefit agriculture in certain sectors in these countries. The export-oriented agriculture in vegetables, flowers, that sort of thing, signals examples of that.

Our concern is that the farmers don't want handouts, nor in many cases, for small farmers, are they necessarily able or necessarily inclined to want to engage in the global market. They want to produce staples for themselves and for domestic consumption. I don't think they want to mess with our agenda, so to speak, because these people will only eat by their own production of staples. They are often not a part of the cash economy. If we don't keep them in business, they have nowhere else to go.

Mr. Charlie Penson: How would you address the issue of the 134-member countries, most of them democracies, that have decided they want to pursue this at the World Trade Organization and they have signed on eagerly thinking that trade liberalization is a benefit to them?

Mr. Stuart Clark: Not wanting to get into a very long debate on this, because it could be a long debate, it is very linked to structural adjustment policies and their implications and to the orientation towards export agriculture.

If you have to operate under the kinds of structural adjustment regimes we've had for the past 15 years, then you have to be interested in export agriculture and you have to be at the WTO table. Whether or not that's good for the food security of the poor is a very important question.

The Chairman: Thank you very much. You have been very helpful.

Madame Debien.

[Translation]

Mrs. Maud Debien: Mr. Moist, you have said that we should use the upcoming round of negotiations to include social, environmental, and human rights issues. We know that the International Labour Organization and some major UN agencies have similar mandates. However, we also know that those major organizations have absolutely no enforcement, no sanction powers, contrary to the WTO.

I would like you to tell us how we could integrate the basic ILO labour standards in the WTO labour rules. Do you think that the ILO might become the executive arm of the WTO with respect to labour standards? Should the WTO create another agency that might be responsible for all human rights, labour standards and social clause issues? I would like to have your opinion on this. Have you made any specific recommendations? Have you done any soul-searching in this regard?

[English]

Mr. Paul Moist: Mr. Chairman, I have been thinking about those issues, as have many Canadians. I think instinctively that the citizens of our country do link the issues of environmental standards and human rights with trade issues. We only need to watch how we greet certain leaders of foreign countries whom we want to trade with. Canadians have made that link between our responsibilities as a first world nation to do commerce around the world that supports fundamental human rights in other nations.

• 1420

The ILO and all of the various conventions that the Government of Canada and the ten provinces have signed on to is not serving a good legal purpose, because those are just statements attached to our UN obligations. I don't know if the ILO could become the executive arm of the WHO, but the principles that the ILO stands for that Canadian trade unionists and governments throughout Canada have signed on to are principles that have to envelop our approach to all international and regional trade discussions.

So I know that the Canadian Labour Congress and our national president from CUPE will be addressing these committee hearings as well. We're very frustrated at devoting time towards the efforts of the ILO, the International Labour Organisation, which we thought the Government of Canada valued, only to have those principles not followed in trade discussions. So there needs to be an executive or some other arm of the WHO and all venues for trade that involve Canada that includes the principles of the ILO. I couldn't agree with you more.

The Chairman: Mr. Blaikie.

Mr. Bill Blaikie: Thank you, Mr. Chairman.

First of all, with respect to the presentation of the Appraisal Institute, I feel compelled to say that I don't understand why it's wrong for countries to want to prevent significant percentages of foreign ownership of their land.

I wish Canada was a little more like the countries you're talking about. We're far too blasé about who owns land and who owns our industries in this country. So I don't think you'd have my support in going after those countries in order to get them to make it possible for the Americans to buy them up as well, or for that matter for somebody else to do so.

You may want to comment on that, but I just want to register my disagreement with your point of view on that.

I have a question for Mr. Moist. Looking over the recommendations of CUPE here, and I'm trying to be difficult here, Paul, from people who are critical of the WTO and the globalization and free trade and everything, there seem to be two different positions. One position is that we should go to the WTO and negotiate various things that would make it a much better framework, such as social clauses, labour rights, human rights, etc. Others like the Council of Canadians, for instance, have recommended a moratorium, that there shouldn't be any negotiations at this time at all.

You've read your set of recommendations either way, because you say don't do it, but then do this. If you could not have these negotiations, it would be great, but if you're going to be in them, this is the way you ought to be negotiating. Perhaps you could just elaborate a bit.

Mr. Paul Moist: I think our last recommendation is an important one that we improve and exhaustively consult with all Canadians about prior to entering into discussions. I'm not sure that Canada is going to avoid, or perhaps should try to avoid, living in the world we live in right now, but the types of approaches we take to those discussions...and I think Canadians care about the position we are going to take in those discussions. I know our organization cares about it.

The purpose in asking for moratoriums or asking for more preparation to be done is so that we enter those discussions with a framework that tries to represent all constituent interests in our country. And we don't believe that the interests of working people or environmentalists have been front and centre in these trade discussions. So I personally don't believe our country can nor perhaps should avoid taking a leading role in global discussions, because they're going to go on anyway. I think we need a framework entering into those discussions that represents the heart and the soul of all groups in Canada, not just the narrow groups.

• 1425

The Chairman: Could you forward to us a copy of the Australian legislation you referred to in your brief? I'm sure we could perhaps try to get it from the parliamentary library, but it might be helpful if we just—

Mr. Paul Moist: I made a note to do that and it will be forthcoming to you.

The Chairman: That's very helpful.

Mr. Pickard.

Mr. Jerry Pickard: Thank you very much, Mr. Chairman.

I took a very quick look at Peter Clark's comments. I thought from the recommendations that were coming forward it said harmonized standards to create a new evaluation methodology, market transparency, development procedures, planning procedures, so that countries have an equal basis in which to operate. At least that's what I read into it. When we talk about negotiations, I thought negotiations could go both ways. Some may move in a direction where there is more ability for nations to participate equally but control some areas as well. Am I missing something? I thought you were talking about harmonization and rules across all planes to make a level playing field.

Mr. Peter Clark: No, I think that's exactly what we're saying. Work is already in progress, in quite a few of the professions anyway, to do this outside of the WTO process, but it certainly helps to raise that to a higher level to have government support in doing this rather than just from a professional point of view. We have a lot of alliances around the world, and I think that is exactly the process of trying to make a level playing field so it is much easier. For instance, we have certain parts of the world where in terms of property rights and ownership.... If you take some of the eastern European countries, if you take even some of the southeastern Asian countries, the risk of development there is such that people want their money out in two years, whereas for a similar type of property in other parts of the world people are prepared to give a far longer term for investment and look to 20 to 25 years. I think we need to try to get this down to something that is more equivalent.

Mr. Jerry Pickard: Thank you very much.

In regard to the other brief presented, I think by the Canadian Union of Public Employees, I want to get an opinion from Paul. Are we better off at the table? You suggested to back up. It's always been my feeling that when we're negotiating, or where negotiations are going on, we have choices; we can stay right away from negotiations or we can be there to protect our own interests and raise voices and concerns that need to be raised. We can isolate ourselves or we can be a leader. I think you're suggesting we not be a leader, but I hope you're not suggesting we're not there at the table protecting our own interests and trying to put points forward, because I think that really is important for Canada.

This morning we had sustainable development people here and people looking at the environment, and they were very clear that we need to take a lead role in making sure a lot of the issues having to do with the human quality of life, having to do with environment, having to do with the causes that I think are maybe eroding in some cases our trade development are forwarded by Canada. They were certainly looking to Canada to be a leader in those areas and make sure we do move in a direction that would enforce this. I'm asking if you're suggesting we just stay back on the trade side or do you really mean to stay away? How would you put that, Paul?

Mr. Paul Moist: I think leadership demands that through any negotiation, whether it's a union and an employer or a government in an international setting, we learn from our mistakes. I believe we've made some mistakes in the past and that many Canadians share with the view I just enunciated.

Second, I think whenever CUPE prepares to negotiate with an employer, the toughest negotiation is often not with the employer; it's with ourselves.

We need much more dialogue about what Canada is going to take into these discussions. Previously, we were quite critical of NAFTA and the MAI in terms of there not being what we took to the table there and what we maybe gave away at the table.

• 1430

So I'm not sure our country is going to avoid any discussions, and I'm not advocating in this submission an isolationist-type stance on our part. But I think municipal governments, provincial governments, the federal government, groups such as ours, and other Canadians have a role to play in this, and I don't mind what Australia has done. Legislating a requirement for all levels of Canadians through their elected representatives, having a say in formulating where we're headed in these trade deals, and compulsory public hearings and compulsory open tribunals when disputes are being settled between us and another country....

The Labour Relations Act of this province, just to finish, starts out with the proposition that organizing workers into unions is a matter of public policy that ought to be enshrined in legislation. Disputes are public, and if a worker in this hotel has an arbitration about not getting a promotion next week, any citizen of Manitoba can partake in those proceedings and view them. That same principle isn't a bad one and, I would say, ought to be a fundamental proposal about dispute settlements at regional or world trading levels.

So it's the negotiations amongst ourselves that prompt us to say—if “negotiations” is the right word—that we have a lot of work to do before our country takes that leading position on the world stage.

Mr. Jerry Pickard: I would totally support the idea that we have a lot of work to do. One of the reasons we're having hearings across the country, and one of the reasons why our chair keeps apologizing, is time. We certainly have been spending a tremendous amount of time on trade negotiations, consulting with all of the different organizations and consulting across the country. But the reality is we need to do everything we can to get as broad a viewpoint as possible and as much working together....

One of our members earlier today suggested that the Province of Manitoba should have somebody at the negotiations to back up concerns and help give input to the negotiations as they go on. I know agriculture has done that with all different kinds of products, and we're finding that more and more involvement is helping.

But again, the system isn't perfect, and one of the things we do face is trying to get all the input we can in a time period that is seemingly almost impossible. Your comments are well taken.

Mr. Paul Moist: Thank you.

The Chairman: Thank you.

I have one question for Mr. Moist as well. From what you said about the ILO—and this is a problem a lot of us have been looking at—I gather that its problem is its rules, if you like, are rather hortatory in nature; they're not enforceable or haven't been enforced by virtue.... Whether it's the structure of the ILO being a tripartite structure or what, I don't know enough about it to understand.

So there comes the demand for it to be included in the WTO's labour standards, at least. Do you think if the ILO itself were strengthened and we had an international organization that had ILO standards, which were there, which most of the WTO members belong to, that it could achieve those without actually having to bring them into the trade rules themselves? In other words, they'd be an underlying given of the nature of society the way they are in our society here. We don't consider labour standards as a part of the economic management, if you like, or the rules between provinces or anything else. They're just a given. Would that work?

Mr. Paul Moist: We thought they were a given, but....

You raised the nub of it. The ILO-type labour standards agreements aren't enforceable right now where the ILO is presently housed. That can't become a given in bilateral or multilateral trade discussions without those being rights that are enforceable by our country in deliberations with other trading partners. You said they'll underscore those discussions or somehow be elevated to be a given in World Trade Organization discussions. That's not going to happen unless those rights are enshrined and enforceable.

All of the rights we have in society are meaningless without the enforceability attached to them. I know that labour, over the decades since the creation of the ILO, has given it a lot of attention. Our about-to-retire president of the CLC, Bob White, is a leading figure in the ILO. We've given a lot of time and effort to it, and it's very frustrating that those ILO sanctions are violated by many Canadian governments, never mind trading partners. If we believe in them, we ought to practise them in our own boundaries, and we ought to be elevating them to become enforceable underpinnings of trade discussions.

• 1435

The Chairman: Thank you.

Mr. White will be appearing before us tomorrow in Toronto. I'm sure we'll hear more about them.

Thank you, everyone, for coming. We appreciate you taking the time.

Perhaps our next group of interveners could come right up and take their place at the table, because we don't want to lose any valuable time. We don't want to lose the members either. Please, don't go away for long if you go away.

I'd like to welcome the next group of interveners before us. We have five interveners in all. You may have heard some of the discussion earlier about the problem of time. It's only an hour for us. So if you reach for about seven minutes in your introduction, that will leave time for questions. That's what I'd like to ask you, if you could keep your introductory remarks to around seven minutes.

We'd like to start with the People Empowering Themselves against Poverty. Is that Ms. Bruce or Mr. Kotyk?

Ms. Susan Bruce (People Empowering Themselves Against Poverty): Randy Kotyk.

Hi.

We are poor people, we are disabled people, we are people of colour, we are aboriginal people, we are people on welfare, we are people who are students, we are the working poor, and we are unemployed people. We are people who see poverty on a daily basis and live the dream. We are people coming together to change a system that disempowers us, keeps us poor, keeps us apart, and keeps us in fear.

Since the implementation of NAFTA and free trade we have seen a growing gap between the rich and the poor. The rich have gotten richer. In the Growing Gap, which was published by the Centre for Social Justice in 1988, there's the statistic right there. In 1973 the richest 10% of families with children under 18 made 21 times more than the poorest 10% of Canadian families. In 1996 the richest 10% of families made 314 times more than the poorest 10% of families. We have also seen Canada's standing as a country that cares for its poor dissolve gradually since the implementation of free trade and NAFTA. To illustrate this, Canada ranks 10th out of 17 of the top industrial countries, according to the human poverty index.

I'd like to sit down and go forward with our objections to the MAI. Then we're going to talk about our own personal—

The Chairman: Are you objecting to the MAI or to the WTO and NAFTA?

Ms. Susan Bruce: We're objecting to the agreement as it's been proposed in the draft, and we're also objecting to globalization. What we've seen of the agreement so far—

• 1440

The Chairman: Sorry, which agreement are you talking about?

Ms. Susan Bruce: I'm talking about the multilateral agreement on investment.

The Chairman: Okay, fine. You know, however, that has been abandoned. But you're worried about it being transferred to the WTO. Is that correct?

Ms. Susan Bruce: Yes.

The Chairman: Okay. We got you. Thank you.

Ms. Susan Bruce: Our first objection is the establishment of transnational corporations having superior citizenship rights compared with the average person, page 12A of the multilateral agreement on investment. Our second objection is that transnational corporations can sue the government of a host country for infringements on their right to make a profit, pages 53 to 64 of the multilateral agreement on investment. Our third objection is the fact that the laws of the host country can take a back seat to the rules of the investment itself, page 60 of the MAI. Our fourth objection is the roll-back clauses, page 122 of the MAI. Our fifth objection is the standstill clauses, which means the government cannot introduce any new non-conforming laws, policies, or programs—page 127 of the MAI.

It does not take a rocket scientist to know that the implementation of these clauses would mean the end of Canada's social programs. We at PETAP feel that the MAI is a form of corporate fascism. We are committed to fight any trade agreement that does not include human rights, and we have yet to see human rights in that agreement.

On a personal note, I am Susan Bruce. I'm the mother of two special-needs children. I have been on welfare for eight years. In that time I have seen many changes. I have yet to see my income increase. I have seen Bill C-36, a Manitoba bill, which took away my right to receive welfare if I'm destitute. I've seen starvation, and I have also seen the increase of the poverty industry. I have seen an increase in the number of poor people that is phenomenal, to the point where if an agreement like this that did not include human rights went through, I am absolutely sure I would see gated communities in Winnipeg itself.

NAFTA did nothing but totally mess up my generation. I am on the cusp. I am not a baby boomer, but at the same time I'm not a member of Generation X. I saw that if my older brothers and sisters didn't get into management, they ended up on welfare or in and out of jobs. I've seen Generation X struggle even with a degree.

This agreement is scary. After studying some of the reports on human rights, I don't see human rights being implemented properly on a national level or on a global level, so how are we going to be able to negotiate a trade agreement and think that we can implement them? That is the question I have for you. Whether or not you answer it is up to you.

I'd like to give Randy a chance to speak, if that's okay.

The Chairman: Yes. Mr. Kotyk.

Mr. Randy Kotyk (People Empowering Themselves Against Poverty): Since 1980 or around the time NAFTA was put in operation, I've seen an increase in food bank attendance. More people have been coming to food banks since that agreement has been put across.

I can't say anything more. I don't normally speak in front of crowds, so I'm a little nervous.

The Chairman: Just be relaxed. Don't think of us as a crowd.

Mr. Randy Kotyk: I've been disabled most of my life, and I have seen less and less money or assistance coming to those of us on social assistance or on disability, as they call it today. The funds have decreased since 1980. We're now unable to afford such things as oxygen or oxygen tanks. We have to pay for that out of our own pockets. The government has decreased the funding for medications, so now we have to pay for them ourselves. Less money coming to us just means the poorer we're going to get. We're going to end up very shortly living on the streets.

• 1445

The disabled have been hurting a lot more than most. We've tried to find employment, but the majority of the people see us as the disabled and not with the intelligence we do have. We always look for employment, but after all the layoffs that have taken place here in Canada, the able-bodied people are now on social assistance and the disabled have absolutely no chance to find work in the near future. Thank you.

The Chairman: Thank you very much, sir. That was helpful. We understand there is a relationship between this and the trade matter, and we'll make sure that gets into our record.

Cynthia Cooke is next.

Ms. Cynthia Cooke (Individual Presentation): Hello. I'll try to keep my comments on my report short. You'll notice that in the front of the report I have a picture of a small child. I put it right at the very front. This annoyed my husband no end, and he said, what do you mean you're coming to a meeting like this and you're putting a picture of a child and nothing else? I wanted to make a statement. The statement is this.

The Chairman: Some of us are grandparents.

Ms. Cynthia Cooke: This is the statement. I hope that as you negotiate these trade agreements, whether it's at the WTO or somewhere else, you think of these future generations, you think of these children. That's what brought me here today—not that I'm very comfortable doing this—the idea of what kind of future we are making for my grandchildren and yours.

You will notice a chart I've put there. When I wrote this report, I tried to do it from the perspective of Chelsea—we'll call her—as if I were trying to explain to Chelsea what has happened to us in Canada during the last 100 years. I think the chart is a fairly accurate one. I have done an awful lot of research to try to figure out why this is happening.

In my report I give you some historical background. One of the first instances of people rebelling against trade regimes and things that are happening today was the Boston Tea Party of 1773. Over the years we've seen that businesses and governments have worked toward trade liberalization, and it seems that society as a whole has suffered. From 1900 to 1950, as shown on my chart, I feel that we had economic control as citizens and participatory democracy. People were very active in their party system, and citizens were totally involved in that.

When you move from 1950 to 2000, I think therein lies a problem for all of us as citizens today. On my chart you have multinational corporations at the top. Going down you have international bodies, economic unions, global unions, and world courts. As far as I can understand it, these are non-democratic, and they have total economic control of most of our economies today. In the next section you have the Canadian bureaucracy, Canadian governments, and the Canadian legal systems. There we have limited democracy.

The turning point for me was the MAI. Without getting into the specifics—as you said, sir, the MAI is not ongoing right now, at least at the OECD—the turning point was that so many citizens around the world said wait a minute, something is wrong here. There is an imbalance in our world today. Using the common yardstick of power, economic control, and participation, today citizens are on the bottom of this list.

I asked myself three questions when I was doing the research for this: In the globalized world of today, where do citizens fit in? Perhaps this is why citizens are so uncomfortable. What are the historical changes that affect citizens' roles today? Again using the common yardstick of power, economic control, and participation, how many of these things are available to citizens?

• 1450

Just quickly, one of the reports I looked at was the Gray report of 1971, which is relevant to this committee. Foreign policy must reflect the situation in Canada at the time. It was a very, very interesting report.

That report talked about the fact that in 1971 we already had a lot of American companies in Canada, and therefore this played a very important part in how our foreign policy was viewed, according to the Gray report.

I think that has had a significant impact on what's happening today. That report promoted, of course, less government intervention.

The Macdonald commission was in 1982, and that was a huge one for several years. Less government intervention was the end result of that.

Interestingly enough, when I did this bit of research to figure out how this has happened, I got into studying philosophy and messianic liberal philosophical views. You will note in my paper that I have references at the back of it to this philosophical liberal point of view.

In fact, they go so far as to say nations have no place and impede the free flow of goods. Well, since 1945, since the war years, this philosophical attitude has been more prevalent all the time.

I also include here a report from Kofi Annan. It's not a report; it's a speech he gave in January. I don't know if you have seen that, but I was pretty impressed with it. In that report he strengthens what I'm trying to suggest here to you, that this imbalance is going to cause an awful lot of problems for us, as he says. But I believe we have underestimated the fragility of globalization. History teaches us that such imbalance between economic, social, and political worlds can never be sustained for very long.

So I've made three recommendations, and they're pretty outlandish, I guess.

The first one is that the committee on foreign affairs must continue to expand its activities of transparency, and certainly since the MAI we see a big difference in that. I do a lot of on-line research, and I must commend you on the things you are putting on line these days. It does help citizens to become better informed, and I think that's critical.

The policy decisions must be put back in the hands of elected officials. It was interesting when I was reading your red book for the Liberal Party. They were talking about the parliamentary Standing Committee on Foreign Affairs and International Trade taking a more active role in regularly debating foreign policy issues and offering advice to the government. I thought, well, who the heck is the government? The guys in the foreign committee—to me, all of you sitting around here are MPs. Who is the government?

So I came up with this idea of a permanent government, which is the cabinet and the bureaucrats. My impression is that perhaps one of the problems—we have this chart today that we're looking at, with citizens at the bottom of the chart—is that policy is being set by the permanent bureaucracy. Certainly this is the way it seems to be.

So my second recommendation is that perhaps we look at that issue and we bring it out and make it more available to all segments of our society.

Third, which might change the way this chart looks, I think, again, in Kofi Annan's report he mentions we have had a history of 55 years of governments and corporations—these are my words—carving up the world. I wonder if we couldn't take as a year 2000 special event a one-year moratorium on trade and investment to look at society and democracy and how trade and investment negotiations are affecting our democracy, for just one year. They've had 55 years, governments and businesses, to move ahead. One year, I think, would be absolutely fantastic to talk about democracy and see if we can change this.

• 1455

I'd like to believe that some day maybe citizens will be at the top of that chart again and we'll be working with all of these other organizations. Thank you very much.

The Chairman: Thank you very much, Ms. Cooke. We appreciate that.

Mr. Hammond is next.

Mr. Barry M. Hammond (Individual Presentation): I don't have any specific recommendations, but I think a lot will distill out of my brief brief.

A big problem for people of the world at this time is the widening gap between rich people and poor people. Thank you for documenting that. The widening gap is affecting most institutions, including education, health, care of children, the disabled, the homeless, the elderly, and others. If something is not done soon in Canada about this widening gap, we will end up with the same walled suburbs found in other countries.

The alleged trickle-down theory is a myth, since the needs of the rich appear endless. New trade agreements will not solve this widening gap problem. The results of the World Trade Organization and the free trade area of the Americas will widen this income gap. It appears that one of the main benefits of China joining the World Trade Organization is it would gain a seat at the World Trade Organization table. Canada could learn from this direction. The world must be guided more toward humane forums and not economic ones.

Although the world as a whole may be getting more wealthy and machines are now doing what people in so-called developed countries once did for themselves, we have not found ways to alleviate the suffering of the poor. For example, an unfortunate “side effect” of economic growth appears to be environmental destruction, just as an unfortunate “side effect” of the bombing of Yugoslavia is the so-called collateral effects of killing civilians. For how long can the world tolerate these side effects?

A guaranteed annual minimum income, along with a guaranteed annual maximum income, for all families must take precedence over further negotiations in the World Trade Organization or in the free trade of the Americas. As long as there is no way to impede the greed of the rich, there will be no way to alleviate the suffering of the poor. In fact, the unsustainable use of fish, forests, and water is part of what has led to the exploitation of minorities like the aboriginals, the poor, and the mentally challenged.

Neither the nature of nor an explanation for the widening gap needs to be given here. The salaries of over $1 million per year and the number of new billionaires created each year are widely documented. Neither will the nature of nor an explanation for the suffering of the poor be given here, as most know of the homeless, the economically poor mental health folk, and children with nothing to do but crime since community centres and wading pools are cash-strapped due to increased investments in roads and bridges necessary to get suburban residents downtown.

Being rich and greedy is not a crime in Canada; hence some believe an enhanced World Trade Organization or a developed FTAA will help all. As we have seen, such is not the case, as greedy individuals can never be satisfied, nor do they know or care about the devastation and the suffering of the poor that comes in the wake of these trade deals.

A humane Canadian government must scrap the new deals of the WTO and the FTAA, just as it scrapped the multilateral agreement on investment when it was found to be exploitative of people and bad for Canada. In fact, Canada must first work on developing a multilateral agreement on human rights, rather than attempt to bring in the old MAI in a new disguise.

Don't repeat the bad planning of the past. Rather, concern yourselves with equity and justice. Ignore the exploiters who would guide you in inhumane directions. Scrap any new plans for the WTO or the FTAA. Thank you.

The Chairman: Thank you very much, Mr. Hammond.

Next is Mr. Derwyn Davies. Mr. Davies, I know you had to take your wife to the hospital today. I hope she is going to be all right.

Mr. Derwyn Davies (Individual Presentation): Yes, she is, thank you.

The Chairman: It was good of you to come anyway.

Mr. Derwyn Davies: I appreciate the opportunity. I think the opportunity for individuals and local organizations to present to you gives at least some, I hope, restorative balance to the opinions you hear, since I gather the Hill is thronged with paid lobbyists these days.

The Chairman: It removes us from the rarefied atmosphere on the Hill.

Mr. Derwyn Davies: I would like to offer a slightly different viewpoint. I've spent 39 years teaching. In all of those years, except for perhaps three or four of supposed remission for perceived good conduct when I was an administrator, I was in daily contact with students. This gives one a kind of different perspective on life.

• 1500

I'd like to start by referring to a couple of recent books. One is by Neil Postman, an American, but I won't hold that against him, and a very perceptive and witty commentator on both society and education. He argued in his recent book, The End of Education, that there were two main problems facing us. One was an engineering problem, and in education that refers to the mechanics—things like curriculum, testing, and those petty little things. The second one was a metaphysical problem, to give a reason for schooling, which is something we do very little of. I want to try to bring you to that reason for society, as well as for schooling.

The other quote is from John Ralston Saul, his Massey lectures, “The Unconscious Civilization”. He said:

Over the last quarter century...economics has been spectacularly unsuccessful in its attempts to apply its models and theories to the reality of our civilization.

The kind of reality I want to refer to is a kind of decline and fall, from Charles Babbage to Bill Gates. Charles Babbage, 150 years ago, tried to build what was really a prototype computer. He called it a difference engine. He was unable to do so because there were no skilled metal workers able to do the kind of work that was necessary for him to build the machine. So he failed. Bill Gates apparently is conquering the world with computers, but is he doing that on his own? Charles Babbage tried to do it on his own and failed. I would suggest we need to look at why people succeed.

Another image I'd like to conjure up is the great cathedrals of Europe and the equivalent in North America—perhaps the hockey arenas that abound. People flock to the cathedrals and admire the wonderful architecture and the stonework. Who built them? For the most part, they were ordinary people—masons, sons of masons and grandsons of masons over generations—with maybe a Cistercian monk to give advice when they started.

The pool of talent business likes to refer to was incredibly small, yet they built those cathedrals. I would suggest they were able to do so from a culture where duty and responsibility were held high, where there was a vision of an ordered moral society and, to quote Newton, people stood on the shoulders of giants in creating things; they didn't just try to make money.

In terms of the engineering approach, I was involved in a kind of misguided effort to introduce individualization in teaching and learning in schools. We had, as usual, a series of films from the United States. The image they used was of two clockwork firemen climbing ladders at different rates, and that is the problem. We tend to see children—and previous speakers referred to our need to think about children—in very mechanical terms.

In my experience, the education system is succeeding in both wasting and destroying enormous reserves of talents, abilities, and skills in young people. We are not doing justice to young people, and we're going to do even less as private enterprise invades the classroom more and more, because the whole goal of education cannot be reduced to any kind of monetary value.

There's the whole deskilling and demeaning of work. I saw this in my career as a teacher. More and more often, you get experts coming in to tell you what to do. They give you a book and you're supposed to follow the book. There's no real need for a teacher in the modern terms of curriculum and instruction. It merely requires somebody to go through and utter the words, which of course the students don't listen to anyway. It's a mechanizing of people.

There's a real cost that is not costed out. The tanker that sank off Alaska caused a huge increase in the GDP of the United States. What an appalling thing. It looked to be good in the books, because the full cost of the cleanup and the necessary work didn't appear. Destroying forests only makes one mark in the account books; the loss of ecology is not balanced.

• 1505

Even in schools, the number of computers that sit around, that don't function, don't work properly, that are broken.... No one ever costs that account. So I would suggest, when you're talking about improvements or using the figures, that you please question them, because there's a lot that is not revealed by the figures.

I'd like to finish by quoting one other author, a person called Herman Daly, who worked at one time for the World Bank. I believe you have copies of my presentation. I've listed the books in that. He said the 11th commandment should be “Thou shalt not allow unlimited inequality in the distribution of private property”. I would say that in any World Trade Organization debate or any trade negotiations, this question of inequality should be paramount. We are not going to get a healthy, sane society with the kind of inequality that others have referred to, which we know is doing untold damage.

So the one recommendation I make is to take Daly's words really seriously and look at this question of inequality within countries and between countries. That, I would suggest, is the greatest obstacle to any real progress in our global economy. Thank you.

The Chairman: Thank you very much, sir.

Now it's the Congress of Union Retirees of Canada, Mr. Cerilli.

Mr. Al Cerilli (Executive Board Member at large, Congress of Union Retirees of Canada): Thank you, Mr. Chairperson and members of the panel. With me today I have a number of people who are representing retirees from different factions. From the Manitoba Federation of Union Retirees, an affiliate of the Congress of Union Retirees, we have John Pullen, Janet Faxton, Jim Neil, Denis Allard, Ed Blackman, and Murray Smith, who's also with the Teachers Society of Manitoba and the Manitoba Society of Seniors. So we can come to you with a great deal of experience in the labour field in negotiations.

What really is happening here, Mr. Chairperson and members of the panel, is that we welcome this opportunity to share with you our views on what our 500,000 members and their families and grandchildren believe is one of the most important debates Canada and the world will have on the very future of sovereign nations under a system of democracy that we have become accustomed to. You as members of this committee will have an influence on the federal government in the direction Canada will take and how Canada will mould a vision of hope in this new global economy. My presentation, because of late notice, will be coming to you from the congress and our affiliates in a written form, as well as what we're doing today.

Under the free trade agreement, deregulation, privatization, and the North American Free Trade Agreement, Canadians have witnessed some dramatic changes that have adversely affected their or their friends' way of life. Government did nothing to reassure Canadians of a better day, and instead they had to fight corporate decisions to reduce wages and benefits under the threat of job loss and/or relocation of the factory to another location or out of Canada outright. Needless to say, health care and other safety-net provisions have been devastated in this country, and we'll rue the day those changes became part of this agenda.

As the rules changed from fair trade, so did the rules stand to change from the umbrella of the General Agreement on Tariffs and Trade to the World Trade Organization; thus, new rules for the new world order that go far beyond tariff reduction. There are no safeguards against corporate power, and we are fearful that this unregulated, uncontrolled power will infringe on the right of democratic governments to manage their economies and to regulate in the public interest.

• 1510

The infringement by deregulation and privatization of FTA and NAFTA on labour rights and freedoms was bad. However, the recent debate on the multilateral agreement on investment, the MAI, made more and more Canadians and citizens of the world aware of the adverse impact that MAI would have on their lives. The benefit of instant communications between Canadians and the rest of the world against further agreements would destroy their fragile democracies and way of life. MAI was put on the back burner, and that is where it belongs. Any new vision or version of an MAI will once again be met with stronger public opposition, not only in Canada but also in the rest of the world.

There are good justified reasons why Canadians are suspect of government and corporate policy and see them as one. In the last 20 years people in Canada and other countries have seen corporate power at work and their influence over governments. They now view this power as one that governments are losing...and their ability to govern effectively for all of its citizens.

It is not uncommon for a corporation not only to threaten the workers and their unions but also to threaten the community and the three levels of government that the enterprise will be relocated if the demand for wage benefits and tax breaks are not met. Are the battle lines drawn between the citizens, their governments, and the corporate power in this global economy, or is there room for all to share in this planet's wealth?

The questions to your committee are numerous. We can begin by each of us asking how much more society can take before we snap, resulting in a complete breakdown. The democracy in sovereign nations is another question to debate. Are democratic governments slowly and deliberately being run by the corporate community, or, more frighteningly, is it slowly replacing government policy and the legislative means?

Let us examine some startling facts as a civilized society in a democracy. Elected government condones 1.5 million children living in poverty. Up to 5 million Canadians remain unemployed, underemployed, homeless, using food banks. Aboriginal unemployment is over and above 80%. Youth unemployment hovers at 20%. Aboriginal unemployment in youth is up to 80% and 90%, if they have anything at all.

Aimlessly looking for hope while billions of dollars go unnoticed by the taxman, that hidden money is reaching $13 trillion around the world, hidden by corporations and individuals, Mr. Chairperson.

Unregulated capital, uncontrolled multinational corporations have no allegiance to Canada or any other country. To keep pace with the other corporate bottom line, they will eventually displace any moral or ethical obligation to the global community, let alone Canada.

Countries may very well fail if you as legislators and caretakers of the 21st century fail to do your job in protecting all the people in Canada and in setting the pattern for the WTO and the global community. Yes, negotiations can carry on, but under some rules that everybody can understand in this country as well as in the rest of the world.

I am sure we will be given the time over the ten minutes allowed to simply read into the record from the well-intentioned citizens, the titans, for example, our good friend, d'Aquino, representing the big community of business.

If you ask yourself in which period since 1900 the Canadian business community has had more influence on public policy, I would say it has been in the past 20 years. Look at what we stand for and look at what all the governments, all the major parties have done and what they want to do. They have adopted the agenda we've been fighting for in the past two decades.

I can tell you that is pretty frightening.

I go on to the chairperson of the World Commission on Environment and Development, Gro Harlem Brundtland, where she says that if we don't put our act together we're dead meat.

In his speech to the UN General Assembly back in the 1980s when we were talking about free trade, the Hon. Tom MacMillan, Canada's environment minister, put the point that as caretakers you must protect society.

An international financier, Mr. George Soros, in his February 1997 article entitled “The Capitalist Threat”, said if we don't start sharing, capitalism will go down the tube and the rest of the world will go with it.

I'm summarizing, but you'll have that in writing when we put the facts together.

• 1515

In the April 1993 summary of the past pastoral message by the Episcopal Commission for Social Affairs, the Canadian Conference of Catholic Bishops reaffirmed their position in their 1993 statement on world affairs. It's worthy that you will be getting a copy of that for your own reading, because as they see the world through the Bible and the poverty that they've witnessed, they'll tell you we have to get our act together.

Canada cannot simply go to the WTO table under a cloud of mistrust. Canadians will continue to be suspect of government as long as they continue to see it favouring on one side the CEOs and the corporation they represent, nationally and internationally. Canadians have seen their governments as protectors of labour rights and freedoms, and they link this protection to decent wages, benefits, pensions, and the rights of free collective bargaining, as well as to the protection of the environment in a sustainable environment and to the protection of their children and grandchildren in the future.

John Pullen will close with a few remarks.

Mr. John Pullen (Congress of Union Retirees of Canada): Governments and the corporate community can no longer place the blame at the feet of the workers and their unions. Reports on profits and CEOs' wages and benefits outstrip workers' wages and benefits, particularly when food banks used by working men and women are on a large increase.

At the October 1998 pre-budget hearings here in Winnipeg, CURC put on the record these facts, and if time allows you to get that transcript, it may shed a new light on your proceedings and your recommendations to Parliament.

Oh, yes, and what about world peace?

This is respectfully submitted for the national executive board and members of CURC by Al Cerilli.

Thank you, Mr. Chairperson.

The Chairman: We only have a few minutes left for questions. That's it for this panel, gentlemen, and then we have six people in the next panel.

Mr. Penson, you go first.

Mr. Charlie Penson: Thank you. I have a question to do with the MAI. There's quite a bit of reference to the victory over the MAI here today.

I just want to remind the panel that in spite of that, Canada has a multilateral investment agreement already in place through chapter 11 of NAFTA that governs about 65% of all the investment in Canada, and something similar for Canadians outside of Canada. That's in place right now, whether the MAI is dead or it isn't dead. My understanding is that there are also several other bilateral investment agreements.

Given the background that Canadian direct foreign investment outside of our country has exceeded foreign investment in Canada for the last two years running, Canadians are investing in places like Chile and all kinds of places around the world. Some of those people have told us that they want the protection that a foreign investment agreement would provide in the event of expropriation. I'm just wondering what would be your advice to the panel.

I notice that several people have said no more negotiations on the WTO—stop it—and the FTAA, but what about the fact that we have this agreement in place right now in NAFTA? What would you do about that?

Ms. Susan Bruce: I've seen their agreement. I've seen the effects of that agreement. My generation lives every day with the effects of that agreement. You cannot sell that agreement to me.

You tell me why in the University of Manitoba's study there are over 50 PhDs out of work in Winnipeg. You tell me why I've seen so many people in my generation with tears as they sit at a food bank with their degree in hand. Even my ex-husband, who had a bachelor's degree in theology, couldn't get anything but a McDonald's job. Don't sell that agreement to me, buddy, because I've had it rammed down my throat. And when I'm at the food bank I always remember NAFTA.

Mr. Al Cerilli: I think it's a fair question. However, what we've always said is simply that fair trade and fair rules, either in investment or world trade...so that we can share with almost a billion people around this world who are going to bed hungry and without jobs. And Canada shouldn't boast, as we pointed out in our brief.

• 1520

The fact of the matter is that prejudgments have already been made by government. I'll just quote from the Report on Business that appeared in the April 3, 1996, Winnipeg Free Press on the meeting in France in the early part of April 1996:

The Group of Seven economy and labour ministers said the only way to boost jobs is to underpin economic growth through curbing public deficits and by reforming rigid labour markets.

I've gone through the rigid labour markets here in Canada, and they're getting weaker and weaker.

Ministers from the United States, Canada, Britain, Italy, Germany, Japan and France agreed there was no universal cure, and struggled to chart a new course between Anglo-Saxon free-marketeers and more interventionist Europeans.

Simply put, if you don't get fair rules and fair trade around the table in this global economy, you will fall apart. If you read George Soros, who is a billionaire in this small world—I don't know how many billions he has—you'll see that he has spotted those pitfalls and volcanoes. As protectors for the future, if we do not nationally....

Don't give me ten minutes to debate with you. Do the job right. Invite Canadians in and get an earful. It doesn't have to take six hours for me to make a presentation—

Mr. Charlie Penson: My question is—

Mr. Al Cerilli: While chapter 11 is there, efforts must be made to overcome that. We were led down the garden path when we were fighting those trade agreements and were told, don't worry, we'll look after you. In fact, we have not been looked after.

Mr. Charlie Penson: In view of the fact that an investment chapter exists right now, whether or not the MAI is in place, some people have advanced the theory that we should roll back NAFTA and stop being involved in it because of that investment side. A number of you have said don't go any further down this road. My question is, do you roll it back?

Mr. Al Cerilli: Agreements and collective bargaining can be amended. If there isn't a provision in that agreement to amend these rules that can destroy a country, then by God those people who negotiated it should be taken to task and simply told, you did a bad job. Here are our proposals. Take those to the WTO first and say, we want amended the rules in the agreement that affect us from country to country.

The Chairman: Mr. Davies wanted to say something.

Mr. Derwyn Davies: Just very briefly, the world is awash with money and credits. What we need to do is distinguish between investment and speculation. Too much of this is speculation, not investment, which leads to jobs and something worth while.

Ms. Susan Bruce: In your original question you talked about people who can invest. What about the people who can't invest? I'm sorry, my best friend was Jewish and taught me the wonderful tradition of answering a question with a question. I don't see that.

My idea of a good trade agreement would be that instead of repressing the third world, we would bring them up to the industrialized countries' level. There's the old story that free trade is like a cow: the mouth is eating out of Canada, the udders are in America, and we know where the end is.

Mr. Al Cerilli: Here's what the banks—

The Chairman: Wait a minute, Mr. Cerilli. I know that three other members of Parliament want to ask some questions, so maybe I'll go to them. We have to end this session in about 10 or 12 minutes.

[Translation]

Mrs. Debien.

Mrs. Maud Debien: Ladies and gentlemen, I would first like to thank you for your presence. Your participation today has given us another opinion. You have a critical approach and have harshly judged everything that went before the WTO, namely the previous negotiations, the FTA, NAFTA and GATT. You also mentioned the MAI. I agree with you that civil society succeeded in putting an end to this negotiation which was being done behind closed doors, with very little transparency.

• 1525

However, you've also said very clearly, as have other witnesses this morning, that the FTA, NAFTA and GATT had not yielded the desire results. In fact, the gap between the rich and the poor has grown. We have heard farmers this morning who told us exactly the same thing about their field.

I come from Quebec, as you have noticed. You know that Quebec society supports free trade, and that we supported NAFTA when the Mulroney government proposed it. Since it was negotiated, there has been an incredible increase in exports from Quebec, and a great improvement in job creation; however; there is still poverty. I cannot be as categorical as you and say that it is the FTA, NAFTA, GATT and the WTO alone that are responsible for the increased poverty in Canada. I do not have the answers; like you, I'm looking for the answers. However, I know that we live in a neoliberal society where money, competition and the rights of business are the only things that count. Unfortunately, you are right in this regard.

Should there be a freeze or moratorium on the upcoming negotiations? I believe that we are dealing with an irreversible tide, and we will never be able to stop it. The whole world has now become too small; we see it everyday in our living rooms. What we are presently seeing in Kosovo proves this.

Canada could not stop the negotiations, nor could it refuse to participate. I believe that it should provide leadership to civilize these negotiations and make the rules clear, fair and transparent for all the participating countries. This should be Canada's main role in the next negotiations. If Canada does not assume this role, you will have the opportunity to express yourselves as citizens, in an election in a few years. Canada must participate, but create all the necessary safeguards, including those that you mentioned in each of your presentations.

It was a comment rather than a question.

[English]

Mr. Al Cerilli: I think it's a worthy comment because of the opposite view.

However, I think as governments we're not being transparent enough. I think this is where the problem lies. We can't wait two years, believe me, not after witnessing twenty years of devastation. Yes, Quebec, Ontario, and the United States might be doing all right, but at what price to the remainder of society?

When we were dealing with the introduction of automation into this country, Judge Samuel Freedman said that one party should not profit over another. That window has never been looked at since 1965. That is where we're coming from. If we're going to share in our planet's wealth, we'd better do it now, because in two years it will be too late. I can suggest to you that, yes, you're going to have traders and money all over the place, but the fact of the matter is that we're leaving a hell of a lot of our people behind.

[Translation]

Mrs. Maud Debien: I fully agree.

[English]

The Chairman: Thank you.

Ms. Cooke, you wanted to add something.

Ms. Cynthia Cooke: One of the comments you made is that you feel globalization is irreversible. In my write-up I try to give several instances of the historical background of this. One of the things, again, is that around here some of us like John Ralston Saul. He's speaking about and explaining fascism. He says there were three things that fascism brought out. It shifted power directly to economic and social interest groups; it pushed entrepreneurial initiatives into areas normally reserved for public bodies—perhaps we could call that privatization today; and it obliterated the boundaries between public and private interest. That is, it challenged the idea of public interest.

• 1530

Those three things, through fascism...we fought a war over it. So in terms of an irreversible current, I think Kofi Annan is perhaps right when he says we are in difficult times now, that we have to look at this.

The Chairman: Okay, I think maybe we'll have to move on to Mr. Blaikie, but those are very helpful comments. Thank you very much.

Mr. Blaikie, did you want to add anything, or do you have any questions?

Mr. Bill Blaikie: I'll be very brief, Mr. Chairman. In my view, the situation that was very poignantly pointed out by PETAP I think was the intent, at a certain level, of the free trade agreements. It was meant to drive down wages. Only it wasn't called that; it was called being more competitive.

When you drive down wages, you drive down government revenues. And when you drive down government revenues, you drive down the ability of governments to fund social programs. So all these things are linked. We found a lot of well-paying jobs disappearing. There have been other jobs created to take their place, but they're not the same kinds of jobs that disappeared. Then we have people who are pushed right off the end of the scale.

I frankly think this is all a part of the plan, except that it was put forward in a much more positive light. It's what you would find in the writing of Tom d'Aquino and the BCNI. I think Mr. Cerilli was quite right. They've had a very successful two decades. They started in the late 1970s, in rebellion against the welfare state and the post-war social contract, and they've had a very successful 20 years taking it apart. And the main way they have done this is through the free trade agreements, because it had the air of a positive development. They've done through the free trade agreements what they never could have done openly and by describing what their actual agenda was.

So I think you've put it very well. You mentioned the Gray report. I actually brought up the Gray report to Herb Gray about two or three weeks ago with regard to the alarming degree of foreign ownership in the Canadian economy at the moment, which is a lot worse than anything that existed at the time Mr. Gray originally wrote his report. But he didn't seem to remember it and didn't like the question very much.

We're now in an entirely different context, where it seems to be okay that we have foreign ownership, even of things that were formerly regarded to be part and parcel of the Canadian infrastructure. We have the CNR owned 60% by American shareholders, thanks to privatization.

All of this is just a comment. I tend to agree with a lot of the things that have been said. And I thank you for coming before us this afternoon.

Mr. Al Cerilli: May I just make one comment to respond to that?

The Chairman: Yes, just one comment.

Mr. Al Cerilli: The senators' committee was dealing with Mr. Thiessen the other day as I was turning on channel 65 at 4 a.m. because I couldn't sleep. He was peppered with questions about three things he opposes. One was a fixed exchange rate, and we can argue about that. The second was a common currency for North America, and I can argue with that too. But here's the one that really grabbed me—the so-called Tobin tax on marketed transactions. I mean, you guys passed this unanimously in the House! And here's a guy coming out of our bank, our servant, telling us, hey, don't you dare pass that Tobin tax and interfere. Give me a break. Who's running the show here? And for whom?

• 1535

The Chairman: Since you like to watch things in the middle of the night and like to read so much, Mr. Cerilli, you might look at a report this committee did a couple of years ago on international financial institutions. In that, we looked at the issue of the Tobin tax. I think that idea is going to come back.

Mr. Al Cerilli: I'm sure I have the tape somewhere.

The Chairman: There's just so much, as you know, speculative money winging around. That idea is certainly one that a lot of people are looking at. It's difficult to implement, but worth considering.

Mr. Al Cerilli: But the fact is, you have to start taxing the hidden money as well and the corporate money that is going offshore and everything else that goes with it; $13 trillion around the world. That's not peanuts that is not being taxed.

The Chairman: Right.

Ms. Susan Bruce: Can I make a comment, too?

The Chairman: Very quickly.

Ms. Susan Bruce: I'm the National Anti-Poverty Organization representative board member for Manitoba, and I heard lots from the Quebec representative at our board meeting last year that Quebec is not doing very well, that the poor in Quebec are doing very.... Compared to the rest of the country...I realize Winnipeg is the poor capital of Canada, but Quebec is not that far behind. If they're doing well under free trade, then I've never heard about it.

The Chairman: We're not going to get into a debate.

Mr. Pickard.

Mr. Jerry Pickard: Ladies and gentlemen, I have to say that you have brought the human perspective to the committee, and I certainly very much appreciate that. There's no question that world trade negotiations have been very lacking in certain areas. The human element is one; the environment is another.

There are things this committee has to take into account and make recommendations on, and there's no question that the perspective you bring is very important to us all. We certainly are looking at jobs, but as many of you point out, the jobs aren't coming fast enough, they're not paying well enough in many cases, and it is problematic. But we do hear what you're saying and we do respect what you've brought forward. I think your presentation does make a difference. Keep up the efforts there.

I certainly think that, above all, the human element must be kept in consideration. Witnesses this morning brought that message forward loud and clear, suggesting environment, economic activities, and human development are the main components that we have to be looking at within free trade, and oftentimes up to this point it's been the economic, without considering the other components that are so important. So thank you very much.

The Chairman: Thank you all very much.

Some of you mentioned John Ralston Saul. He happens to be a constituent of mine, so when I go back, I'll tell him he is being read out here in Winnipeg too. Being an author, he'll just want to know whether you've bought the book or not, but we won't ask that.

Thank you very much. We appreciate your testimony very much.

Can I ask the next group if they could come up right away? We're running a few minutes behind and we want to make sure everybody has a chance to be heard. We have five presenters and we only have 50 or 55 minutes.

• 1540

The first intervener we have on the list is Monsieur Gilbert Laberge. Thank you very much for coming, sir. Again, you saw how the last panel worked. If you can keep it to around five to seven minutes, that leaves time for questions. We have five of you, so that would be most helpful.

Mr. Gilbert Laberge (Individual Presentation): Excuse me, I didn't quite understand you. Did you say I have five minutes instead of ten?

The Chairman: You have between five and seven minutes to do your introduction, because that leaves us time for questions at the end. Otherwise we won't have any time.

Mr. Gilbert Laberge: I'll start off by saying I have two presentations. I want to make my first presentation in French and English, and then the second one in French and English.

The first one is on a water watch. The second one is on a tax study.

[Translation]

The Chairman: We would appreciate it if your presentation lasted only five to seven minutes. We received a copy of your material. Perhaps you could give us an overview of it.

Mr. Gilbert Laberge: I would first like to make it clear that I am testifying before your committee as an individual and I do not represent any organization. The document that I sent you is the fruit of my research and represents my contribution to throwing some light on this subject and examining it methodically, so that it will be useful to both establishment people and anti- establishment people. I will be making the same presentation in the area of water after this meeting, so that there will perhaps be a marriage of ideas and perspectives.

My philosophy is that all Canadian citizens are beneficiaries of the Canadian water systems and that they are also the keepers of this system. This declaration could be applied internationally, and it could be said that every country is responsible for its own water system. The guiding principle is that all citizens, through the duly mandated governing bodies of their countries, have this responsibility. The territories, provinces, cities and towns, municipalities and villages have the inherent right to control the sharing of their water with those in dire need. They must above all control the trading of their water in exchange for maintenance fees and for sincere, harmonious measures for peaceful coexistence in order to promote world peace through the sharing of wealth. The rich must help the poor, and the poor must help the poorest of the poor.

We must protect water from being abused in any way or from being misused. It must not be wasted.

We should establish controls to ensure that our water is of the highest possible quality. We should always try to reach the highest purity levels. We should control the production of waste water and know how to treat it before it is returned to our water supply systems.

We should control the purity of rainwater through strict anti-pollution measures. In other words, the water that comes down from the sky should be clean, and not acid or polluted rain. We should develop acceptable methods for using water. We should develop acceptable criteria for recycling water.

We should ensure proper respect for this life-sustaining element that the Creator gives us. We must realize that we are not alone. Canada should exercise pressure internationally so that this essential resource will be respected by all.

• 1545

Because I don't have as much time as I anticipated, I will now go on to the issue of tax dodging and loopholes in the law.

In 1991, it appears that the federal government did not see fit to collect taxes on a fortune worth over $2 billion, which had been accumulated by one of Canada's richest families and then transferred out of the country. This family did not pay its fair share of taxes on this amount that it had acquired by benefiting from our society's trust. Its worship of wealth led it to take advantage of our laws and regulations, our mentality and the freedom we enjoy. Here in Canada, we expect citizens to make it a point of honour to pay their fair share of taxes.

It is my personal opinion—and most people would probably support it—that the federal government of Canada should, in all good conscience, ensure that our fine principles of democracy are respected and denounce those who flagrantly violate our laws and weaken the harmony that should prevail. In this country, there are courts at different levels and it should be possible to ask them to consider tax evasion cases that go back a long time, even to 10 years ago. As soon as possible cheating is noted, it should be documented and the date recorded, so that the funds can be recovered retroactively.

The material that I have submitted to you outlines another question that you'll find at the bottom of the page. For lack of time, I won't raise it, but I leave it with you as information.

Thank you for your attention.

The Chairman: Thank you, Mr. Laberge. I invite you to use the language of your choice and I will answer you in the same language.

Mr. Gilbert Laberge: Okay, thank you.

The Chairman: During the question period, the MPs will ask you questions in English and in French. I suppose that Mrs. Debien will take advantage of this opportunity to speak in French.

[English]

I think we have Mr. Preston next.

Mr. Bob Preston (Individual Presentation): Drinking water is the lifeblood of our nation. It's madness to sell it off; I can't believe we can be talking about these things. Water requires a special status separate from any other natural resource we have. It has to stay in public ownership.

I wanted to talk today a little bit about how water impacts on us individually, but clearly we don't have time so I'm going to skip that part. I really want to mention how water is fundamental to our national interests; we can't sell it off.

Let me just run over a few points. It keeps our workforce alive, it mutes illness, it cuts back mortality, it's a boost to economic development. Could you imagine our medical community with no water, no sanitation? In industry it's probably the most widely used resource. Could you imagine a meat packing plant without fresh water? In agriculture, grow a bushel of wheat without some water. Inland fisheries would be dead in the water. Hydroelectric—we have all kinds of facilities like that. There is the seaway, the recreational sector. Think of all the cottage industries we have, people swimming and boating and that kind of thing—it's all pivotal on fresh water. Think about waste removal. Does anyone here flush the toilet?

The critical thing is this. Water is a strategic commodity. Its purification and distribution must stay in public hands. We all know what happens if we let it go. Think of NAFTA and the Ethyl Corporation. We just can't have that thing.

• 1550

The second point I would like to make is that there are storm clouds on the horizon. In 25 years, the world's population is going to double. Think about that. The demand on water is going to double, but the amount of fresh water is static.

There will be no more rain water in 2025 than there is today. How are you going to go around that circle? Corporations today are buying fresh water all over the world. Why? Because in 2025 they're going to sell it for a lot. What do you think a glass of water is going to cost you in 2025?

The other problem hinges on this point of diminishing resources. Our rural and our urban sectors are going to be in a major conflict soon. When our population starts to expand, who gets the water? I'll tell you who. The political clout on the urban scene is going to be much stronger than the rural. In the years to come, the water tap for irrigation of the rural area is going to be turned off. What this means is that land that's now irrigated will have to be pulled out of production. Think of what that does to food costs.

In High Plains...in the San Joaquin Valley in California, their water table is falling dramatically. In fact, irrigation is turned off right there. The point I would like to make is that this war is starting. The battle has begun and agriculture is going to lose. The hydrologic cycle is in a state of flux. We've all heard about the greenhouse effect, and we know what that's going to mean. There are going to be major changes in our weather patterns. What that's going to do is cut back or maybe even increase—we're not sure—the rain. How can we sell off water today that in 2025 we don't know we'll have? It doesn't make good sense.

The difficulty is all the economical sources are tapped. There are no new sources coming onstream, unless you count the desalination of ocean water. For an acre foot of sea water, it costs $1,800 U.S. It costs $900 to process an acre foot of just brackish water. You can't grow your grass with that.

The point I would like to make is water is a special resource and it needs a humanitarian hand, and business doesn't have it. They're amoral. It's not that they're not nice; they're amoral. They don't have the morality. They're out for profit. They're self-serving, short-term, mobile.

Let me give you an example. In 1984, in Bhopal, India, there was an explosion at the Union Carbide plant. The plant was a pesticide plant. A vicious pall of smoke blew over the urban area. Five hundred thousand people were affected. That's almost equal to the population of Winnipeg. Four thousand people died. What was the response of Union Carbide? The toxicology data they possessed they didn't let out to the people in the surrounding areas right away. As a result, the medical community—the precious little they had—couldn't even deal effectively with the problem. They tried, and they did, reach an out-of-court settlement to limit damage. That what it's about. Limit damage, cut back on liability. The compensation is meagre. Those people today really are in bad shape. They hardly get enough to cover medical costs. In 1996, 14 years after the disaster, they still haven't responded to the courts in Bhopal, India. As of 1996, they still have left this toxic material leaching into the drinking water of the people who live in Bhopal, India.

What does that tell us about the morality of that particular company? Would you want Union Carbide looking after your water supplies? I think not.

.01555

I could talk about all kinds of other companies. For 20 years Dow Corning kept the wraps on the problems with breast implants. They wouldn't tell anyone, because if people knew 20 years ago, they wouldn't have bought breast implants.

There are other problems, such as the Ford Bronco with the roll-over problems. I won't go into that because we don't have time.

CPR has let us down. They didn't back Halifax's bid for the mega-port Halifax hopes they get. It isn't that they're not nice, but corporations just don't have the means we need to have them treat the problem.

We've all talked about George Soros here and I guess we've all read him. It's the same with John Ralston Saul. I just want to put together, in a moment or two, what Soros says in one of his books, Crisis in Global Capitalism. He says the task of government is really to set the rules everyone should play by. It's the role of business to play within those rules. But we all know what's happened in the last 20 years. Businesses have become so strong that they gang up on the governments. They tell the governments which rules to set, and that's the problem.

I'd like to wrap up with three points—three recommendations to the federal government. We absolutely have to stop any idea of exporting water. That has to be cut down in its tracks. The second point is the distribution and purification of water has to be kept in public hands. Third, we need to look at our water systems and set a jurisdiction and controlling body so we can integrate the use and the water coming back into the streams.

I'd like to close on this note. The hand that holds our water tap must possess humanity, integrity, and morality. Private enterprise loses on all three counts. Thank you.

The Chairman: Thank you very much, Mr. Preston.

Mr. Harris.

Mr. George Harris (Individual Presentation): Good afternoon. To begin with, I'm going to make a few references to what seem to be disjointed matters. The first one is a reference to Jeff Gates, who is the author of The Ownership Solution: Toward a Shared Capitalism for the 21st Century. In the coverage of a recent visit to Winnipeg, it was reported in the Winnipeg Free Press:

Mass media coverage of fantastic stock market gains during the last several years might give people the impression that market gains mean greater wealth for all of us. But, of course, that isn't the case.

According to Jeff Gates, his wealth projections through 1997 suggest that 86% of stock market gains between 1989 and 1997 went to the top 10% of the households, with 42% going to the most well-to-do 1%.

Another section of that particular newspaper report said this:

The net worth of the three wealthiest individuals in the world is greater than the GDP of the 48 least developed countries of the world.

That's the first bit of information that I'd like to put on the table here.

Second, I would say the stock market, which has been referred to here, cheers each time workers are laid off. You lay off workers, cut the costs, and the stock market goes up. There is the image that comes on TV, where at the end of the day the bell gongs and there's all this clapping in the stock market as they set yet another record. But it is not there for the benefit of most of us ordinary Canadians—I would say virtually all of us ordinary Canadians.

• 1600

The next thing I'd like to refer to is something that appeared in Fortune Magazine. I just want to quote it because it says as much as I would be able to say:

As a percentage of GDP, the U.S. spends up to twice as much on health care as European countries do. Is that because America has dirtier air, fatter people, and worse drivers? Those are surely contributing factors, but the more important reason has to do with how medical care is delivered—mostly by the private sector—

The Chairman: Lawyers and insurance companies eat it all up.

Mr. George Harris:

—in the U.S., mostly by the government in Europe. That also helps explain why so many Americans have no coverage at all.

The next one I'd like to refer to comes out of Freeport, Illinois. This was from a person by the name of Kent Johnson in a community college there. He indicates:

We are submitting a guest editorial to our local paper regarding a massive move overseas by Kelly Springfield, a Goodyear subsidiary. Up to 850 jobs in northwestern Illinois stand to be lost. We have a question we are hoping you will be able to answer for us right away:

Do some European countries have laws inhibiting corporate flight or surprise “downsizings”? In other words, are there countries that institute a “social tax” on companies who decide to suddenly relocate overseas?

The final one is this. After the recent meeting of the Manilla Framework Group,

Australia and Japan joined forces Friday to warn the international community against succumbing to “reform fatigue” in the wake of the Asian meltdown, lest the nascent economic recovery falter.

All of this stuff keeps bombarding us, and it comes at us in bits and pieces all the time. What it says to me is clearly the system isn't working. It's not working except for a very small percentage of the population, what I would like to refer to as the favoured few.

I would like to make a few observations on things that might be done in response to this. First, if we're working for international agreements, whether we're talking about the free trade agreement of the Americas or the World Trade Organization, let us work for agreements that mitigate the inequities and injustices that come out of global capitalism. Things are not going in the right direction; they're going in precisely the wrong direction. Even though the stock market is cheering, it doesn't mean we're all well.

Second, I keep hearing about rulings the World Trade Organization is making. They seem to come out of the blue. When those pronouncements are made, it's almost as though they have come out of some naturally ordained set of rules. I would contend that should not be the case. The World Trade Organization should never be given powers that we as citizens cannot change when we collectively determine it is desirable to do so.

The third thing I would like to put out for consideration is that assuming for some time in the future we're going to have creatures like the World Trade Organization, we should put in place conditions that would allow challenges to any decisions that are made there that violate basic human rights, as defined in one of the documents—and there are a number of others—the Universal Declaration of Human Rights.

I would like to just refer to two articles. I don't want to use all my time to read all the articles, but there are two in particular I'd like to call attention to. Article 23 says:

Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment.

Article 25 states:

Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.

• 1605

This was written over 50 years ago, and consistently we are seeing governments of the 1990s violate those basic human rights.

Another one I'd like to consider is make sure the public has the power to reverse privatization decisions that are made by what I would call rogue governments. We are living in a province where we make a decision to privatize the Manitoba telephone system, and we cannot reverse that because we have such things as free trade agreements that say if you reverse that, you have to compensate these companies. It puts us in a box and leaves us with the feeling that there's nothing we can do except to succumb to the will of these corporations.

Another consideration, which has already been adequately addressed by Mr. Preston, is to make sure the public maintains control over basic resources, and in this particular case I would like to see the public maintain control over water.

In short—

The Chairman: Are you pretty well coming to the end?

Mr. George Harris: Yes, I'm pretty well there.

In short, if the system as it now stands is not working, do not enshrine its rules in some form of international law.

There is a personal note I would like to make on this one. I grew up on a mixed farm. My father earned a living largely because of the supply management system that was in place. If the pressures that are now being exerted on organizations such as the World Trade Organization to get rid of our marketing boards and so on are successful, my brother will not be able to pass his farm on to his children.

The Chairman: Thank you very much, sir.

We have two more presenters. The first is Mr. Kopas from the Manitoba Society of Seniors Inc.

Mr. Ramon Kopas (Executive Director, Manitoba Society of Seniors Inc.): As executive director of the Manitoba Society of Seniors, which represents the interests of 250,000 older Manitobans, I'd like to introduce our presenter, Mr. Charles Cruden, who is a representative from the MSOS board of directors and a member of the MSOS executive committee. Charles.

Mr. Charles Cruden (Member, Board of Directors, Manitoba Society of Seniors Inc.): Thank you very much, Ramon. We received notice of this meeting on April 17, so our words will be brief. It is a very lengthy subject, and it has been the subject of many hours of discussion around our table at the MSOS.

As representatives of the Manitoba Society of Seniors, MSOS, and its board of directors, we would like to thank this committee for the opportunity to speak on the subject of international trade priorities and concerns. When the topics of transnational, globalization, NAFTA, MAI, and FTAA are mentioned at various MSOS meetings, the immediate response is concern and uncertainty. The concern and uncertainty develops into a fear that any future agreement signed by Canada will have a detrimental effect on Canadian social programs. Seniors have been very concerned about the apparent detrimental effect on cherished Canadian social benefits, particularly health and pensions, since the signing of the FTA and NAFTA.

There is a major concern as to who is or who will be running Canada: politicians who have been elected with the responsibility of governing our country in the interests of all Canadians, or transnational corporations and/or political incidents beyond Canada's borders that are foisting a new era on Canadians under the name of corporate globalization.

It was interesting to learn while preparing this presentation that since the 1994 Miami Summit of the Americas, Canada's exports to Latin America and the Caribbean have continued to grow significantly. It was also surprising to learn that Latin America and the Caribbean will have an expected population of 500 million by 2000. The concern on this latter point is that with the transnational corporations' interest in Latin America as a place of potential markets and cheap labour, the result could be a lessening of Canada's influence in negotiations.

• 1610

All Canadians, not only seniors, have reason to be concerned about agreements that will have a detrimental effect on Canada's laws, regulations, and social programs, which have been paid for by Canadians, and still are, as part of our country's responsibility to each other.

Seniors in particular are not prepared to accept sacrifices to social programs that have been fought for and put in place over many years in order to develop a Canadian standard of living. There is concern that laws and regulations that have been put in place for Canadians to live by and to respect will not be expected of transnational corporations operating in Canada.

MSOS members have pointed out that there is a lack of information, and they expect more transparency and accountability from governments, along with straight talk on what is being proposed under any title in the name of economic globalization. They do not wish to see the surprise consequences that came about after the signing of NAFTA. Many seniors are aware that economic globalization is a current direction that is encouraged by financial institutions and transnational corporations. Seniors want to be given the opportunity to be knowledgeable about decisions made by elected representatives, and they do not want to be left with a sense that profit-oriented business is influencing or dictating to our elected officials.

In summation, some recommendations MSOS seniors have indicated are: that with media availability today, Canadians should be better informed; that there be more government transparency and accountability; that governance be the responsibility of our elected representatives; that the Canadian government have more control over the Canadian economy; that Canadian social programs not be put in jeopardy due to economic globalization; that there be no reason for Canadians to be concerned about a potential lack of control of the Canadian destiny by our elected representatives; that the Government of Canada be cautious of any talks at furthering trade and investment, including the FTAA; and that it engage in a genuine dialogue with Canadians about the consequences of this model of economic globalization.

At the millennium round at the WTO, Canada should use the opportunity to push for a serious examination of the factual global record of trade and investment. Rather than expand the current model, Canada should insist on a wide-ranging assessment of the economic, social, and environmental impacts of economic globalization. Canada should also address the continuing lack of democracy and transparency, which has placed more and more power in the hands of transnational corporations at the expense of civil society.

On behalf of the Manitoba Society of Seniors, we thank you for this opportunity to present a view that is of greatest concern to many seniors in Manitoba.

The Chairman: Thank you very much, sir.

We have with us also a representative of the Canadian Federation of Students, Manitoba branch, Ms. Bryans.

Ms. Margaret Bryans (Canadian Federation of Students of Manitoba): Thank you.

The Chairman: You weren't here at the beginning, so I'll let you know that I'm trying to keep everybody to five or seven minutes at the most.

Ms. Margaret Bryans: Okay. I'll shorten it as I go through it.

The Chairman: We have to be out of here in 20 minutes.

Ms. Margaret Bryans: What I want to talk about today is basically how unfair trade and globalization are affecting our post-secondary institutions in Canada. I'm speaking obviously from a university's perspective, but for the most part it's also true of elementary and secondary educational institutions.

Globalization is being touted as the wave of the future. It's clear that public funding and access to quality post-secondary education are in danger. Massive government cutbacks at the federal level to post-secondary education are resulting in the privatization and corporatization of our public institutions.

Public funding as well as public ownership, control, and regulation of the post-secondary educational system are being replaced by private dollars, private ownership, private control, and no regulation of things such as tuition fees. Some examples of this include the decision by the Ontario government to deregulate fees for all university programs and some college programs. This means that students are paying an exorbitant amount to access education, and many students aren't able to do so.

Another example is that the former president of the University of British Columbia, David Strangway, plans to offer “better schooling to those who can afford it” through a private, non-profit liberal arts university for affluent students.

The contracting out of services on campus, such as cleaning and food services, is another example. Support staff work goes to the lowest bidder.

• 1615

Business interests are shaping many aspects of the post-secondary education system, including setting tuition fee levels, determining the content of our classes, which supplies get used for a course or program, and which programs or courses receive funding and which are cut. As an example, millionaire Joseph Rotman donated $15 million to the University of Toronto's faculty of management. This donation has brought him an unprecedented level of control over the faculty, detailed in a 26-page list of criteria, including the right to hire an external public relations firm to represent faculty, protection from budget cuts, and the university's adherence to Rotman's vision of public education. According to a calculation that was done by the Varsity, the University of Toronto's student newspaper, Rotman may end up paying less than $6 million out of his pocket, with much of the remainder being paid by Canadian taxpayers through the tax benefits he can claim on his donation to this university.

As well, at Carleton University, five local high-tech firms recently donated $60,000 to the computer science department, citing as one of their reasons the well-trained recruits they can hire later.

Education has become a very lucrative market. According to Maude Barlow and Tony Clarke, the possibility for corporate partnerships at the primary, secondary, and post-secondary level is estimated to be worth between fifty billion and several hundred billion dollars annually. With globalization, it is nearly impossible to remove this corporate influence from our public colleges and universities, because they've already been opened up for business. Globalization and unfair trade also give foreign-based corporations completely unfettered access to students and their educational environment.

The public post-secondary education system is increasingly becoming a mixed public and private system, which only strengthens the rights of corporations to access the market. Although the federal and provincial governments still fund roughly 50% to 70% of the cost of post-secondary education, the percentage of public funding has dramatically declined over the last ten years. There is currently no commitment at the federal level to restore cutbacks to post-secondary education, so it is likely that the level of private funding in college and university operating budgets will continue to increase.

Students have been instrumental in trying to establish guidelines for regulating and holding accountable the companies that are taking up residences on our campuses. Yet these regulations, even though they are passed by our governing boards or senates, are being ignored. Governing boards, which are supposed to represent the interests of community, are focused only on creating a global economy instead of being committed to creating a learning environment, free from corporate control.

So what's for sale? For one, it is access to a new generation of consumers: students. Corporations are increasingly being allowed to advertise on everything from computer screen-savers to the name of a particular course. Students' consumption habits, values, and political views are being influenced from within the walls of academia. Private post-secondary institutions do not serve the interests of citizens, as they're in no way accountable to the public. The privately funded for-profit nature of the vast majority of private institutions results in extremely high tuition fees. Even with government financial aid, students pursuing programs at private institutions will pay more for their education and training than they would if public funds were available to offer the same programs at public institutions.

We are shifting away from building institutions that exist to serve the public good in often unmeasurable and unquantifiable ways, such as furthering knowledge and having an educated electorate, to institutions that exist to serve private interests, which, as exemplified by the bottom line of profit maximization, are infinitely measurable and quantifiable. The globalization agenda for education is based on a clear shift away from education that prepares people to participate in a democratic society to education that prepares workers for business. Focusing on education to train workers not only serves the economic interests of corporations, it also diminishes the capacity of people to demand that governments take action to limit the power of corporations over their lives. Education that prepares people to participate in a democratic society will of course still be available, but only to those of us who can afford it.

What is at stake is our ability to make the right decisions as a society. Each day our world grows increasingly complex, forcing us to come to terms with rapid technological change and often conflicting societal values. As long as we believe in the ideal of a democratic society, we must strive to give Canadians the education required to make sophisticated judgments about the future of our society.

Thank you.

The Chairman: Thank you very much, Mrs. Bryans.

Remember, members, about fifteen minutes is the most we have, so maybe three or four minutes each.

• 1620

[Translation]

Mrs. Maud Debien: I would simply like to make a comment on the presentations by Mr. Laberge and Mr. Preston regarding water management. Naturally, it would be hard to disagree with the ten guiding principles that you set out regarding, among other things, public ownership of water and public responsibility for its management.

As you know, the Constitution says that water management is a provincial jurisdiction. As far as I know, no province exports water on a large scale—I checked this with Mr. Penson a few minutes ago—except, perhaps, British Columbia. But I'm saying this with reservations, because I don't have the right information on hand. I do know that Quebec does not have any bulk water exports.

I don't know whether you are aware of a recent study. Apparently, a UN organization last week sounded the alarm with regard to forests and oceans. What worries me as much as public management of water is the contamination of ground water because of accelerated industrialization. In effect, what good does it do to talk about managing and distributing water if it's not potable? Therefore, we must first ensure that ground water is not contaminated and that we are in a position to do all the necessary research.

It was more my intention to mention this comment than to ask a question.

The Chairman: Mr. Laberge.

Mr. Gilbert Laberge: You raised the subject of federal and provincial jurisdiction over water management. I believe that the federal government should act as a leader to the provinces, give them a vision, and indicate the direction they should go in implementing their own policies. For example, as I point out in my short document, it's up to the federal government to ensure that our environment is protected and that pollution is avoided, and it should do so in co-operation with the provinces and the private sector. The federal government should have a very well-defined vision so that it can guard the well being of its people and set an example for the rest of the world.

The federal government should take action to force the companies that are polluting our waters to stop doing it as quickly as possible. The water that falls from the sky and clouds gives life to plants, human beings, animals and insects. If this water is dirty and polluted, we will perish.

• 1625

The sewers that flow into lakes and rives, including the Great Lakes, have seriously polluted these waterways. Every country must take steps in the right direction to clean up its water. We are fortunate to have very good water and we should set an example. If we fail to act, as my fellow panelists mentioned, things will get worse and it will prove very difficult and very costly to clean up our waterways. This part of creation represents our survival.

The Chairman: Thank you, Mr. Laberge.

[English]

Did you have any questions, Mr. Blaikie?

Mr. Bill Blaikie: I have two things.

With respect to water, just for the information of a number of the witnesses who mentioned it, I think they should know that there was recently a motion passed in the House of Commons. It actually stood in my name. It was an opposition day motion of the NDP calling for a national moratorium on the bulk export of water and calling for legislation to institute a ban on the bulk export of water. The motion passed, technically unanimously. I think the Bloc was against it, but voted for it by accident because they regard it as—

[Translation]

Mrs. Maud Debien: [Editor's Note: Inaudible]

[English]

Mr. Bill Blaikie: —a matter of provincial jurisdiction.

Of course what happened after the motion was the government had a press conference and announced that in their view they were living up to the spirit of the motion, because they were calling for ten provincial moratoriums, whereas the motion called for a national moratorium. We still haven't seen any legislation, although there may indeed be some coming.

In speaking to that motion, I took the view that you took, Mr. Preston, which is that it would be a serious mistake to regard water as the oil of the 21st century, which is a phrase that very commonly rolls off the tongue of the trade minister, Mr. Marchi. I think this would be a serious mistake, from a variety of points of view. Yet the temptation is to see water as just any other commodity. So I certainly share your view on that.

I also wanted to say, with respect to the presentation by Margaret on behalf of the Canadian Federation of Students, that I believe there is a connection between what's happening in the cost of university and globalization, and it's this. I don't think it's often said, but I think globalization, as we spoke about earlier, is creating within Canada a lower-wage economy, and therefore the system, to the extent that it has a mind, wants fewer and fewer people to go to university, because if you're going to be able to pay people less and less and less, you want to downsize expectations. You don't want people graduating with big expectations so they can get a telemarketing job. So you want people to have lower expectations. I think that is part of what's going on, to have fewer people going to post-secondary education so they don't have the same expectations. Therefore they are not disappointed, and therefore they don't create social unrest. Everything works.

The Chairman: I would take that as an observation rather than a question.

Mr. Pickard, did you want to...?

Mr. Jerry Pickard: As an observation, I believe that for people who are looking at systems today, Margaret, there's no question that we have to do our best to make sure the skills and opportunities are there for all young people. It's my belief that this should happen. I think we're trying to do the best we can.

Obviously the costs of university have just skyrocketed; there's no question there. It has a lot to do with operating, with wages, with the facilities that are there, the high technology that's required. There's a great deal in university education. Whether it's university education, community college education, or high school education, we all have to be there, up front, doing the best we can. I have no question that this is a priority.

• 1630

As far as the rest goes, no one can argue, Bob, with your point and George's point and Gil's point on water. It's a motherhood issue. I think everyone at this table certainly agrees that water is protected. And I would say that the trade minister also agrees. So I don't see differences in the viewpoint you're putting forward. I think it's an important point you've made.

The Chairman: Thank you very much, everyone. Given the time, we'll have to wrap up. On behalf of the committee, I'd like to thank each and every one of you for coming and sharing your experiences with us and your view of upcoming trade organizations.

Members, I would just like to remind you we've got a bus leaving for the airport and we will leave in about ten minutes. If you're not on it, you'll have to get your own transportation to the airport, because we've got to make that plane.

We're going to be sitting tomorrow morning at nine o'clock. We're at the Holiday Inn on King Street.

We're adjourned until nine o'clock tomorrow morning in Toronto. Thank you very much.