FAIT Committee Meeting

STANDING COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE

COMITÉ PERMANENT DES AFFAIRES ÉTRANGÈRES ET DU COMMERCE INTERNATIONAL

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, April 27, 1999

• 0825

[English]

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

Pursuant to Standing Order 108(2), the main committee is conducting an examination of Canada's trade objectives, starting with the forthcoming agenda of the World Trade Organization. Pursuant to the same standing order, the subcommittee is also conducting an examination of Canada's priorities in the free trade of the Americas area.

The public hearings our committee is holding across the country on key aspects of Canada's future international trade policy come at a time when countries are facing some crucial choices and decisions through complex negotiating processes being conducted both multilaterally at the World Trade Organization and regionally in such areas as the free trade area of the Americas.

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

In March the committee travelled to Quebec and to the Atlantic provinces. This week, while one half of the committee is holding hearings in three western provinces, the other half of our committee is holding similar hearings in Manitoba and Ontario. We hope to benefit from as broad a cross-section of Canadian opinion as possible, and to reflect that in a report we hope to table in the House of Commons before the summer, well before the major international trade meetings take place later this year.

Leading up to this phase of cross-country consultations, the committee in February heard first from the minister and his senior officials. Following that, a number of successful round tables were convened in Ottawa prior to the start of the cross-country hearings. By mid-April, more than 100 witnesses had made substantial presentations to the committee, addressing a broad range of critical issues and concerns. I should add that yesterday we heard from 39 witnesses, and by the time we leave Vancouver today we will have heard from 70 people.

As Minister Marchi stated in his opening presentation to us, international trade has now become a local issue. What happens as far away as the negotiating table has consequences that reach right into the kitchen table and to other domains of daily life. This, I might add, is also something we've been hearing from the many witnesses who have come before us.

As this trend deepens as a result of globalization, the making of trade policy cannot be left only to a few officials in back rooms, but needs to engage the whole of society and governments at all levels. Members of the committee therefore welcome these hearings as one step in contributing toward that goal. We have been truly impressed by the quality of the testimony and the written submissions we have received. Beyond the formal hearings, we must keep this an ongoing learning and listening process. In that regard, we have just added to our committee's Internet website a series of discussion notes with questions for public consideration and consultation. We are also planning to include in our report a citizen's guide to the WTO.

We encourage citizens in all parts of Canada to continue to participate and to follow the progress of our parliamentary study in the coming weeks and months.

With that, I would like to take this opportunity to have my colleagues quickly introduce themselves before we hear from our first witness, Dr. Nola Kate Seymoar. Mr. Stinson.

Mr. Darrel Stinson (Okanagan—Shuswap, Ref.): Darrel Stinson, member of Parliament for Okanagan—Shuswap.

Mr. Werner Schmidt (Kelowna, Ref.): Werner Schmidt, MP for Kelowna.

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

Ms. Colleen Beaumier (Brampton West—Mississauga, Lib.): Colleen Beaumier. I'm a member of Parliament from not Toronto, and I'm chair of the subcommittee on international human rights.

[Translation]

The Acting Chair (Ms. Sarmite Bulte): Mr. Sauvageau.

Mr. Benoît Sauvageau (Repentigny, BQ): Good morning. I apologize for having been a bit late. My name is Benoît Sauvageau and I represent the riding of Repentigny, in Quebec, for the Bloc Québécois.

[English]

The Acting Chairman (Ms. Sarmite Bulte): My name is Sarmite Bulte. I am a member of Parliament from Toronto, from the area known as Parkdale—High Park. I also have the privilege of chairing these western hearings, and I'm also the chair of the Subcommittee on International Trade, Trade Disputes and Investments.

With that, we welcome you, Dr. Nola Kate Seymoar, to address the committee.

Dr. Nola Kate Seymoar (Executive Director, International Centre for Sustainable Cities): Thank you very much.

Let me start by saying I was the executive director of the Unemployment Insurance Commission about ten years ago and held public hearings in sixty communities across the country, so I know you have heard technical stuff until it's coming out your ears. Part of what I intend to do is to talk more about principles, and I will be brief. I'm not an expert on trade, so I promise you I won't try to pretend to do that.

• 0830

I have served on a Canadian delegation to the Bolivia summit. I attended the global forum at the Santiago summit. I have served as an expert on sustainable development for CENPES, which is the committee of experts for the OAS. And I was elected as an NGO representative in the Inter-American Strategy for Public Participation in Sustainable Development. So I have been rather heavily involved with the issue of the summit of the Americas, the OAS general assembly and its practices, and the NGO forums and attempts to bring forward issues, particularly around trade and the FTAA.

Each of those experiences has been totally different. Being part of the Canadian delegation, I learned what it was like to try to negotiate with what I would call the American bullies. The way in which we formed alliances with smaller countries—whether it was Central American and Caribbean countries on various issues, or when we were wanting to hook up on trade issues, often with Mexico—leads me to understand something of the complexity and difficulty of what happens when you actually get into the negotiations. It also has made me very aware of the value of what I would like to think is the Canadian way. So what I will talk about, in terms of principles, has to do with what I believe to be promoting Canadian values abroad if we tie it back to Canada and the world and the kind of Bible of foreign affairs these days.

I don't have a written brief for you. Let me just make a few points.

The first point is that responsibility for negotiations I believe must rest with politicians, not officials or interest groups. You are the only ones who are elected, and you are the only ones who are therefore going to be able to be held accountable. That point goes through a lot of what you will have been hearing. You will have heard about the Ethyl Corporation case and the problem of giving to corporations the rights of governments. That must not occur again in other negotiations or other agreements. So the first principle is those of you who are elected are really the ones who ought to be at the table. Quite frankly, I would even recommend that you get to the table—that politicians from this committee or in other ways are actually involved in those negotiations. Don't leave it to the senior officials. I have great respect for the senior officials, but they're not voted in, and we can't vote them out—much as I'd sometimes like to.

My second point is that trade and investment are different. We want to liberalize trade, and I appreciate the importance of getting more flow of goods and services. That principle is very different from the principle of investment. If we want investment to serve sustainable development, then we have to have investment for the long term. In fact, we want to prevent the rapid flow of money in and out. Money speculation is not good investment. So I think it's important that you retain an understanding of the difference between the objectives of the trade mission, so to speak, to liberalize trade and the importance of investment not being a quick in and out process.

My third comment is that the market economy and democracy are compatible, but they're not the same thing. We get into thinking that if we promote the market economy, we are somehow promoting democracy. I would remind you that in the market, it's one dollar, one vote. That means that the guys with more money or the corporations with more money have a great deal more power than the rest of those competing in that market system. Democracy will allow individuals and in a sense countries to be much more equal. So we mustn't get overwhelmed by the mythology that free market and democracy are necessarily related.

• 0835

Let me also say markets need to be local. If we can somehow assist with local market... it isn't that I'm against the market system, don't get me wrong on that.

Fourth, protection from the abuse of power is the responsibility of the state and of the stronger. It's a legitimate, necessary role. I know that if you start speaking out against free trade, you'll be perceived as being protectionist. I would suggest to you that you have a responsibility to protect. You have a responsibility to protect the vulnerable, the poor, women, indigenous groups, minority groups. That is a responsibility, and it's a rightful role for you to be playing—to protect. The question you need to ask yourself if you're being accused of protectionism is who are you protecting, the rich or the poor, the powerful or the vulnerable?

My fifth principal point is that the 34 countries of the Americas are very different. I've worked in projects in about 14 of the 34 countries, and to compare a small Caribbean country with Brazil or to compare Chile and Mexico or Guatemala—there just is not a comparison. To attempt to develop something that is one-size-fits-all I do not think is a workable model. I think it's really very much only in the interest of the United States to do so.

From my perspective, I would suggest that any negotiation that you do has to protect the national interest, the national identities, the differentness in the different countries. Certainly in the meetings that I've been part of, the Caribbean groups have said to us they do not have the capacity to go to the table on free trade. Even at the OAS, if you're at a meeting and you break into subcommittees, a country like Guatemala or El Salvador might have one or two people able come to the set of meetings. They can't cover the subcommittee meetings. They can't literally, physically be there, much less have expertise. So it's terribly important to provide the means and mechanisms whereby we adjust the process to account for who has the power and who doesn't.

The sixth point is that sustainable development has to go from being in the preamble and being rhetoric to being a reality in communities. I've worked in this field of, as we now call it, sustainable development for the last 10 years. It is really funny—I gather you were in Winnipeg yesterday—I used to be at the International Institute for Sustainable Development in Winnipeg. I've just moved to Vancouver to head up the Centre for Sustainable Cities. I've gone from public policy, and trade policy in particular, which is the expertise at IISD, to being involved with garbage and sewage and water and housing. The real difficulty of sustainability is local. It's what happens in our own backyards with our own water. I am constantly now trying to tackle practical problems and still retain a connection to principles.

There are three principles of sustainable development that I think are essential and mustn't be forgotten.

The first is that it's long term. Sustainable development is about future generations. We all have been given the Brundtland commission definition. The indigenous peoples would say to us it's about seventh generation. But it's about our grandchildren. That's why I'm in it, and I expect that's why most people suddenly say “These issues affect my grandchildren.” And if you keep that in your mind, you'll think about sustainability.

The second one is that it integrates social, economic, and environmental. That's really the working definition. That's what corporations like Shell use when they're talking about sustainable development plans. They're talking about economic, environmental, and social well-being.

• 0840

A week ago I was speaking to the Canadian-European parliamentary association, or whatever it was called, on barriers to transboundary negotiations. And the barriers I talked about were not geographic barriers, they're the barriers between disciplines, between departments in the government, between economic forces, environmental forces, and social forces. We all speak different languages, and when we get together it's as though we were speaking Spanish, French, and English. It's just as big a problem between economists, social workers, and environmentalists. So integration of those three is the biggest challenge.

The third thing about sustainable development is that it's a process. And Canada really has provided leadership in that process. The way we've done it is to talk about a multi-stakeholder participatory process. We called it “round table” 10 years ago; now we just talk about multi-stakeholder processes. But that's really what changes the way decisions are made, if you bring all the actors to the table.

So those are the three elements of sustainable development that I think are worth using almost as a screen over what one does with a negotiation.

The seventh point—and I only have two more—is that if you change who's at the table you will change the kinds of decisions that are made. We need government at the table, we need the private sector at the table, and we need civil society at the table. One of the things that is frequently raised is, well, who does civil society organizations represent; they're not voted in, right? Or, I would say the same of corporations; who do corporations represent? We know they represent their shareholders, but are they elected? No. The issue is still that the only people at that table who are elected are politicians.

I would move into the issue of who represents governments, to say to you that you need to expand beyond the federal government at the table, or even beyond the provinces at the table, and include municipal governments, because that's where a great deal of the reality of implementation is going to occur. And I would also include the level of government of first nations groups, because they have different roles and responsibilities, and they definitely have roles and responsibilities.

Within civil society, I would invite you to consider an experiment that was actually done within the OAS to deal with the issue of whom civil society organizations represent. What happened was the Inter-American Strategy for Public Participation polled..there were 350 organizations that were known to them to be interested in the OAS's issues. They polled them for nominations to sit on the international advisory committee. They got 50-some nominations in seven categories—organizations interested in economic matters, environmental, social, indigenous, women, labour, and African and other minorities. For each of those nominees they then sent out, using the Internet and faxes and all that kind of stuff, their names and their CVs, and there was an election held, and seven of us were elected. It's not perfect; it's very complicated; we don't have any money to report back to people. I mean, it's a flawed system in its implementation, but it was a process that allowed groups to come forward with representation.

I would suggest that Canadian groups in civil society are quite willing and able to identify who we would like at the table. It may not be perfect, and some of us may say, “Oh, it's the CCIC”, or “Oh, it's at the CLC; it's not my group”, but nonetheless, better that we do a process that allows representation at the table than not.

Finally, I would add some comments on issues around dispute resolutions and intellectual property.

You've already, I'm sure, been more than overwhelmed with arguments about the dispute resolution processes that would lead to things like the Ethyl case. The importance of a form of dispute resolution is essential, but it's also useful to look at how you can build in a consensus-building process instead of just the dispute resolution process.

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In terms of intellectual property, the issue that I think is fundamental has to do with food security. That's the issue of not allowing things like the colonization of seed, the ability to patent seed and to prevent people from actually growing their own food year after year. That isn't in our interest. It's in Monsanto's interest, but it's not in our interest.

Those are my essential comments. I have all sorts of ideas, and I'd love to answer your questions.

The Acting Chairman (Ms. Sarmite Bulte): Thank you very much, Dr. Seymoar, for your fabulous presentation.

We have time for questions. We have fifteen minutes.

Mr. Werner Schmidt: Congratulations, Madam Chair. We have time for questions.

Dr. Nola Kate Seymoar: It helps to be first in the morning.

Mr. Werner Schmidt: That's absolutely fantastic, because yesterday we ran out of questions—

A voice: Ran out of time.

Mr. Werner Schmidt: Yes, we ran out of time, not questions.

I really want to thank you for appearing before us this morning, Doctor. Your experienced background has a tremendous breadth, and I think that encourages me to ask you this question on the assumption underlying the position you've taken and the basis on which you've developed your principles. The assumption is that there's a willingness to want to come to agreement.

You talked about the division between these various groups and the bullying tactics of the Americans in particular. I think those are the words you used, or something to that effect. Is there a willingness to come to agreement, or are the interests so vested and so deeply held that in fact there is no possibility of an agreement? If we're going to have an agreement, there has to be a give from a number of individuals and interest groups. How do you create that primary position of yes, we want to come to an agreement?

Dr. Nola Kate Seymoar: I think you do so by broadening the base of the people who are involved in the discussion. If the discussion continues to be among the officials that orchestrated NAFTA or among the CLC and the organizations that have had ten years of history on debating with one another, then I think we'll stay very much in neutral.

If we broaden that so that we incorporate people who have not been involved in previous negotiations but who really do have a stake in the outcome, then I think you get a different dialogue going, and suddenly people find that they have to move in their position.

I certainly don't mean to demean CLC or the chamber of commerce or any of those who were involved in the NAFTA negotiations. I'm simply saying we need to free it up.

Mr. Werner Schmidt: Okay, but regardless of whether you free it up or not, it seems to me that implicit in the freeing up is the underlying assumption that these people want to come to agreement. With all due respect, I don't think you've answered that question.

Dr. Nola Kate Seymoar: Well, okay. In my experience in negotiating around sustainable development issues for the Bolivia summit, one of the things we found was that civil society groups could reach agreement on particular parts of the agenda and we could then influence our own governments and our government representatives to move in that direction.

For example, Canada is in a very unique position in negotiating in the Americas. The Americans would come to us and say “We have an idea about something that we'd like to change, but if we raise it, it will be voted down.” It was like they knew perfectly well that they were the bad guys on particular issues. If we did agree with them on a particular issue, we would bring it forward, or we might bring it forward through the NGO stream in an initial round of discussion.

The thing that was important was non-negotiable positions. Everyone knew what they were. So what was important was to find where the trade-offs could be made. Usually you could find enough room for agreement that either you would leave the non-negotiable items out, or you would find some way of working them in in different wording. Unfortunately, it becomes commas and semicolons. It's really boring. When I suggest you get to the table, it's an awful place to go—little better than Question Period.

• 0850

The Acting Chairman (Ms. Sarmite Bulte): Very quickly.

Mr. Werner Schmidt: My final question on this is, who determines what is and what is not negotiable?

Dr. Nola Kate Seymoar: The dynamics of the moment. Unfortunately, 75% of the economic weight is American. Still, in all of the negotiations the weight is with the U.S., Brazil, Mexico, Canada to a lesser extent. We serve as the middle kid in the family. We do the kind of smoothing role, which I think is a good one.

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

[Translation]

Mr. Sauvageau.

Mr. Benoît Sauvageau: Good morning.

To begin, I want to thank you for your presentation, which was very interesting. I think we should all try to emulate you. We have to understand that nothing is all white or all black, contrary to the claims of those who are all for or all against. Your point of view is very interesting.

Since we only have five minutes, I would like to deal with one of your comments which I agree with. You stated that, at the end of the day, the people responsible are the politicians since they are the only ones to have been elected in this system. I agree with you about that. However, you also said that we should be at the negotiating table. This would be very difficult, if not impossible, because of time and other constraints. The members of this Committee, myself included, believe they may have found an interesting principle on which I would like to get your opinion.

We would continue our consultations in view of any future WTO negotiations, that is to say we would continue meeting people to give input to our negotiators. Then, we would ask those negotiators to keep us informed and to show them the final product of their work before we would ratify any agreement. In other words, we would have input not only before the negotiations but also after, and before signing any treaty. Do you think this would be a desirable role for your politicians? Do you think this would be useful?

[English]

Dr. Nola Kate Seymoar: It seems to me that if you've got a role before, during, and after the negotiations... In practical experience, when we got to the Bolivia summit and they had the signing-off on the declaration... it's all cut; it has already happened. There's no point in coming to that meeting. It's a good cocktail party, but it's not really where you want to be if you want to influence what's going on.

I don't know how you would hold your officials accountable during the process of negotiations. What would happen on the delegation is we would be working on a particular item and the officials would fax or phone back to Canada to their departments to get instructions. That wasn't going to the parliamentarians. That was going to the officials in the department. Frequently we were dealing with very junior officials at the table. The senior officials—Peter Boehm, or the ambassador or whatever—are superb. He is someone we should be very proud of.

What I question is—and I don't have the answer; I really think that's something for our committee to address—how do you get influence long before the document is written? When you come to sign, it's too late.

[Translation]

Mr. Benoît Sauvageau: I will come back to Mr. Schmidt's idea. During our pre-consultations and our roundtables and meetings with citizens, we could indicate to our negotiators what is absolutely not negotiable, in other words our bottom line. We have to admit that negotiating cannot be a fully open process. It's a sort of a game of poker. It would be difficult to play poker with all our cards on the table. Unfortunately, perhaps, negotiations always have to be held in secret.

• 0855

I come back to my first idea. During the consultations, we would decide together what fields are not negotiable, such as culture, the environment, our social programs and so on. We would tell our negotiators that Canadians do not want that be negotiated and, when the negotiating process is over, we would ask them to submit the agreement to us before they sign it. Unfortunately, that process was not followed for the Canada-Chile Free Trade Agreement. Parliamentarians got involved only when a Bill was tabled to implement the agreement. Before that, they had never seen any provisions of the agreement. So, I would recommend that before Canada sign anything, before the huge cocktail and before the champagne glasses, Parliamentarians be made aware of the agreement and, after consulting Canadians, tell the negotiators if the document should be signed or not. Would that be an appropriate manner to fulfil the conditions of your first principle relating to the role of Parliamentarians?

[English]

Dr. Nola Kate Seymoar: Yes.

[Translation]

Mr. Benoît Sauvageau: Marvellous. Thank you.

[English]

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

Mr. Bob Speller: Thank you, Madam Chair.

Thank you, Doctor. That was a very enlightening presentation. I think it will make us all think in terms of how we can better involve different groups, including civil society, directly within the process, right at the final level.

My experience only goes back to the last WTO negotiations, but one of the things we tried to do at those negotiations—and it was mostly on the agricultural side that I had experience. In the final days of the negotiations, prior to the consultations—and unfortunately the consultations last time weren't as good because they were over an election period, and unfortunately we went from an election directly into Geneva in a process that took a couple of months. One of the things we did, though, was take the leaders of the commodity groups right to Geneva. They were right there on the spot. They got daily briefings. They said, look, this is where the negotiations are going. We tried to get feedback that way in the final days.

So the negotiators were there, the politicians were there, and the different interest groups were there. Civil society was there, but not—the CLC was there and there were a couple... but not, as you say, the massive group of civil society. They also were not at the table.

You're suggesting a process. Are you suggesting that they should be right at the negotiating table, or are you trying to say at some point you need to turn it over to the politicians, who then turn it over to the bureaucratic staff to do the...

On another point, in terms of our department, anyway, even though the negotiators may be calling back to the superiors in Ottawa, their superiors are constantly reporting back to the minister's office in terms of that. So there is a politician at the top who eventually makes a decision on that.

Would your process involve everyone right at the table?

Dr. Nola Kate Seymoar: You know, we have an interesting history. Canada has always said, as part of our foreign policy, that on Canadian delegations we will always include representatives of civil society, but we don't do it. At the Santiago summit, for example, Canada did not have a civil society representative on the Canadian delegation.

We were involved in SIRG, which are the preparatory meetings or the implementation meetings. It's interesting to me that—I'm trying to remember which countries did. The Americans did and someone else did. We had 70 Americans. You have one representative of civil society. It's symbolic. As you say, it's the champagne dinner. It's not that it's important at that point.

• 0900

I would be fascinated by the idea of putting on the team that actually do the negotiation a representative of civil society, a representative of the private sector. Why not have them right on the team as part of the delegation? It would challenge more than anything else. We set up a committee that the NGOs refer to as the post office committee, because it's just receiving briefs and passing them on. That's not meaningful participation. It would be really phenomenal. We Canadians talk about the importance of transparency in the negotiations. We don't really mean that. We still do everything in the back room. If you had civil society as a member of the delegation, then people are challenged in a different way about what is allowable in the back room. It's worth an experiment.

Mr. Bob Speller: That's fine. Thank you.

The Acting Chairman (Ms. Sarmite Bulte): Madam Beaumier.

Ms. Colleen Beaumier: Thank you, Dr. Seymoar. I think your presentation today has given us a lot to think about, and perhaps a little courage to act on what many of us believe.

I think one of the problems we have as Canadians, in spite of the fact that we go around and we say we're nice and cosy and comfy being a middle power, is that we have a bit of a complex that we're not the movers and the shakers. There is always the threat that if you don't get on at the beginning, you're going to be left trailing behind. I'd like you to comment on that, because I certainly feel your presentation has made me a little more comfortable with the fact that, no, you're not necessarily trailing behind. But I think that's one of the biggest problems and one of the biggest insecurities we as politicians have. When you're not sure, you jump on the bandwagon just in case you're going to leave your people behind.

Dr. Nola Kate Seymoar: In the Americas we are leaders. There is no question. We in the next year have the five events. They are the Pan Am games, which start in August, the first ladies meeting, the ministerial on trade, the general assembly of the OAS on the summit of the Americas. That is the Americas agenda for the next two years. We have them all. So there's no question we're leaders. I think the question for us is how we're going to lead.

The middle power leadership is a different style of leadership. If we could learn something from the landmines process, which became known as the Ottawa process, it was that we could have an influence that others could not. We could bring people to the table in a different way. That process fundamentally shared power between governments, civil society and private interests, including the military. It was a phenomenally exciting process. So we can do it. We just need the courage to do it.

The Acting Chairman (Ms. Sarmite Bulte): Thank you. I wish we had more time because I would like to ask you, especially in light of your words that in the Americas we are leaders, what we can we do at the FTAA, which is seen as a technical discussion even though FTAA is parallel to the WTO. But where can we build the consensus, or can we use culture? Unfortunately, we don't have the time, but maybe you could think about it, and follow up and send us a brief or even notes. We see this consultation today as just the beginning of the consultation process, not the end. We encourage you to participate in ongoing dialogue with the committee. If there are any other issues you want to bring to our attention, please do so.

Thank you very much for your wonderful presentation.

Dr. Nola Kate Seymoar: Thank you so much.

The Acting Chairman (Ms. Sarmite Bulte): Okay, could we have our next set of witnesses, Dr. Riddle and Steven Forth.

• 0905

I'm delighted to welcome Dr. Dorothy Riddle, who is president and CEO of Service-Growth Consultants Inc., and also in my past life one of my colleagues in the Women Entrepreneurs of Canada. It has a wonderful history of working abroad and being a leader in all areas, and we're delighted to have you here, Dr. Riddle.

Please begin.

Dr. Dorothy Riddle (President and CEO, Service-Growth Consultants Inc.): Thank you. Thank you very much for the opportunity to testify at these hearings.

I will be restricting my comments to trade in services issues, particularly trade in business services. Because FTAA negotiations on services are still at the beginning stages, I will focus my remarks on the upcoming new round of negotiations for the General Agreement on Trade in Services, the GATS.

I'm speaking today both as an active exporter of management consulting services, earning 40% of revenues from clients outside of Canada and having created seven jobs besides my own, and as a professional who has specialized in services trade issues for the past 18 years.

Trade in services is a rapidly growing part of the world economy. However, despite the fact that service industries account for 76% of Canada's GDP, services continue to account for only 12% of Canada's exports, in contrast to the 21% average for industrialized countries as a whole. There is tremendous potential for expansion of Canadian services exports, along with the creation of skilled jobs throughout all parts of Canada, if priority is given to issues affecting services exporters.

There are three issues I would like to point out that need attention in the context of multilateral negotiations in the GATS.

The first is improving temporary business entry. In order to obtain contracts in foreign markets, exporters like me need to travel abroad in order to network and meet potential clients, in contrast to goods exporters, who often deal through local agents or distributors. Canadian service firms export to virtually every world market, with only 53% doing business in the United States, where temporary business entry is covered by the NAFTA. Our ability to travel on business is constrained and made more costly whenever we need to obtain visas for a range of markets prior to departing from Canada. Such requirements are especially onerous for those of us with firms outside of Ottawa, where most visas are issued.

Visa requirements for temporary business travel will only be reduced or removed if Immigration Canada is part of the trade negotiating team and recognizes that helping Canadian business persons enter foreign markets is as much a priority as focusing on foreigners entering Canada.

Number two, removing biases towards commercial presence: As you may remember, under the GATS there are four modes of supply for services, one of which is commercial presence or setting up offices abroad, and one of which is cross-border trade, where you stay in Canada and send your services electronically abroad. In negotiating the GATS, Canadian trade officials have stated publicly that commercial presence abroad is the most critical mode for Canadian service exporters. That may be true for large service firms, but it is certainly not true for the many small service exporters like me who would prefer to export cross-border.

Since the conclusion of the Uruguay Round, cross-border options for exporting services have increased exponentially because of the maturation of the Internet. Please note that cross-border services trade has the distinct advantage of keeping jobs and growth in Canada rather than creating jobs primarily in the export market, as happens with commercial presence.

Three actions would help put cross-border on an equal footing with commercial presence.

First, treat any national requirement that a service provider have a local presence as being a non-tariff barrier to trade.

Second, treat any national requirement that a portion of fees for professional services that are provided cross-border be withheld “at source” pending income tax filing as being a non-tariff barrier to trade rather than simply a tax issue.

Third, treat electronic commerce as an infrastructure for cross-border trade rather than as a separate trade issue.

• 0910

Number three, aligning liberalization offers to match commercial realities: While the four modes of supply defined as part of the GATS had a benefit of focusing attention on the multiple ways in which services are sold to foreigners, they are artificial from the perspective of service exporters like me. We need to be free to make strategic choices among the four modes in order to be able to compete most effectively, sometimes cross-border, sometimes on-site, sometimes with local partners. If at all possible, this next round of GATS negotiations needs to do away with the distinctions among the modes and address cross-mode liberalization.

Another structural aspect of the GATS is that liberalization commitments are on a sector-by-sector basis. This sectoral approach to requests and offers, which was modelled on goods trade, overlooks the fact that service sectors are not discrete and independent. Competitive service exporters like me often need to bundle different types of services together or need to rely on complementary services. For example, Canadian exporters of tele-health services need liberalization in both health services and insurance services in order to compete abroad. To make sure that we are not disadvantaged as trade liberalization progresses, there are also changes needed here in Canada to help ensure the international competitiveness of service firms like my own. In the interests of time, I will only note them briefly.

One, we need better-quality services trade statistics as policy decisions and priorities are based on these statistics. Despite excellent initiatives by Statistics Canada, funding for services to statistics capture remains disproportionately low in comparison to that for goods, and services export statistics remain understated as they really only reflect two of the four modes of supply.

Second, given that computers are core equipment for service firms, we need an investment tax credit scheme for computer equipment similar to that of our U.S. competitors in order to be able to offset the escalating annual costs of continuous computer upgrades.

Third, provincial regulations still exist that unnecessarily restrict the recognition of out-of-province professional credentials. We need to make it as easy for smaller professional service firms to grow within Canada as it is to export.

Thank you for your time and attention. I would be happy to answer any questions.

The Acting Chairman (Ms. Sarmite Bulte): Thank you very much, Dr. Riddle, for your excellent presentation on services. Again, your presentation is excellent because we have not really dealt with this matter in this detail, and thank you for your recommendations.

Mr. Schmidt or Mr. Stinson, who would like to start?

Mr. Werner Schmidt: Madam Chair, thank you very much.

Thank you, Dr. Riddle. You're a breath of fresh air. I think this is one of the most concise, most lucid documents detailing the problem that faces services I've ever seen, and I've seen lots of them. This is an excellent presentation, and I really want to commend you for that.

I'd like to ask you, is the Canadian tax structure the biggest stumbling block in this whole thing? The whole tariff business and the whole visa business is in effect based, I think, on many of the considerations we have on taxes. I refer specifically to the continuing computer upgrades. We treat them in our tax structure as a capital investment now, and to a certain degree that's true. But the upgrades have to happen so regularly that it's almost an operational expense rather than a capital one. So I want to ask that question first.

Now, later I want to get into the other part of exactly how you could practically implement what you're suggesting.

Dr. Dorothy Riddle: Thank you for the question about the computer equipment. I find myself, for example, in the situation where I'm depreciating equipment that I haven't used for three years. I have to upgrade at least twice a year in order to stay competitive given the type of work we do. That doesn't say anything about the software upgrades and all the training costs for my staff to continually use the new software, I'm just talking about the hardware.

The initiative with regard to Y2K credits is a small help, but when I ran a business in the United States I could write off the first $19,000 of computer equipment every year, just as an expense. And that is very helpful in terms of cashflow, instead of having it depreciate.

• 0915

Mr. Werner Schmidt: Coming, then, to your suggestion that there be almost a composite of the four modes into a single consideration when it comes to the actual negotiation, how would you practically implement such a coming together of the four different modes?

Dr. Dorothy Riddle: I can give you some initial thoughts. It depends very much on what the appetite is, so to speak, at the negotiating table. One of the things I know has been talked about is to remove national treatment from a mode-by-mode issue and just make it a generic thing, like transparency is. I think that would be tremendous.

One of the difficulties, I think, from a practical point of view is that many of the actual barriers for service firms reside in domestic regulations that were developed without any thought to the trade implications. So everybody, Canada included, is still trying to discover and uncover all of those different kinds of regulations that have an impact on trade.

But the reality is that we need to know whether we can get into a market and what the ground rules are for being there. I think that can be done separate from sector and separate from mode but just in terms of can you do business there in whatever way you want to do business.

It's interesting to me that in some of the modes there are many offers of liberalization one wouldn't have expected, and I think it's just because people don't know how to deal with the complexity of the four modes. In other instances I think they restrict unduly, again, not having thought about the mode. So if we could just do away with them, it would be very handy.

If I may just add one comment, the other thing is that we don't have the statistics to track what's going on. For those of you who are going to be at the negotiating table in December, if you're looking at what the impact has been on Canada, you don't have a hope of knowing what happened in mode two. There are no statistics on mode two, for example. So why are we bothering? Why are we going to this level of detail?

Mr. Werner Schmidt: May I?

The Acting Chairman (Ms. Sarmite Bulte): Yes.

Mr. Werner Schmidt: It would suggest, then, that really the whole foundation, if you will, the underpinning of the basis on which negotiations take place, has to change and become broadened rather extensively so that the negotiations are actually tailored according to the particular industry, rather than the sector dividing it up.

You say that you go right across the traditional sectors. Traditional sectors are based on moving things and people from one place to another and on manufacturing things, and you're saying, no, that's not what we're doing at all. You're performing a service that cuts across all of those things. So on the one hand, we need to dismantle the process into the different areas, and on the other hand, we have to bring them together. You're saying yours is the industry that brings them together so that you can in fact freely provide the service that is needed. The vagaries of the situation will change from case to case, because in one instance you'll need a wide range of services and in the other case you'll probably have to focus on a very narrow issue.

Is that a fair analysis?

Dr. Dorothy Riddle: Perhaps I can use myself as an example. Sometimes we go into a market and provide only “management consulting services”. Sometimes we also provide training services, market research services, and communication services. So each of those is dealt with separately in terms of the sectoral breakdown. In terms of the modes, we may want to be cross-border; we might want to go in and actually deliver a training workshop there. So what we really need is to be able to just export a service that is bundled however it makes sense to us.

If I could just for a moment go back to one of your earlier comments on the tax structure being the most critical, it is critical. But perhaps I could just underscore for you temporary business entry. It is not a sexy topic, but it is really critical for us to be able to move in and out of markets. If I'm going to one market, I don't want to suddenly realize that I need to get four visas for the countries I'm transiting or where I'd like to stop off and have a business meeting on the way. So it's not just tax; temporary business entry is also very important.

Mr. Werner Schmidt: How long is temporary?

Dr. Dorothy Riddle: For my purposes it's under 30 days. It's a week or two days, for example.

• 0920

The Acting Chairman (Ms. Sarmite Bulte): Before we go to Mr. Sauvageau, could you go over what the four modes are?

Dr. Dorothy Riddle: There are cross-border and commercial presence. Mode two is supplying it to foreigners who are here in Canada, which is what we do through tourism or training here. Mode four is called movement of natural persons, but it's basically when I go into another country and deliver a seminar or a service there.

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

Mr. Sauvageau.

[Translation]

Mr. Benoît Sauvageau: I thank you for your presentation. I share the opinion of my colleague and friend of the Reform Party about the quality of your presentation.

I would like to ask a very simple question in order to understand clearly the visa issue that you mentioned a while ago and, especially, the 30-day period. I am sorry but I do not really see the problem. I would like to understand the issue in order to deal with it, perhaps, in our report. If I am not mistaken, one has to obtain a work visa in order to work in the U.S. for one or three weeks, and that visa must be obtained in Ottawa.

[English]

Dr. Dorothy Riddle: Thank you for the question for me to clarify. What has been negotiated under NAFTA for service providers is that if you are in one of 60 categories, you can go into the United States simply to do business development, to attend a conference or whatever, with no work permit needed. If you get a contract where you are being paid money, then you have to apply for a NAFTA treaty visa to do that. But the business development part, the temporary entry part, you can do without ever having to apply in Ottawa. You just show up at the airport with your papers, and you're fine.

If I want to go into the U.S., it's not a problem. But let's say that I have been invited to do something in South Africa, and I want to stop off in Tanzania to do some business development. I probably have to transit Kenya, and I need an entry visa to go through the Nairobi airport. Then I need a visa for Tanzania, which I know from experience will take me at least seven days to get. Let's say that I have only three days before my trip to South Africa to take advantage of this opportunity. What am I to do? I can send one of my staff members to Ottawa to try to lobby and work things at the Tanzania embassy, but it's very frustrating. Suppose I wasn't here in Canada. Suppose I was in London and I suddenly heard of this opportunity. We need the flexibility to be able to move around just for these short periods of time in order to develop business, because we have to do it face to face in order to establish our credibility.

[Translation]

Mr. Benoît Sauvageau: I'm sorry but I'm still not sure I understand. The problem does not seem to exist in the U.S. but rather in Kenya and in Tanzania. It seems to be much more general and seems to involve common people rather than only those who trade in services. If I wanted to go to South Africa and follow your path, should I not apply for the same type of visa?

[English]

Dr. Dorothy Riddle: Oftentimes you do need a visa as a tourist. One of the things we face is that sometimes the only way we can get quickly into a market is to lie and say we're going in as tourists, instead of saying we're going in for business development, because business travellers are usually in a different category.

The reason I raise this issue in particular is that right now these kinds of entries are primarily negotiated on a bilateral basis. For example, I can go to Chile easily. If Canada were to impose a $20 fee, as the U.S. has done for Chileans going into the U.S., suddenly I would find myself having to fill out paperwork to apply for something in order to get into Chile. My experience is that Immigration Canada thinks about the people coming to Canada, but it does not think about the fact that it has to negotiate on business people's behalf for easy entry into other markets. This has happened under NAFTA. NAFTA is almost the only trade agreement that allows us to travel easily in this way.

[Translation]

Mr. Benoît Sauvageau: In an ideal world, you would wish the Department of Immigration to be represented at the negotiating table, to win on all fields so that all those who do any type of temporary business in any country whatever be exempted of this requirement and be able easily to obtain a visa.

• 0925

[English]

Dr. Dorothy Riddle: I would like to see either that or that the visa can be obtained at the airport when we enter.

[Translation]

Mr. Benoît Sauvageau: I believe I understand. Thank you.

[English]

The Acting Chairman (Ms. Sarmite Bulte): Mr. Schmidt, we still have some time for a second round.

Mr. Werner Schmidt: Madam Chair, this is absolutely a delight that we have time to ask even more questions. I can't believe we could have such an exchange.

I really want to get into the practical implementation of this. You gave an excellent answer to my colleague here, that you have the visa available at the airport.

My question is, how would you register, or could you have a registry of persons like yourself who do international business? Would you need such a thing? Would you simply want to have the ability to put your credit card in, or whatever identification card it would be—maybe your Canadian citizenship card—and say this is what I am, and it would immediately say yes, this is one of the persons who does business in the world, and bingo, you have your entry?

Dr. Dorothy Riddle: Actually, we have several examples of exactly the kind of thing you have described. When I served on the APEC Business Advisory Council, we were working on an APEC business visa travel card. We had the CANPASS and the INSPASS between Canada and the United States.

There are a number of examples in other economies where you use something like a chamber of commerce to validate that this is in fact a businessperson in good standing in the business community; they have an ongoing business. Usually the concern of the country is that the person is not trying to immigrate illegally, that they will return to their country of origin.

So I think if the will is there, there are a number of ways you could do that. I wouldn't even mind, if it was absolutely necessary, to post some kind of bond on an annual basis that would allow me to travel quickly and easily into all kinds of markets. Then we could experiment.

Mr. Werner Schmidt: What is the resistance?

Dr. Dorothy Riddle: I think there are two issues. One, there is this concern that people are really trying to come in illegally, even between Canada and the United States. There's not a good understanding of the temporary business traveller. People are either students, tourists, or illegal in some kind of way, or coming in on work permits.

I think the other thing is that the immigration officials simply haven't focused on it. My understanding is that the trade minister cannot deliver this to us. Immigration Canada has to be at the table, and they don't see this as a priority issue. They don't understand the impact on us. It doesn't have that great an impact on goods exporters, but it has a tremendous impact in terms of time and expense on service exporters.

Mr. Werner Schmidt: That's the Canadian side of the thing, but what about the case of Tanzania? I think you mentioned that. Let's say you wanted to go to Tanzania. What is the problem there? Is it Canadian Immigration or is it Tanzanian Immigration?

Dr. Dorothy Riddle: Exactly. It's reciprocity. Thank you very much. If you're going to let me as a Canadian easily into Tanzania, Canada has to be willing to let the Tanzanian business travellers into Canada.

Mr. Werner Schmidt: This sounds to me more like an immigration problem than a trade issue. Well, it's both. But it seems to me that the fly in the ointment here is immigration.

Dr. Dorothy Riddle: That's right. That's why we need Immigration Canada at the trade table, which is an unusual partner in trade negotiations.

Mr. Werner Schmidt: I think, Madam Chair, this is a very worthwhile sort of discovery we've made here this morning. I think it would be very useful to take it back to your colleague, the Minister of Immigration.

I really want to thank you for bringing this and for being so frank about what's happening here. I think you're the first witness we've heard who was able to say this is how it is. That's wonderful. It's very refreshing.

[Translation]

The Acting Chair (Ms. Sarmite Bulte): Mr. Sauvageau, would you like to ask another question?

Mr. Benoît Sauvageau: No.

[English]

Ms. Colleen Beaumier: I think reciprocity is the real problem. I think you understand that as well. When you think that we know now that people can buy extra driver's licences—and certainly we're a little more controlled and are perhaps less susceptible to these kinds of false documents here in Canada than they are in many of the countries in which you wish to travel. So I think it's probably going to be a little more complicated to solve than just having a card to get in and out of India.

• 0930

Dr. Dorothy Riddle: If I could just comment on that for a moment, though, I would ask you to reflect on the fact that the community I'm speaking of is business people with established businesses, staff, and payrolls they need to meet. We're not talking about individuals who may be looking around the world for another economy they may want to live in.

Ms. Colleen Beaumier: But we know there are certain countries where you can buy a landed immigrant status paper if you have the right money and the right connection, and certainly you can get a visitor's visa for 100,000 rupees.

Dr. Dorothy Riddle: With all due respect, we have embassies and high commissions in all of these economies. We have highly skilled officials there. I'm sure if people want to solve this issue, there is a way to solve it making use of legitimate channels within the business communities of each of—

Ms. Colleen Beaumier: We have legitimate visitors from these countries, legitimate business people who get turned down at the embassies. It's very frustrating. I live in an area where 40% of my constituents are first-generation Canadians, so I understand your frustrations, as well as the frustrations of people trying to get into this country—legitimate people trying to get into this country. I do understand what you're talking about.

[Translation]

The Acting Chair (Ms. Sarmite Bulte): Mr. Sauvageau.

Mr. Benoît Sauvageau: I would like to convinced by your reasoning. Suppose that you win and that visas start to be provided more easily at the airports to small business owners. How would you define a small business? Going back to the example of Tanzania—and rest assured that I have nothing against that country—and of a Tanzanian craftsman who produces wood sculptures with two employees, would you say that this is a small business owner who should be able to obtain a preferential visa at the airport?

[English]

Dr. Dorothy Riddle: Certainly you would be a small business at that size. I want to be very careful to restrict my comments to service exporters because that is the area I know. I don't know groups. I don't know crafts. I don't know what the issues are there.

If we change it and, say, suppose you are a Tanzanian engineer with three employees and you want to be able to come over to talk about a joint venture to look at possibilities of partnership with Canadian firms in Canada, what I would like to see is that as long as you have the documentation that shows you are a legitimate business traveller with a base back in your home country—however that is worked out—you could come here.

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

I have a question regarding your statistics. Thank you for bringing them to life. Only 12% of our services are exported abroad and only 53% are exported to the U.S. Is the basis for these statistics from Statistics Canada? Does it again include all the modes or just modes one and three?

Dr. Dorothy Riddle: The statistics you see are from Statistics Canada. They're understated, so the percentage is probably higher than 12%, but they are comparable to the way in which the statistics are gathered for the other industrialized economies. If ours is really 18%, then the average is probably really 30%. In other words, it's relative to that. We don't know precisely, because of the mode issue, what percent of services are exported to the U.S., but we do know that it's a much lower percent than for goods and that service exporters are much more diverse in the number of markets they're in.

My firm, for example, has exported in the last five years to 40 countries. That's 40 different jurisdictions where I had to deal with this cross-border issue, and there are also others where I went just to conferences to try to meet people.

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

Mr. Bob Speller: Can I just follow up on one question? Why is only 53% going into the United States?

• 0935

Dr. Dorothy Riddle: I think there are probably two reasons. In terms of trying to find a match between your service specialty and the market, people look farther afield than just to the U.S. But I think the other is that realistically the U.S. is an extremely competitive service market. It's the most competitive. So you're up against not only lots of Americans, but lots of people from other countries, who are also exporting there. There are other markets where Canada has a very good image and you can get in much easier, with less competition.

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

Thank you, again, for your presentation and the recommendations contained therein. Thank you for joining us.

Colleagues, we'll have a five-minute recess, but we'll be back in five minutes.

• 0936

• 0945

The Acting Chairman (Ms. Sarmite Bulte): Good morning, Mr. Emerson. Welcome to the Standing Committee on Foreign Affairs and International Trade. We're delighted to have you here with us. We'd ask that you start with your presentation, and then we have time for questions and comments.

Mr. David Emerson (Co-Chair, Free Trade Lumber Council): Thank you very much, Madam Chairman, and good morning to you and committee members.

My name is David Emerson. I'm the president and chief executive officer of CANFOR Corporation, and I'm the co-chairman, with my eastern Canadian colleague, Frank Dottori from Tembec, of an organization called the Free Trade Lumber Council.

We are a group of companies in the forest products business that have come together to advance the cause of liberalized international trade in forest products. I don't have to tell you that the forest products industry in Canada is large. It directly employs in excess of a quarter of a million people in mainly smaller communities all across Canada. It indirectly supports another three-quarters of a million people across the country. We're also the leading contributor to Canada's balance of trade. The forest products industry accounts for exports of approximately $40 billion and a sectoral trade surplus of roughly $34 billion.

Importantly, our forests are renewable and sustainable, generating a potentially stable source of employment and economic benefits for many generations to come.

Our industry is also in a process of transition. We're evolving from domination by heavy mechanical manufacturing and the mythic logger with his chainsaw, to an industry dominated by technology, science, advanced resource management systems, and tightly managed supply chains.

This brings me to trade policy, which is a critical public policy issue that will very much contribute to shaping our industry as we enter the 21st century. The Canadian marketplace is small by world standards, and it's dispersed over an enormous span of geography. Economic success and improved standards of living for Canadians have always and will always require access to major international markets for the goods and services we produce as well as those we consume.

As a trading economy, we rely on free, open, and stable access to markets. To be globally competitive today, industries have to manage a complete supply chain, from the sourcing of our basic inputs, through to just-in-time management of retailer inventories, and often right out into after-sale service.

By the same logic, unpredictable, hard-to-manage, and costly disruptions to the supply chain are damaging to an industry's future and to the future of those who depend upon it. That is precisely the situation we face today under the Canada-United States softwood lumber agreement. The industry that has been the number one contributor to our balance of trade is now constantly subject to threats, countervail trade actions, and a general atmosphere of protectionist harassment. Under the agreement, production, shipments, and inventories must be managed to annual and quarterly quotas with consequences for both stability of supply and price. Worse still, the quota restrictions under the softwood lumber agreement do not apply to all producing regions of Canada, nor do they apply to lumber exports from other countries into the U.S. market.

As a result, we are seeing a dramatic reshaping of the geographic pattern of production among Canadian regions and between Canada and overseas producers. With the softwood lumber agreement we have taken a potentially vibrant contributor to our economic future and tied it up with administered quotas and associated protectionist paraphernalia and relegated it to also-ran competitive status.

• 0950

More shameful, this comes at a time when Canada, the United States, and Mexico purport to have North American free trade. We need constantly to be reminded that Canada is a small market beside a very large market. It is inevitable that our economy will be more vulnerable to trade disputes than the large market partner. This creates an exposure for Canadian industry today, and it will hurt our economy even more as future new investments seek immunity from trade policy disruption by gravitating to the large U.S. market and, by implication, away from Canada.

I'm not a technical expert on trade policy, but perhaps I can offer some general themes for re-engineered trade policy framework.

First, our trade agreements must be more clear, stronger, and less subject to unilateral, internal, political manipulation than is the case today. There should be much less scope for protectionist trade actions by all parties, but most particularly the United States, where such actions against small trading partners are carried out with virtual impunity. As long as trade agreements leave substantial latitude for interpretation, protectionist-minded legislators will find that that will fill the vacuum and Canada will pay the price.

Second, in those cases where a dispute does occur, we must have dispute resolution mechanisms that are responsive, i.e., quick, fair, powerful, and definitive. Resolution of disputes under the softwood lumber agreement today is a crapshoot that is largely unpredictable. You may win, but you still lose because of long delays, high costs of dispute resolution, and the likelihood that rules will simply be changed to secure the interests of the large market partner in any event.

Third, we do need better mechanisms for monitoring ongoing day-to-day compliance with trade policy. There's a natural tendency in a quota-restrained, rules-dominated world to look for loopholes. Small loopholes quickly become major structural flaws and disputes quickly escalate. Industry and government need to establish mechanisms for preventing trade policy abuses and dealing with them quickly and effectively. Early action could have neutralized recent conflicts over drilled studs, rougher-headed lumber, and other so-called value-added products.

I've always been an advocate of free trade, and in a world of large powerful trading blocks, I believe a North American free trade area is an important foundation from which to advance our interests in multilateral trade liberalization over time. Sliding back to poorly designed models of sectoral protectionism is not the way forward. We should, with our North American trading partners, cement and reinforce a trading framework that ensures that all three countries are stronger together than apart; that embodies mechanisms to ensure a fair and expeditious resolution of problems.

Canada faces an enormous challenge if we are to avoid long-term absorption of strategic business investment into the large U.S. market. The protectionist forces are strong and getting stronger in America today. Sectorally managed trade may well be the best we can do, but my plea is that the context and ultimate objective be a stronger, more balanced North American free trade area that can facilitate multilateral trade liberalization in the years ahead.

For Canada, I see no alternative but to tackle trade policy as a matter of national urgency and priority. A half-hearted approach will surely yield half-hearted results and leave us on a slippery slope down the world rankings of economic performance.

Thank you very much, and I'd be happy to entertain questions or comments, Madam Chairman.

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

Mr. Stinson.

Mr. Darrel Stinson: Thank you very much for being here today and for your input. One thing I picked up loud and clear is the unclarity of the rules. Let's just take the softwood lumber agreement as an example. Since the signing of that agreement, we've had pre-drilled studs added to it, and now you have rough-headed lumber. Now there's talk of 20 to 30 more products that might also be lumped into this.

• 0955

The forest industry is the largest employer in Canada. You supply the jobs, and the income impacts right across the board. A lot of people don't understand that. When we talk here about the impact coming down from the forest industry, they think it's just the forest industry. They forget it also impacts upon the teachers, the hospitals, the whole scale here.

How can we clarify these rules? When you sign these agreements, you sign them in good faith, and then they change them afterwards.

Mr. David Emerson: Thank you for that question. I'm not a technical expert on trade policy, but it doesn't take a rocket scientist to read some of the history of Canada's past couple of decades. In fact, it probably goes back about a century or more in terms of lumber disputes with the Americans in particular.

I think it is fair to say that to the extent one can enter into agreements and define with clarity the true meaning of the agreement, the meaning of the terms and concepts, the basis for resolution of disputes, and the meaning and interpretation of some of the issues that will come up in dispute resolution, such as the meaning of a subsidy, then I think for Canada we are far better off.

As I said to you earlier, Canada is in a unique situation in the sense that while we stand to benefit from free trade in a very substantial way because we're an open trading economy, we also stand to be hurt in the long term much more seriously than our trading partner to the south. The reason that is so is that as long as we have a trade agreement with areas of ambiguity and grounds for constant countervail trade actions, then we're really creating a world in which anybody who is considering a major strategic investment, certainly in our industry, and who has the choice of investing in the U.S., where they avoid the risk of disruption and countervail, versus Canada would not invest in the long term in Canada. Why would you possibly consider investing in the long term in Canada? The only way around that for Canada, in my view, is a rules framework and a dispute resolution framework that are strong and clear.

The issues under dispute on drilled studs are a classic example. There is a world classification of the products that were to be in and around, if you like, the softwood lumber agreement. Drilled studs, rougher-headed lumber, and a number of other products were clearly classified internationally and at the time of the softwood lumber agreement as valued-added products and in a classification not to be included in Canada's quota for shipment to the U.S. market. Now the U.S. administration, under pressure from protectionist forces in the U.S. lumber industry, is basically rewriting the rules unilaterally around the classification of products, which has the direct result of creating a significant increase in protectionism under the softwood lumber agreement, because now lumber that was going in quota free is coming in under the quota. We're losing quota, and it's very destructive.

Mr. Darrel Stinson: How does this impact on the employment sector regarding layoffs in the industry?

I have one other quick question. Knowing what you do now about the softwood lumber agreement, would you recommend the scrapping of it and going to the WTO, or would you recommend trying to work within the scope of that softwood lumber agreement?

Mr. David Emerson: On your first question on employment, I think the number one destroyer of jobs and growth in our industry in Canada today is the softwood lumber agreement. There's no doubt about it. You can talk about a soft Asian market, but that involves a relatively small portion of Canada's production and exports. The big issue is softwood lumber. The big issue is the absolute constraint imposed by quotas versus tariffs. Tariffs are bad, quotas are worse. I think most trade economists will tell you that.

• 1000

So I think it is a very destructive policy from a jobs point of view, and more destructive—you alluded to that—because the forest industry, while it is evolving technologically and is becoming a very advanced industry, is perhaps the best ray of hope in many, if not most, Canadian communities. You're not going to get Silicon Valleys in Dawson Creek and Fort St. John, let's be honest about it; but you can get high-tech sawmills and you can get high-tech forest products and value-added facilities. So even the absolute job numbers I think distort the true importance of the industry in the fabric of the country and our economy.

Sorry, I lost the second part of your question.

Mr. Darrel Stinson: Do you want us to scrap the agreement?

Mr. David Emerson: Scrapping the agreement; that's quite an important question. My own view is that were we to be faced with signing the agreement today as it now is written, I think many who were involved even at the time would not sign the agreement.

Do you now scrap it? My own feeling is it would be better to plug up the flaws and the holes in the agreement for the next couple of years, and when it is up for renewal in 2001 I believe we should be reshaping our trade policy in the forest products sector toward much greater liberalization of trade. And if we are driven back to a softwood lumber type of quota-restrained system, it needs a fundamental overhaul to make it a much more balanced and fair arrangement, because it is not that today.

I can tell you for a company like CANFOR, our predominant export orientation into the United States today is into what are called the big box retailers of building products, like Lowe's and Home Depot. Those retailers—and we're Canada's largest lumber supplier into those stores—are growing at 20% per year. They do not want to have a reliance on suppliers that can't keep up with their growth; and so if they're growing at 20% per year and we can't grow and in fact when our quota is shrinking, we have a serious problem coming down the pipe.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Speller has a direct question that follows up on this.

Mr. Bob Speller: Yes, it follow up on that. You mentioned there that you should liberalize the trade agenda regarding softwood lumber. How would you do that here in British Columbia?

Mr. David Emerson: To begin with, I would not focus on British Columbia. I think part of the problem to date has been that we are a country dealing with another country in trade policy, and constitutionally trade policy is a federal jurisdiction or responsibility; and yet we have, in my opinion, fallen into the trap where trade disputes have become less a nation-to-nation issue than they are a province-to-nation issue. I think that's a very serious problem, because British Columbia has really been the primary target of United States protectionists even though we are just one province, one region, within Canada. The major countervail attacks have been on British Columbian lumber, not really on Quebec, not really on Ontario, to date.

Mr. Bob Speller: Why is that? Do you know?

Mr. David Emerson: Because B.C. has been historically the dominant supplier into the market. The protectionists in the United States, in my opinion, are driven by the share of Canadian lumber entering the U.S. market, and the biggest contributor to that share happens to be B.C. lumber, historically, and therefore they go after B.C. But the anomaly is that B.C. is now Canada's highest-cost producer, because of our wood costs and our stumpage system and our regulatory system, and yet it's being alleged by the Americans that we are subsidizing our lumber in British Columbia. If we're subsidizing it in British Columbia, we're giving it away in Ontario. It's that ridiculous.

Mr. Bob Speller: What is it that British Columbia does differently from, let's say, some of the other provinces, whereby the Americans would say that British Columbia is subsidizing?

Mr. David Emerson: Basically nothing. The American allegation has historically revolved around the fact that Canadian lumber tends to be over 90% crown owned, and therefore when the crown disposes of lumber through sales and the stumpage revenue take-back system in place in virtually all regions in Canada, the Americans will allege that the fact of government ownership automatically presumes a subsidy in the disposition of the resource.

• 1005

So that has historically been the foundation on which they've attacked Canada and an alleged subsidy. Repeatedly, those allegations have been taken to impartial tribunals and adjudication mechanisms of one kind or another, and I think objective analysis has supported Canada and B.C., that we do not subsidize our industry. But the rules are then continually changed by internal rewriting of the rules within the U.S.

Mr. Bob Speller: So you think it would survive a countervail by the United States?

Mr. David Emerson: The problem is that the debate on the last countervail, back five or six years ago, was argued on certain grounds. Some of the grounds on which the last battle was fought have now been written out of the rules in the U.S. So whether we would win again today is much less likely, to begin with, and completely uncertain. That's part of the problem. We win on an objective set of criteria. The protectionists say, well, we'd better change the criteria—

Mr. Bob Speller: And they change the rules.

Mr. David Emerson: —so they successively change the criteria, and I think we're left with very little ground to stand on. I don't know. I really think that for Canada to unwind the problem today will require virtually a prime ministerial priority to be placed on resolving the softwood lumber issue, and probably doing so in the context of an array of other Canadian and American trade disputes that will allow trade-offs to be made.

Mr. Bob Speller: Thank you.

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

Mr. Werner Schmidt: Thank you, Madam Chair.

It's exactly on this point that I would like to address my question. So far, the softwood lumber dispute has centred on a particular sector of trade between Canada and the United States. I'm really wondering whether that isn't part of the problem, because there's NAFTA and the free trade agreement, and the softwood lumber was a side agreement. It's really not part of that bigger agreement. I think one of the reasons why this sort of thing is happening is that Canada itself is not united. So you have British Columbia over here, you have other provinces over there, and the Americans are looking at the situation and saying, well, you guys can't get your act together, so why in the world should we even bother? We'll fight with the people we think we can hit the hardest—and that's British Columbia. So that's what they've done.

My question to you is, ought the softwood lumber to be scrapped as a separate side deal and be made part of the larger trading negotiations? I think that's the point you just made with regard to the Prime Minister. How would your industry feel? They've invested millions of dollars in this negotiation process and have won quite extensively in previous contests with the WTO. What would happen now if it became part of the larger discussion when everything is on the table?

Mr. David Emerson: That's a very good question. You will know that within the industry there are as many divisions as there are regions and localities of Canada. So, please, I'm not speaking on behalf of Canada's industry when I answer the question.

My view is fairly simple. The quota environment we're now in is as much a cause of division as anything else, because when you have quotas that are as tough as the lumber quotas, you're fighting a zero-sum game. You now have a world in which some people have quotas that they're reasonably comfortable with, some people have no quota, some people have a little bit of quota, and some regions are not even in it at all and therefore are not restricted by quotas. So there are all kinds of rumours about underground shipments going through the quota-free regions from quota-constrained regions. There are investments being made in regions where the quota doesn't apply. The thing is just a great big bathtub full of holes leaking all over the place.

• 1010

My view is it's time for the Government of Canada to ask fundamental questions about what constitutes good, even-handed, and fair public policy, and not get into trying to win the unwinnable, which is to get into trying to figure out who loses quota so somebody who doesn't have enough can have some. That is never going to be a harmonious process, by definition.

[Translation]

The Acting Chair (Ms. Sarmite Bulte): Mr. Sauvageau.

Mr. Benoît Sauvageau: Good morning, Mr. Emerson. I'm pleased to welcome you this morning.

You stated that the softwood lumber agreement is the main cause of current job losses in your industry in Canada.

Do you know how many jobs have been lost since that agreement? If I remember correctly, the Canadian Association of Softwood Lumber Producers was quite favourable to that agreement when it was signed. Of course, it recognized that the agreement was not perfect but that it said that it was still the best that could be obtained in the circumstances. So I fail to understand how that agreement could have become the cause of all the ills of your industry.

I would also like to know the number of millions of boardfeet exported to the U.S., before and after the agreement, because I seem to remember that quotas were granted on the basis of the number of boardfeet exported at the time the agreement was ratified.

You also referred to an opening of the markets through free trade. The European Union representatives came to meet with us in Ottawa before their trip to British Columbia in order to explain their concerns about clearcutting in the province. I am far from being an expert about forestry in British Columbia but, if I remember correctly, they wanted your exports to bear a kind of ecological logo in order to let the Europeans know that our forests are sustainable. I would like to have your comments about that.

My final remark is precisely on sustainable forestry. I don't know if you have had the privilege of seeing the documentary produced in Quebec and entitled L'erreur boréale about clearcutting. In your statement, you mentioned very discreetly that your industry operated in a renewable and sustainable forest. What do you mean by "renewable and sustainable forest"?

[English]

Mr. David Emerson: Thank you very much for that question.

Just going back to your earlier questions about the industry being signatory to the softwood lumber agreement, yes, indeed that is correct. What I did say is I believe if the industry understood the impact the agreement has had looking back from today—20/20 hindsight, as we say—they would probably not have signed it with the same degree of enthusiasm as they had when they signed it.

I believe the fundamental problem has been—and it's one man's opinion—that there was too little recognition of the fact that if you are going to restrict trade by volume, by quota, you had better do it in a complete and thorough manner. Don't leave a bunch of holes in the dike, where people can simply shift their mills to Saskatchewan, Manitoba, New Brunswick, or Nova Scotia, which are not subject to quotas.

While the underlying objective of the agreement was to stabilize the supply of Canadian lumber into the U.S. market, it didn't do that, and it didn't do that because it was incomplete. Whether or not you should constrain supply is another matter.

As far as British Columbia is concerned, I do not have the specific numbers with me, but I would be happy to provide them to the committee. We have basically not seen any material growth in B.C. exports to the U.S. market in the last few years. Indeed, when you do look at the share of exports into the U.S. market from Canadian regions, the B.C. share has gone down quite significantly in the last few years. It's now down, I think, close to—and I will give you the correct numbers; it's close to 51% from I think the high fifties of three or four years ago.

• 1015

Turning that into a quantification of jobs that are forgone would be difficult, but in theory you can look at U.S. sawmills; you can look at how many mills have been shut. You can look at the under-capacity, because mills are maybe operating one or two shifts instead of operating more fully. That's all forgone economic benefit, both in terms of jobs and other economic benefits.

Your next questions are good ones, and they really deal with a problem that I think has a number of components. To be candid, part of the problem is a real problem in terms of the need for the industry in Canada to upgrade its environmental and forest management practices. Part of it is a perceived problem, in that because of clear-cutting and a variety of somewhat symbolic opportunities, opponents of the forest industry and advocates of environmental causes have been able, I think, to garner quite a bit of world public support against the forest industry basically by running films such as the one you allude to that I think was run in Quebec recently.

My view and I think the view of a number of Canadian forest companies today is one of moderation, and you may not agree with me, but I think of it as enlightenment. I think we are committed to improving our forest and environmental practices in a meaningful, specific way. A number of Canadian companies, and CANFOR is one of them, are taking the position that it's not good enough to sit back and react to attacks by Greenpeace and ads in the New York Times, boycotting pulp in the U.K., etc., by simply running counter campaigns of public relations or manipulation. That really was okay as a first-step reaction to a crisis situation a few years ago. I think many of us now believe we have to go far beyond that.

Now what we need to do is combine real modification in our forest practices with external validation of our forest and environmental practices and then have a campaign of long-term communication around that. To that end, a number of companies, and CANFOR again is one of them, are seeking to be certified under... we're dual-tracking CSA certification and FSE certification in CANFOR.

We in CANFOR have also recently undertaken a very thorough review of what have historically been I think very good forest practices in CANFOR, and we are taking ours to a whole new level, where we're looking at the science of total ecosystem management, particularly in the boreal and sub-boreal forests in the north. We are attempting to identify what we think of as a very long-term sustainable strategy for managing the forests for commercial purposes, as well as for the purposes of other users of the forests, including those who simply prefer to preserve.

[Translation]

Mr. Benoît Sauvageau: You stated in your presentation that your industry operated in a renewable and sustainable forest. As the President of CANFOR, what do you mean by a "renewable and sustainable resource" in the forest industry?

[English]

Mr. David Emerson: I'm not a forester, so I won't give you a technical definition. I think in terms of what ordinary people would understand, we mean a forest that is husbanded or managed in a way where you are essentially planting more for the future than you're cutting today. That is what we do in CANFOR. It means ensuring there are no significant environmental disruptions in the areas where we carry out our forestry and our forest management, so we're not destroying in any significant way valued wildlife and fish habitat—that kind of thing. It's basically to say, let's meet high standards of environmental management and let's do it in a way that the commercial basis of the forest is sustained in perpetuity, and the varied natural zones are preserved in a way that is satisfactory to the society around us.

• 1020

The Acting Chairman (Ms. Sarmite Bulte): Ms. Beaumier.

Ms. Colleen Beaumier: Thank you. I can always count on Mr. Sauvageau to raise my interests much more eloquently than I do.

I've just come back from the island, and I understand much of it is optics. However, after you've been to Clayoquot Sound, look at the areas you've reforested and see the enormous stumps there and the trees that after 50 years you can still literally hug, I understand it is optics, but it's a very difficult thing to swallow. I think we should ban wooden toothpicks.

You were talking about the U.S. and protectionism. Protectionism sounds like a dirty word. Well, I think it's not. One of the issues we have to deal with here, in fighting U.S. protectionism in the lumber industry, is we also have to worry about protectionism for other industries. We have to be able to rely on the sovereignty of our food production. We have to make sure we have milk producers, egg producers, and people within our own country to feed our own people, because the wave of the future seems to be total globalization—it may not always be—and there are certain things we as Canadians consider sacred.

When you're talking about liberalized trade rules, are you talking about across the board? If you aren't, how can we determine and convince our trading partners that the issues where we feel they are enacting too much protectionism are more important than the areas we feel are worth protecting? It's not an easy task.

Mr. David Emerson: I have a bias, which I will declare right up front. For reasons I've already stated, I think Canada has always been and will always be dependent on international trade. To the extent we are perpetrators of protectionism and encourage in any way the perpetration of protectionist acts by others, I think we are cutting off our nose to spite our face. I accept that there are socially critical industries, if you like. Food production is often cited. I am not personally of the view that free trade is the enemy of agriculture. I don't believe that, but that's another debate.

When it comes to the forest products sector, I would like to see it treated with the same priority, the same level of aggressive negotiating effort as we would see, for example, in the automobile industry or in our high-tech industries. Today the forest industry has been singled out for a particularly virulent form of protectionism that other sectors are not affected by. So the first step is to put the forest sector on the same basis as other critical industries in Canada, because after all, it's our number one trading industry, and if we can't negotiate trade policy to at least create a fair trading environment for the forest industry, then I think we have a problem.

• 1025

Ms. Colleen Beaumier: Are we exporting the maximum we can right now?

Mr. David Emerson: As a quota? Yes.

Ms. Colleen Beaumier: I thought the automotive industry was our number one exporter.

Mr. David Emerson: The number one exporter, according to our numbers, is the forest products industry. Gross exports are about $40 billion.

I did a study on the automotive industry when I used to work at the Economic Council of Canada, and it has a large amount of both exports and imports. A lot of parts come into Canada, vehicles go back and vice versa. So I'm not quite sure what they classify as automotive these days, whether it includes all the parts and accessories or just the vehicles.

Ms. Colleen Beaumier: When you're talking about exports, are you talking about logs or are you talking about processed goods?

Mr. David Emerson: There are actually restrictions on the export of logs from British Columbia. Most people might not know it, but B.C. has been a net importer of logs because we bring a fair amount of—

Ms. Colleen Beaumier: Okay, so we're talking about the export of finished products.

Mr. David Emerson: Yes.

The Acting Chairman (Ms. Sarmite Bulte): I have just a quick question.

Yesterday we had a presentation made to our committee by Murray Dobbin, who is on the board of the Council of Canadians. He talked about an agreement on forestry that Canada is promoting, along with the Americans, to the WTO. Are you aware of this agreement and have you been consulted?

Mr. David Emerson: I am not aware of the agreement. I understand there is a WTO meeting coming up in Seattle. There have been some discussions written up in the press recently, which I had a private meeting on last week, involving the trade ministers of the U.S., Canada and Mexico. There was some discussion amongst some of the business people there about the potential for Canada, the United States and Mexico to use the North American free trade platform as a way of furthering North American interests to the advantage, one would hope, of all of us in a WTO context. I'm not aware of anything specific to forestry, although there are some non-tariff barrier issues that may well be the focus of attention.

The Acting Chairman (Ms. Sarmite Bulte): According to this paper, there is an agreement on forestry that Canada is promoting, along with the Americans, to the WTO. The agreement on forest products has been drafted in the U.S., with the input of forest transnationals such as Weyerhaeuser, Boise Cascade Canada Ltd., International Paper and Georgia Pacific. Are you aware of any such agreement?

Mr. David Emerson: No.

The Acting Chairman (Ms. Sarmite Bulte): Very quickly, we're almost out of time.

Mr. Darrel Stinson: I just wanted to clear up one thing.

I sat on the natural resources committee, and we studied forestry practices around the world. I want to commend you people in the forest industry here in British Columbia. We found that you have the highest standards in the world here in British Columbia, and you are a leader in that field. Congratulations.

Mr. David Emerson: Thank you very kindly.

[Translation]

Mr. Benoît Sauvageau: Mr. Emerson, I would like to tell you about a cartoon that I saw in a Quebec paper. Two lumbermen are seated on logs in the midst of a completely devastated forest. One says: "What did you do before becoming a lumberman?" and the other answers: "I was a fisherman but there's no fish any more".

[English]

The Acting Chairman (Ms. Sarmite Bulte): Thank you very much for joining us, Mr. Emerson.

Thank you, colleagues.

Mr. David Emerson: May I make one last comment?

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

Mr. David Emerson: The big difference between fish and trees is that at least you can see the trees, or where they ought to be; you can't find the fish.

• 1030

The Acting Chairman (Ms. Sarmite Bulte): I'd like to call upon Ellie O'Day to come forward. Welcome, Ms. O'Day, to the committee. You're here to address the issues regarding the impacts of our international agreements on culture. I'm delighted to have you here to discuss these issues.

I also happen to be a member of the Standing Committee on Canadian Heritage and a member of CCA, the Canadian Conference of the Arts, and a former chairman of the Canadian Stage Company. I'd delighted to have you here today.

We have half an hour for you, and I see that your written brief is very detailed. If you can keep your presentation to 15 minutes, then we have—

Ms. Ellie O'Day (Executive Director, Pacific Music Industry Association): Oh, I think so. I'm an old broadcaster; I'm really good at getting to the—

The Acting Chairman (Ms. Sarmite Bulte): All right, perhaps you can just summarize it. I looked at it very quickly and it's very detailed, and I'm afraid you wouldn't get through it without questions.

Ms. Ellie O'Day: I don't know if I can do it, but I think I can get through it.

The Acting Chairman (Ms. Sarmite Bulte): Okay. Please begin.

Ms. Ellie O'Day: Okay. I'd like to thank the parliamentary committee on foreign affairs and international trade for this opportunity to describe how some of these issues impact on culture. I come to you specifically on behalf of the sector producing sound recordings and developing artists' careers, and generally as a supporter of the arts and cultural industries, as chair of the Vancouver Cultural Alliance.

But I also come as a citizen of Canada who expects that a certain standard of living—not just economic, but a quality of life that looks after our environment, working and living and intellectual conditions—is maintained and perhaps even improved by our government. I would be greatly concerned if corporations were left to set these standards, rather than the elected government on behalf of its citizens.

In the sound recording industry, we have less to gain and more to lose should unfettered trade prevail. It's not just that song writers and artists have enjoyed increased exposure due to measures like Canadian content regulations; it's that cultural diversity has been preserved at all.

I was part of the Working Group on Cultural Policy for the 21st Century, organized by the Canadian Conference of the Arts, and that group recommended—and I can condense this—that the Minister of Canadian Heritage, the Honourable Sheila Copps, continue her efforts to develop broad international consensus with governments of our international partners to adopt measures to affirm cultural sovereignty in Canada and beyond, to secure cultural pluralism in a globalized world, and to harness the powers of new technologies as tools.

Trade and culture have been awkward bedfellows. On the one hand, culture and other intellectual properties are the most borderless of our activities, engaging in trade, yet not fitting easily into the rules that control other sectors of the economy.

As Garry Neil wrote in his analysis of the MAI:

Canada is the most open market in the world for cultural products. Canadians believe passionately in the free movement of ideas, information and entertainment. But we want to be able to see ourselves reflected in what we watch, hear and read and to be able to choose to view the world from our own perspective, as well as that of others. Faced with the tremendous competitive advantages enjoyed by our southern neighbour, Canada has developed a series of measures which permit our artists and cultural industries to emerge and succeed. The basic objective is to ensure that Canadians have choice in our own culture.

Paul Hellyer, in his latest book Stop: Think, regards globalization as domination by power and greed. He describes how developing nations are exploited by the IMF and free trade and investment agreements. Today's superpowers were built in a climate when strong industrial bases were grown under the protection of trade tariffs. Today's agreements prevent developing countries from this domestic security. As long as they cannot establish strong domestic industries, they are forever dependent on the superpowers, and competition is reduced for the superpowers.

We keep hearing how these agreements are efforts to create level playing fields for multinationals, with their insistence on national treatment and most favoured nation clauses. But where is the level playing field for the worker, for the country's citizens? In the course of our discussions in the Working Group on Cultural Policy, our vice-chair, R.H. Thomson, introduced a proposal that he referred to as “global parallel rights”. Trade and investment agreements could only be signed if they recognized national obligations and citizens' rights in culture, social programs, health, environment, education, and labour standards.

• 1035

In the broadcast industries we have measures to ensure that Canadian product, although it doesn't have the economy of scale of that of the U.S. or the access to capital, can exist in a supportive environment. We expect broadcasters to reinvest in content, and we have initiated the much-copied Canadian content regulations to reserve room for this domestic product. The simple fact of liberalizing trade is no assurance that multinationals are going to provide international windows of broadcast or that they would invest in the production of content that may in many cases be of primary interest to people living in Canada, because we want to hear our own stories.

The evidence is just the opposite, in that we are finding that liberalization leads to more international takeovers of domestic companies, allowing them to distribute international product more easily into Canada. Although this may create some Canadian jobs, control remains with the multinational—and therefore the top-paying and empowered jobs—and the ownership of the product line is foreign owned. We in the music industry, fortuitously, have a rare exception at the moment in that Seagrams is owner of the largest sound recording company in the world, having purchased both Universal and PolyGram, but operations are based in the U.S.

Canada has established an effective and, as I've said, much-copied-around-the-world system of ensuring that those public airwaves also accept a responsibility to continue their enhancement. Just as we subsidize education so that everyone can afford an education, we must be prepared to underwrite the continued enhancement of our culture. Today's northwest coast art is renowned around the world, but remember, it emerged from a culture that willingly valued the work of its artists and created a place for it in its society.

The indigenous societies of the Pacific northwest supported artists whose work included longhouses, bent boxes, baskets, and totem poles. When those were taken away by their new traders, along with the customs that they accompanied, and replaced with those of the dominant new culture, the foundation of that culture was all but destroyed. It is through cultural expression that the last embers of these indigenous cultures have began to rekindle, with the production of new works, creativity, and social vitality. A new generation has learned those great skills and created new works relevant to today's cultural life. This renaissance has played a major role in social healing, but the human, spiritual, and economic cost of that destruction can never be replaced.

A few summers ago, I was sailing up the east coast of Vancouver Island and arrived at Alert Bay. The next day was a special day of significance to me because it was my 25th anniversary of immigrating to Canada, and to mark the occasion, the boat's cook and I went over to what is called the U'Mista Cultural Centre. The staff encourages you to watch a video first, which tells a story of how the people of Alert Bay came together to repossess their culture.

Earlier in this century, this community had resisted the government ban on the potlatch until the RCMP just came door to door and took the regalia away. After that, things went downhill in Alert Bay. But they turned the corner a couple of decades ago when they sat down to negotiate with the federal government to recover these cultural properties, which, by the tradition of the potlatch, are the property of families. But the government would only relinquish its collection if the community built a centre. Today the U'Mista Cultural Centre displays its mask collection in a long hall suggesting a longhouse, where youngsters learn the Kwakwakawak language. Out back, young carvers create new works, while the imposing but decrepit old residential school sits adjacent to the site, used for offices.

Culture does make the world go around. Without culture and without an identity, the expression of a people's values and dreams, people lose their collective soul. And just as we endeavour to keep our planet healthy by awareness of ecology, the people of the world thrive in cultural diversity.

Many in the cultural community have been concerned that agreements like the MAI sacrifice too much sovereignty for the sake of encouraging free trade and investment. In designing a level playing field for transnational corporations throughout the world, these agreements also threaten cultural diversity. For reasons of safety, social justice, conservation, health, and cultural sovereignty, such agreements cause far more problems than they solve.

The arts and cultural sector is already alarmed by recent treatment in multilateral trade agreements against our domestic magazine industry, threats by PolyGram Filmed Entertainment to seek an appeal by the EU against our domestic film distribution policy—that is, of course, until Seagrams bought the company—and threats by the U.S. against our new copyright legislation. The U.S. in particular has a competitive advantage in market size. Canada has developed policies to ensure that we maintain access to diversity—including our own voice, as well as from the broad and diverse international market. The U.S. already commands 95% of our cinema screens; drama on Canadian television is 86% foreign, mostly U.S.; 84% of our record retail is foreign, 84% of magazine sales, 70% of books, and 70% of radio is foreign—again mostly U.S.

• 1040

The relentless resolve of Hollywood, through lobbyist Jack Valenti, to access those few more screens, television hours, and radio air time shows just how desperately important arts and culture is to the corporate agenda. As Keith Kelly, then of the CCA, noted in a presentation over a year ago to the Standing Committee on Foreign Affairs and International Trade, although every Canadian government since 1944 has been engaged in negotiating freer trade agreements, it's difficult to find the sense of where the trade-off is between sovereignty and wealth. Once again a canary in a coal mine, the cultural sector is fighting to save the freedom to maintain cultural sovereignty and remain culturally sovereign.

Canadians already enjoy free trade. In contrast to many countries in the world, Canada has maintained access to international cultural products and information for many decades. Over the past ten years foreign investment in Canada has nearly doubled, to $180.4 billion, while Canadian investment overseas has increased two and a half times, to $170.8 billion.

There are always ways in which countries can improve access, whether it's co-production treaties for film projects, lower tariffs on imported goods, or more conventions establishing the reciprocal payment of artist royalties amongst countries. Yet while one department is negotiating free trade deals, another department of the Canadian government has increased tariffs for performing artists coming into Canada, while Germany and Australia levy a 30% withholding tax on foreign performers' revenues.

Artists are among the first to criticize these increasing barriers to the free dissemination of their works. Free access is important to our intellectual and social freedom. Loss of all controls, including the rights of creators, workers and consumers, however, is a great concern.

A number of years ago when the NAFTA was being hotly debated, The New Music on CITY TV in Toronto hosted a debate on the effects of NAFTA on the music industry. Panellists included multinational record company executives, Sheila Finestone, an Ontario MP who was for the NAFTA, plus this country's two biggest artist managers, rivalling any in the world: Ray Danniels, who was then managing Rush and now counts Van Halen among his clients; and Vancouver's Bruce Allen, with clients Bryan Adams, Martina McBride, and Anne Murray. Interestingly, the two managers were against the NAFTA. After signing a new talent and going shopping for a record deal, and had they exhausted their “big five” options in Canada, they would be facing even more competition in the U.S. market.

The primary reason that each of the multinationals has offices in Canada is because of trade restrictions. Allen and Danniels were also concerned that the CanCon system would collapse for radio because the U.S. multinationals would probably service Canadian radio out of somewhere like Detroit and wouldn't likely supply enough Canadian product. Without the distribution clout of the multinationals, few Canadian-owned labels would supply sufficient inventory to create a real hit record.

The U.S. has always been reluctant to properly pay for the use of creative work, yet most extravagant at protecting their already dominant market share and acquiring the rest. Today the U.S. wants to take to the WTO our hard-won new copyright legislation, which brings Canada up to speed with more than 50 other countries, because we weren't planning to pay their writers and their publishers royalties, which they don't even pay in their own country. Paying for the creative work of artists is a right recognized in Canada, and we uphold reciprocal agreements with many other countries in the world to both collect user fees and pay artists for that use. The U.S. has not signed onto some of the most widespread international conventions in copyright.

The David after Goliath this season is IMRO, the Irish Music Rights Organization. Just this past December the EEC upheld their 1977 complaint that the U.S. was in violation of international trade regulations. A U.S. exemption for certain shops, bars, and restaurants to play radio and television broadcasts without paying royalties was estimated to be worth $20 million to European writers and composers. A recent extension in the U.S. increases the exemption to 70% of establishments. IMRO now estimates that this will push losses to European authors to $60 million and U.S. authors to $400 million. In this case, the lobbyists for the U.S. National Restaurant Association won out over ASCAP, BMI, and SESAC, the collectives who administer copyrights for writers and publishers. IMRO says the U.S. legislation allowing this exemption violates the Berne convention on copyright and the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights, or TRIPS. The WTO must now adjudicate.

• 1045

This past February the members of the cultural industries sectoral advisory committee on international trade submitted their paper Canadian Culture in a Global World: New Strategies for Culture and Trade, acknowledging that Canada has always been at the forefront of international efforts to liberalize global markets. We also have been a champion of cultural sovereignty and cultural diversity. Canada should maintain this leadership role. A new international instrument on cultural diversity, according to the SAGIT, would recognize the importance of cultural diversity and acknowledge that cultural goods and services are significantly different from other products. It would acknowledge that domestic measures and policies intended to ensure access to a variety of indigenous cultural products are significantly different from other policies and measures, and establish a set of rules on the kinds of measures that countries can use to enhance cultural and linguistic diversity and how trade disciplines would apply.

In last weekend's papers came news of the latest deadlock in negotiations with the U.S. over the new Bill C-55. Mr. Sergio Marchi has heard the Canadian public request to make these negotiations more public, after our experience with the secretive MAI negotiations. He has asked his counterparts in the U.S. and Mexico to more narrowly define “expropriation” in the FTA, as it was intended to protect corporations from expropriations of assets. However, the experience in recent years is that this has been broadly applied to anything that diminishes a corporation's opportunity to derive profits. A narrower definition would allow countries to pass legislation and regulations that affect health, welfare, labour, environment, and cultural sovereignty.

Mexico's Mr. Blanco has opposed this, but Canada must stand firm on this issue as it ultimately affects all international trade agreements. I return to Mr. R.H. Thomson's global parallel rights, which insist that privileges come with responsibilities and ensure that trading partners have parallel obligations to respect sovereign rights.

Thank you.

The Acting Chairman (Ms. Sarmite Bulte): We have 12 minutes, so we can do one question apiece. If we have time for a second round, I'll come back to you, Mr. Schmidt.

Mr. Werner Schmidt: Thank you very much, Madam Chair, and thank you very much, Ms. O'Day, for appearing before us this morning.

I would like to ask you this. In terms of sovereignty, you have added the definition of cultural sovereignty, as if that is somehow a different kind of sovereignty from national sovereignty. Could you clarify the difference between national sovereignty and cultural sovereignty?

Ms. Ellie O'Day: I guess what I'm referring to more is the sort of non-physical things that we deal with. We have to make some distinction these days, in that we have such a borderless world when it comes to all kinds of information. It doesn't have borders as a sovereign country has borders, so I think just in the linguistics we tend to make a distinction there to indicate that these are ideas, things we can't put a physical presence to, in the same way as we recognize intellectual property. We make a distinction between physical property and intellectual property. I think it's just a matter of language. I think it's all really ultimately the same thing, which is that we're concerned that we have a country that has its own ideology and principles that we abide by.

Mr. Werner Schmidt: I find that interesting, because in your paper you do refer to some very physical things as culture, and if I remember correctly, if I can find it here, it has to do with the removal of... Yes, it's on the top of... this page isn't numbered here.

But you say, “Today the U'Mista Cultural Centre displays its mask collection in a long hall suggesting a longhouse, where youngsters learn...” and so on. You continue: “Out back young carvers create new works, while the imposing but decrepit old residential school sits adjacent to the site...”. You say: “Culture does make the world go 'round. Without culture, without an identity, the expression of a peoples' values and dreams, people lose their collective soul.” The earlier reference here is to the removal of totem poles and things of this sort. That's very physical.

So I'm not quite sure how to interpret your recent answer.

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Ms. Ellie O'Day: Well, I don't think we can expect that... how should I put this? Culture has manifestations in a physical sense, whether it's in film, a sound recording, a sculpture, or a book. They're all physical manifestations. But it is actually the content that is the cultural issue. But in order to disseminate those ideas, we have to reserve spaces for the cultural manifestations of those ideas.

It's a difficult linguistic issue, I understand. When we talk about cultural industries, I recognize we're talking about a somewhat commercial manifestation of those ideas, but that is how we disseminate it. That's why I made the point about how dramatically Hollywood goes after preserving the international space they have for their cultural product, because that is how they disseminate the principles of the United States of America. It's primarily through Hollywood films more than anything else.

Mr. Werner Schmidt: So then culture should never become part of a free trade discussion?

Ms. Ellie O'Day: I think it has to be regarded in a distinctive way, because it has so much to do with who we are. I think we have to deal with it in a very distinctive way in terms of the way we allow the reservation of that space, within our domestic market particularly.

Mr. Werner Schmidt: So does that mean no or yes?

Ms. Ellie O'Day: I'd have to hear your sentence once again to answer that accurately.

Mr. Werner Schmidt: Thank you, Madam Chair.

The Acting Chairman (Ms. Sarmite Bulte): Ms. Beaumier.

Ms. Colleen Beaumier: I don't have any questions.

The Acting Chairman (Ms. Sarmite Bulte): Okay. I have a few questions, then.

Now, Mr. Schmidt did ask if it is both. Let's first talk about the cultural SAGIT report, which talks about making culture part of a separate international instrument. We had members of the cultural SAGIT speak before the foreign affairs and international trade committee about this. But one of the things the report didn't say—and I agree with the principles that are in there—was how we go about making this international agreement, and through what forum. I mean, is it the WTO, or is it the free trade of the Americas?

We had a very interesting presentation. Our first presenter this morning was Dr. Nola Kate Seymoar, with the International Centre for Sustainable Cities. She talked about how in the Americas “we are leaders”. Now, this agreement that is proposed by the cultural SAGIT, is this something we could start to negotiate at the free trade area of the Americas negotiations?

Ms. Ellie O'Day: I think it needs to be addressed in all negotiations. I think that's the principle that's being addressed here, that we need a general operating principle that would be respected by all these trade agreements. In other words, we really need to begin to set a precedent here in how we talk about culture, because every time we have negotiated one of these agreements, this whole definition has come up once again.

The Acting Chairman (Ms. Sarmite Bulte): I understand that, and I certainly understand that what the SAGIT report also states is that exceptions and reservations are not working, and notwithstanding those exceptions and reservations, we are being taken to WTO. We have to find another way.

My concern is, logistically, how do we link it to the World Trade Organization? We still have the World Trade Organization. We have that dispute settlement, and we're going to have the rules there. How do we link it so that it does stand separate and apart, and when should we start talking about it? My concern is that it's going to fall through the cracks.

Ms. Ellie O'Day: I have to return to my comment, which is that I think it has to be addressed at all those agreements to harmonize the language of these things, so we don't have to keep returning to this in every individual case.

The Acting Chairman (Ms. Sarmite Bulte): Another thing is that in your paper you talked about one department negotiating for your trade deals, and artists being among the first to criticize the increasing barriers to the free dissemination of their work. That is a point well taken. However, about a year ago, I believe, when the Minister of Citizenship and Immigration, Lucienne Robillard, brought down her legislative review of the immigration system, one of the things they looked at was visas. The reason I bring up visas is that we talked about the inability to get visas being a problem in service industries.

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One of the recommendations in that report was that we give 30-day visas to temporary workers. An incredible outcry came from ACTRA at that point because we didn't have reciprocal arrangements. If we are allowing the Americans in for 30 days, is this an area we should be exploring in our trade agreements?

Ms. Ellie O'Day: Yes, as I mentioned, we have the cases of Australia and Germany to deal with as well. Those are the kinds of areas where we simply address reciprocal agreements. My problem is where things aren't really reciprocal, such as the copyright issue, where they're not at all reciprocal.

With these bilateral agreements and even more widespread agreements like this, where we say we want to see the free dissemination of cultural performances or whatever, let's harmonize our requirements so one country isn't expecting these huge withholding taxes and another is not requiring them at all. Let's try to get those equalized, because I think that is where artists like to see sharing. It's where the playing field is not at all level that I have significant problems.

The Acting Chairman (Ms. Sarmite Bulte): I just have one last comment. You speak about Garry Neil's paper. This subcommittee has dealt with that paper because we took Mr. Neil's recommendations on the MAI and embodied them in our subcommittee report, which was chaired by Mr. Seller in the following year.

Mr. Schmidt has talked about cultural sovereignty and the difference. I'll never forget what Robert Lantos once so eloquently said: we must never forget that our cultural sovereignty is so inextricably entwined with our economic sovereignty. There's some food for thought. Thank you very much.

Mr. Werner Schmidt: Do you mean this is all about money?

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

Next I'd like to ask to come to the table the West Coast Environmental Law Association, the Canadian Association of Physicians for the Environment, and the Canadian Marine Environment Protection Society.

Welcome, ladies and gentlemen. Thank you for coming to the Standing Committee on Foreign Affairs and International Trade. We will begin with Steven Shrybmen, executive director of the West Coast Environmental Law Association. We have three panellists in this section. So we can allow for questions and answers from the table. We would ask you, if you could, to summarize your presentations to ten minutes apiece, so we have the opportunity to exchange some dialogue.

Mr. Steven Shrybmen (Executive Director, West Coast Environmental Law Association): Thank you very much, Madam Chairman, members of the committee. Thank you very much for inviting me to appear before you today.

I'm the executive director of the West Coast Environmental Law Association, which is a public interest legal advocacy organization that is now in its 25th year of operating and providing legal services to the people of British Columbia.

We've been actively involved in environmental law and policy at the international, national, local, and provincial levels for the past 25 years. For the past decade or so, international trade has been a priority for West Coast and my colleagues there.

Today I will present you with submissions that represent an excerpt of a report I wrote, as part of our participation in something called the Common Front on the World Trade Organization. Other member groups include the Council of Canadians—I believe you've already heard from Ms. Barlow—the Canadian Labour Congress, the Sierra Club of Canada—I think you'll be hearing from Elizabeth May some time in the future—the Polaris Institute, the Canadian Environmental Law Association, and us. I haven't provided you with a copy of the full report, but I'd be happy to do that.

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What I want to do today, in the ten minutes available to me, is make three points. First, as a consequence of entering into these multilateral agreements, we have ceded parliamentary and sovereign authority to institutions that reside outside of Canada and are not accountable to Canadians.

Second, the rules administered by these institutions are fundamentally incompatible with any version of sound environmental policy. Third, it's time now for us to stop and take stock of what we have accomplished by negotiating agreements such as NAFTA and the World Trade Organization, and engage other sectors in a discussion about the impacts of these regimes.

I compliment the government on embarking upon this inquiry, but it's only a beginning. Other departments of the federal government should be engaged much more fully in the exercise of understanding and debating the implications of Canada's international trade and investment treaty commitments.

So to expand very briefly upon each of these points, it has become very clear that in negotiating a free trade agreement with the United States and in concluding a North American free trade agreement that includes Mexico, we have abandoned a wide variety of regulatory and public policy opportunities that from environmental, cultural, and various perspectives are very necessary to accomplishing Canadian public policy objectives.

We have abandoned them to U.S. institutions, in the case of conceding under chapter 19 of NAFTA, in the way we've provided our consent to the application of U.S. unilateral countervail trade measures under chapter 19. We cannot protest the development or implementation of U.S. unilateral measures, other than to insist that they be applied in accordance with U.S. law, which the U.S. is free to change as it cares to from time to time, subject only to the requirement that they consult with Canadians in the process.

We have ceded our authority as well by submitting to the prospect of investor-state litigation under the investment rules of chapter 11. You'll be familiar with the fact that a number of cases have now been brought challenging Canadian regulatory policy—not coincidentally, most often Canadian environmental policy. The Ethyl case is one and the S.D. Myers case is another. The Sun Belt challenge is yet a third, although I understand they have yet to file a claim. They certainly filed notice of intention to claim. Their concern is with water export controls in British Columbia.

So we've submitted in a way to disciplines—for example, in the case of investor-state suits—that will be imposed upon Canadian law and policy by international arbitration tribunals that will be operating entirely outside the context of Canadian law and judicial norms and will be applying rules that are not grounded in Canadian statutory or common law. Those panels apply international laws in the agreements. In many ways, particularly in the area of expropriation, there are great differences between the two.

Most Canadians probably don't understand what was accomplished with the WTO in the transformation of enforcement mechanisms that occurred when the WTO was created. We transformed basically a regime that existed to facilitate consensual dispute resolution among the parties to the GATT into a regime that actually had an effective enforcement mechanism. Now the rulings of panels are automatically implemented within 60 days of being issued, unless they're appealed. Then the same rule applies with respect to decisions of the appellate board, unless every single member of the WTO agrees to block implementation.

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To illustrate what this means, the first case to be resolved by the WTO involved a challenge to U.S. environmental regulations, called the reformulated gasoline case. There was a complaint about U.S. Clean Air Act regulations that was brought by producers in South America. The complaint was heard, and the panel decided that U.S. Clean Air Act regulations were a trade barrier and would have to be removed. There was an appeal. The appellate body came to the same conclusion. The U.S. was put to the option of either removing its regulations or paying these foreign oil and gas refiners tens of millions of dollars a year for every... I forget whether it was sixty or more, something in excess of $60 million a year.

All that happened in nine months. There is no domestic enforcement regime available under either Canadian criminal law or Canadian civil law that could mete out that type of remedy and do so in a period of nine months, appeal included. They're very powerful enforcement mechanisms. It doesn't matter any more what Canadians think Canadian cultural policy should be or what the Canadian environmental policy should be where conflicts arise with the greatly expanded domain of international trade agreements that now deal with all kinds of things that have very little to do with trade—investment measures, intellectual property rights, and investment among them.

The second point is that the rules of these regimes, which were developed basically in secret behind closed doors, with the participation of no departments other than the Department of Foreign Affairs and International Trade, reflect an overwhelming preoccupation with trade policy objectives to the exclusion of any other policy objectives. It simply wasn't on the radar screen. So it's not surprising that when push comes to shove, other policy goals seem to be nowhere present in terms of protecting Canadian cultural integrity, our environmental values, our workplace health and safety measures, or Canadian resource conservation policies.

I can't in the time available to me get into the extensive jurisprudence that has now arisen in this context, but they include the shrimp-turtle case, the reformulated gasoline case already mentioned, and challenges to salmon and herring conservation programs off Canada's west coast that have been brought successfully under NAFTA. What are the others?

Canada has now invoked the WTO to challenge asbestos regulations in France. These regimes are now increasingly and more frequently being employed to challenge domestic regulatory measures that have been established for the purposes of protecting consumer health.

I forgot to mention the bovine growth hormone case, in which Canada is a villain as far as we're concerned. Every single one of these challenges has succeeded, which isn't really surprising when you appreciate that the policy objectives of these regimes is to facilitate liberalized trade. Very little scope is given for defending other goals.

The third point I want to make, in concluding, is that it isn't difficult to understand why these institutions are so imbalanced when it comes to weighing competing policy objectives when you appreciate the fact that they were developed in a very myopic way. I've noted that, for example, when it comes to environmental law and policy there is an official who works for Environment Canada who is responsible for representing the department and for understanding the implications for the whole gamut of environmental and trade issues. He also works on climate change issues as well. The point is that within the Department of Environment there is not more than one staff person assigned to dealing with the enormous interrelationships that exist between environmental and trade policy.

I suppose the last thing I'll say, to conclude, is that in dealing with the conflicts that have arisen between environmental measures and trade agreements, it's been common for trade institutions to suggest that the way to resolve these conflicts is to create some type of independent institution. Apparently Mr. Ruggiero suggested that quite recently with respect to the WTO, advocating the establishment of a world organization on the environment. Or, as occurred under NAFTA, we've seen the creation of a commission on environmental cooperation.

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What those approaches suffer from is the failure to appreciate that the environment and the economy are intimately interrelated, and we cannot imagine that we can enter into commercial or international trade obligations without influencing in a great way what happens with our environment. In making this argument to friends in the environmental community, I argue that the World Trade Organization is actually the most important international environmental agreement we have in the world. You will not find in the provisions of the WTO any element that doesn't have environmental consequence.

If you look at the guide I've drafted, you see that we deal with agriculture, which from our perspective is probably the aspect of WTO agreement that has the broadest impacts on the environment from climate change to food safety. But we also deal with intellectual property measures, with services, and with investment. There simply is nothing in the WTO that doesn't have substantial implications for environmental law and policy. It's important that before these commitments are further consolidated or extended, we begin to understand what those implications are and make a commitment to address them in a way that's consistent with dealing with the very pressing ecological problems before us.

Thank you very much.

The Acting Chairman (Ms. Sarmite Bulte): Thank you very much, Mr. Shrybmen. You did offer before you made your presentation that if we so desired you would provide us with the entire report. I've looked at the contents. Could you please do so? There are a number of issues that have been raised by other witnesses, and we'd like to have it.

Mr. Steven Shrybmen: Yes, certainly, I'll deliver them later today.

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

Next is Dr. Peter Carter, secretary of the Canadian Association of Physicians for the Environment. Welcome, Dr. Carter.

Dr. Peter Carter (Secretary, Canadian Association of Physicians for the Environment): Thank you.

Honourable members of the standing committee, I am glad to have the opportunity to present to you the position and concerns of Canadian physicians concerned for the environment on the World Trade Organization, WTO, and the free trade agreement for the Americas, FTAA.

I have a little bit of housekeeping first. I sent you a fairly substantial document on April 14, which you don't actually have. It's still languishing in Ottawa somewhere, I gather. It will make things a little bit difficult for both of us, but I'll do my best. The document does have some importance because it contains copies of 12 governmental agreements, conventions, and declarations that I want to draw to the committee's attention.

The focus of the submission and our work is human and environmental health in the context of sustainable development. We got involved in this research first through our submission on the renewed Canadian Environmental Protection Act, CEPA, in which, interestingly, the public documents that came out several years ago did mention the likely effect of free trade agreements on the new CEPA.

Subsequently, we had correspondence with the Department of Foreign Affairs and International Trade. We weren't satisfied with the information we were given, and then in January 1998 we submitted a petition under Agenda 2000, the amendment of the Auditor General's act on sustainable development. So that's a brief overview of our involvement to date.

Almost exactly two years ago, here in Vancouver, on April 17, 1997, the Hon. Lloyd Axworthy gave his address on sustainable development in Canadian foreign policy. This was an introduction to the Agenda 2000, which was the basis for our petition. I now quote from his address. He makes some very crucially important points. He says:

Our aim in this document is to outline a strategy for integrating sustainable development considerations into all aspects of our operations and decision making. In other words, to make sustainable development an over-arching theme for the conduct and practice of Canadian foreign policy and international trade.

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We would assess and judge the proposals for WTO and FTAA on the basis of that statement, making sustainable development the overarching theme for the practice of Canadian policy and trade.

With the tremendous changes to other aspects of the international landscape in the last few years there is a real danger that environmental concerns have slipped off the international agenda since Rio. We cannot allow this to happen. Pragmatic workable follow-up is crucial. To do this, we will have to work in new ways.

Another quote from the same presentation is:

Environmental degradation and resource scarcity are the underside of globalization. They are threats to human security that respect no boundaries. Faced with this kind of threat, the old approaches will not be sufficient. And finding new approaches will not be easy or non-controversial. But we have substantial assets and skills to bring to bear on the problem... And we have the strongest reasons possible to get our answers right: the future of our children, and of our children's children.

The document I sent you on the 14th, which you don't have, gives the strongest support from our research from a wide spectrum of disciplines and authorities for the minister's statements.

I'm here as a family physician. I'm not here pretending to be an expert on environmental law or international trade; hence the considerable amount of research that mainly I and some of my colleagues have done in our submission. We have taken a very wide range of disciplines, from Canada, from the world, from international organizations, from the WTO, from the OECD, to arrive at the conclusions and proposals you have. What we're asking is that the committee recommend that the FTAA and the WTO expansion and agenda be put on hold so that sustainable development can be done and done right, in the words of the Hon. Lloyd Axworthy, because the document we have sent shows conclusively that the WTO and the FTAA are in fact keeping environmental concerns off the agenda. There is no integration of sustainable development whatsoever in the WTO and the FTAA. Even the background documents that were made available on the department's web sites do not even mention sustainable development.

Sustainable development is uniformly noticeable by its absence in any of these new proposals. We have gone downhill since NAFTA on incorporating and integrating sustainable development. There is no question about this.

The submission I am giving gives details of the essential new approaches, and again, they're not coming from me or from our group. These new approaches are coming from experts in economics, environment, health, and sustainable development, from around the world.

Included in the international agreements I've copied are, for example, the health declaration on environment and sustainable development from the Organization of American States, which would act as our basis on the health involvement here, and we also have what to our mind are very excellent documents from the OECD.

I've already stated, but I have to mention again, that there's no mention of sustainable development in any of these proposals. We are continuing with the old agenda back from Uruguay of top-down processes that do not allow sustainable development. The texts of any of these agreements since NAFTA do not allow sustainable development. The dispute resolution panels we're hearing about, which are so badly and uniformly anti-environment, do not allow sustainable development. Health and the environment—and this was confirmed by the copies of the Hon. Sergio Marchi's speeches in the House—are kept outside of these free trade rules. They do not allow sustainable development.

This position continues to be the firm position of the WTO. At last month's high level symposium on trade and environment, again, sustainable development and environment were kept outside. You can't do sustainable development like this. It is not the right way into the future—the challenge that the Hon. Lloyd Axworthy presented two years ago here in Vancouver—it is simply the wrong way.

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I could present four categories of reasons that we're asking the committee to put these proposals on hold.

The first would be this question of openness and transparency. We still do not have it. In fact, there's a strange confusion in the process that we're involved in here today. According to the trade website that I checked a couple of weeks ago, the department here in Canada is leading the FTAA committee, and in actual fact they state that they persuaded the FTAA committee to do this civil society input. But we find that the civil society input had a deadline. The deadline was March 31. So here we are having our discussion and having our dialogue, and we're given a deadline of April 31. So unless these deadlines have been changed, this doesn't make a whole lot of sense. It certainly doesn't allow very much in the way of openness and transparency.

The Acting Chairman (Ms. Sarmite Bulte): What website, our website on these hearings? Are you talking about the FTAA secretariat in Miami?

Dr. Peter Carter: The government trade website, which states that:

An important challenge remains... of a collective process of consultation with civil society in the Americas in the absence of consensus on how or the extent to which such consultations should occur. The Committee of Government Representatives on the Participation of Civil Society is a Canadian initiative and a Canadian senior official serves as the acting Chair of the Committee. As a result of a meeting of the Committee in October 1998, an open invitation was extended to civil society to provide written submissions by March 31, 1999...

That's all the information I have, which I just got two weeks ago. But it seems rather strange, to say the least.

The Acting Chairman (Ms. Sarmite Bulte): We'll check that out. Continue, please.

Dr. Peter Carter: I didn't want to spend a lot on that, however.

The second point would be, again according to the trade department's own website, where is the need for pushing these free trade agreements as hard as they're doing? Trade with South America has never been greater. Tariffs are falling. This is happening without pushing so hard with these deregulating agreements, which we see as so dangerous for the environment and for health.

The third argument would be what you've heard already, that we already have a history—from WTO certainly, but also from NAFTA—of these deregulatory free trade agreements undermining environmental and health regulations. The fear, which is becoming a regularity, which is becoming a reality, of being pushed down to the lowest common denominator... and this is good for neither the economy nor the environment, I would hasten to say.

The fourth argument would be that we find a conflict with the terms and rules of the WTO and these free trade agreements on international agreements on health and sustainable development to which Canada is already party. I would refer you to four of these that we see as very important. I would point out that there are 900 environmental agreements around the world, according to UNEP, and one of the tasks that we see we need to do as catch-up, of course, is to consolidate these.

We have the Pan American Charter on Health and Environment in Sustainable Human Development, which I have already mentioned, which came out in 1994. This is in tab 9 of my document.

We have Agenda 2000 and the Department of Foreign Affairs and International Trade's statement on Agenda 2000, in which the department confirms its responsibilities towards integrating sustainable development in all its policies on trade.

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A third one would be the Declaration of Santa Crux de la Sierra hemispheric conference on sustainable development of 1996, a very full and comprehensive document on sustainable development referring to international trade, to which Canada is a party and a signatory.

The fourth one, to which I would particularly draw the committee's attention, is the report of the high-level advisory group on the environment to the OECD secretary general of November 1997, to which the secretary general has informed us in correspondence that Canada is a signatory, and this is binding at a governmental level.

The Acting Chairman (Ms. Sarmite Bulte): Dr. Carter, could I ask you to conclude, please?

Dr. Peter Carter: Right.

In a nutshell, the first of our recommendations is that all multinational and trade agreements be based on sustainable development. We're nowhere near that. We're nowhere close. So all our proposals are means taken from other agreements by which this can become a reality. So if, for example, the very excellent OECD recommendations were actually followed, to our mind, this is eminently achievable. We know how to do it; we're not getting it right.

Put another way, the department said it was transferring the MAI to the WTO and to the FTAA. The OECD recommendations should move along with that.

The last recommendation is that the process and terms of the NAFTA and FTAA be modified to comply with the Declaration of Santa Crux de la Sierra on sustainable development.

Members of the committee, the work has been done. This work has been done over thousands of hours for most of this decade. It is time to do it and get it right.

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

Our last witness in this panel is Annelise Sorg, executive director of the Canadian Marine Environment Protection Society.

Ms. Sorg, please.

Ms. Annelise Sorg (Executive Director, Canadian Marine Environment Protection Society): Madam Chair and members of the standing committee, on behalf of the Canadian Marine Environment Protection Society, I thank you for the opportunity to allow the public to bring forward comments regarding Canada and the World Trade Organization.

I trust that you have all received the brief we sent to you on April 16, where we summarized background information on Canada's policies on whaling and sealing and provided you with a list of our recommendations.

We are concerned that internal and external pressures will influence the Canadian government to partake in organized efforts to lift the global ban on the trade of whale meat by transferring the issue from the International Whaling Commission, IWC, to the WTO.

Pro-whaling organizations such as the North Atlantic Marine Mammal Commission, NAMMCO, and British Columbia's World Council of Whalers, together with countries such as Norway and Japan, are outspoken critics of the ban on whale meat trade.

In the agenda for the upcoming IWC meetings to be held in Grenada in May, item 10.1.2, entitled “Infractions” states:

Norway has made the following comments on this agenda item: As stated on many previous occasions Norway holds the view that questions relating to trade in whale and whale products falls outside the scope of the IWC. In our opinion CITES and WTO are the appropriate international fora in this context.

However, a majority of the IWC member countries continue to oppose any type of international trade with products of cetaceans, and furthermore, they are also seriously concerned about the human consumption of contaminated whale meat.

At the last IWC meeting, the “Resolution on IWC concern about human health effects from the consumption of cetaceans”, IWC document 50/39, was adopted by consensus. It reads:

WITH DUE REGARD to International Convention for the Regulation of Whaling... Schedule Article V,2(d), stating that the Commission “shall take into consideration the interests of the consumers of whale products”;

AWARE of scientific evidence indicating that some Arctic communities are currently faced with the threat of organic contaminants and heavy metals from the consumption of certain cetacean products;

NOW THEREFORE THE COMMISSION: INVITES member and non-member governments directly affected

to submit, when possible, reliable information to the IWC relating to possible human health effects resulting from the consumption of cetacean products;

Other international fora are equally concerned with the deteriorating health of humans and marine mammals. The sixth meeting of the Canada-Greenland Joint Commission on Conservation and Management of Narwal and Beluga, which was held in the Northwest Territories from November 28 to December 1, 1997, concluded under item 13.1 entitled “Beluga” that “There is a need to determine and complete contaminant analyses on samples that have already been collected.”

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Although much research still needs to be done in that area, there is now enough scientific evidence that shows that high levels of mercury, selenium, PCBs, and other toxic chemicals found in marine mammals killed for human consumption are detrimental to human health. Contrary to what the premier of Nunavut claims, seal meat is not health food. After announcing Nunavut's plans to revive the commercial ring seal hunt to satisfy the Asian market, the premier complained about the U.S. stand on importing seal products and suggested that the Canadian government persuade the United States to water down the Marine Mammal Protection Act, maybe even by challenging the act as a violation of free trade agreements.

Instead of promoting the free trade in seal and whale meat, the Canadian government should take serious action to protect the health of Canadians and others whose diets include marine mammals with high levels of contaminants and to educate the public on the harmful effects that this toxic diet produces on humans. Canada should also take a leading role in scientific research being conducted in this field and actively participate in the sharing of this information by becoming a member of the IWC.

Canada was a founding member country of the IWC back in 1948, but in 1982 Canada renounced its membership when a moratorium on commercial whaling was adopted under the schedule of the International Convention for the Regulation of Whaling. The moratorium entered into force in 1986 and remains in place today. All cetaceans covered by the IWC moratorium currently are listed in CITES appendix 1, effectively banning international commercial trade.

Both in 1996 and 1998, the IWC adopted resolutions urging Canada to stop issuing licences to hunt endangered bowhead whales and to rejoin the IWC. The DFO chose to dismiss both resolutions, arguing that the hunt poses no threat to the two populations of bowhead whales, which number only 150 individuals in the Hudson's Bay stock and 350 in the Davis Strait stock. These populations are listed as endangered under both COSEWIC and CITES.

At last year's IWC meeting, the “Resolution on Canadian Membership to the IWC,” document 50/37, was adopted, urging Canada to rejoin the commission. DFO's representative at the IWC, Dr. Howard Powles, dismissed this request and argued that:

Canada banned commercial whaling in 1972, and withdrew from the IWC in 1982, concluding that there was further no reason to remain a member, since the Commission's mandate is to ensure the orderly development of the commercial whaling industry.

Nothing could be further from the truth. The IWC's mandate also includes approving subsistence whaling quotas of member countries, and its objectives are clearly stated in last year's report of the aboriginal subsistence whaling subcommittee, under item 10.2, entitled “Report of the Scientific Committee”. In the presentation of the standing working group chair, the scientific committee's work on the aboriginal whaling management procedure was driven by the summarized objectives given by the commission:

1) ensure that the risks of extinction to individual stocks are not seriously increased by subsistence whaling;

2) enable aboriginal people to harvest whales in perpetuity at levels appropriate to their cultural and nutritional requirements, subject to the other objective, and

3) maintain the status of stocks at or above the level giving the highest net recruitment and to ensure that stocks below that level are moved towards it, so far as the environment permits.

And that in particular, highest priority shall be accorded to the objective of ensuring that the risks of extinction to individual stocks are not seriously increased by subsistence whaling.

Canada stands in clear defiance of the IWC aboriginal subsistence whaling scientific committee's objective by allowing the hunt of an endangered whale species and is also in violation of the International Convention on the Regulation of Whaling for issuing whaling permits without first requesting a quota, as procedure requires. The international community considers Canada another pirate whaling nation, placing us in the same category as the Philippines and Indonesia, countries that continue to hunt whales without belonging to the IWC.

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DFO officials have represented the Canadian government and misrepresented the Canadian people at past IWC meetings. We applaud and support the Ministry of Foreign Affair's decision to send to the IWC meetings in Grenada next month, Ms. Renée Sauvé, from the environmental division, as Canada's alternate observer. We are hopeful Ms. Sauvé's presence at the upcoming meetings will help change Canada's shameful policies on whaling, which undermine international law. We would like to see the Canadian government reflect in its policies on marine mammals the opinions and concerns of the majority of Canadians, who are opposed to the destruction of the natural environment and the destruction of the health of Canadians in the name of free trade agreements.

Thank you.

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

Any questions?

Mr. Werner Schmidt: Thank you very much for your presentation. They are all very interesting presentations. I'm trying to get my head around exactly what is the common message here. I think I have heard from every one of you the concern and preoccupation, in many ways, of the environment and sustainable development.

I've heard so many ways of describing sustainable development even in the three presentations we have had here this morning. Just exactly what is sustainable development? Could you come up with a common definition that would bring the three of you together so that we could say, yes, this is what we're talking about when we're talking about sustainable development? How does it apply to the whaling situation, for example, the situation you mentioned with regard to the health of humanity, and even in more general ways, which I think you suggested to us, Doctor? Could we come up at least certain elements that are common?

The Acting Chairman (Ms. Sarmite Bulte): Dr. Carter, would you like to start?

Dr. Peter Carter: Sure. One of the best and current ones comes from no friend of the environment. Shell International released its 42-page guidelines on its new move towards sustainable development and a $25 million media campaign. They expressed it very well. Sustainable development is about balance and integration—and integration is the key word here for policy-making—integrating the economic, social, and environmental aspects of everything we do and balancing short-term and long-term needs. That's a very concise and very clear way of putting it. The Brundtland commission, of course, paraphrased their rather lengthy explanation of sustainable development as meeting the needs of the present generation while conserving the needs of future generations. So it's about our children and planning ahead for future generations.

Really, the best I've seen, which is still fairly concise, is the OECD high-level recommendation of November 1997. It's about ten pages long. It's in the context of globalization, the MAI of that time and free trade agreements, and it explains it very well.

There are principles for sustainable development, and these principles are in Agenda 2000 and the federal government's Guide to Green Government. It can be put simply, but there are very definite principles, and if you don't abide by these principles, everybody agrees you can't do sustainable development.

Mr. Werner Schmidt: I appreciate that.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Shrybmen, do you have a response?

Mr. Steven Shrybmen: I didn't use the phrase actually, I don't believe. I was happy with those encapsulated definitions. I'd support them.

The Acting Chairman (Ms. Sarmite Bulte): Ms. Sorg, do you have a comment?

Ms. Annelise Sorg: Yes, I was happy with that too. I'd just quote Dr. Carter again. He said health and the environment are kept outside of these free trade agreements. Really, I think that's our common position here. It is not only the health of Canadian citizens, but the health of the whole world, as in humans and the environment.

Mr. Werner Schmidt: I think that's very useful. We have three highly skilled, very well educated individuals before us here this morning. You all know, only too well, the significance of very accurate and concise definitions of highly technical terms, which is what we're talking about here. We are talking about a lot more than just a concept here, or if it's just a concept, well, all right, then make it a concept, but that's not what you presented. You presented something that apparently is supposed to have a very clear definition, which anyone in the world can identify and understand and apply in the same way. If that is true—and I think you all agree that that needs to happen—then we'd better not put the kitchen sink, and everything else that goes with it, into sustainable development. It seems to me we have to be very careful about what it is we're talking about. If the key here is balance—and I think that's the word that comes out of that definition; that's the number one word that's in there, the balance of these issues—then why would we single out particular issues as somehow predominant over others? I think that is something we really have to watch.

• 1140

You have emphasized one or two areas in particular. You have not created here this morning, unless I've missed the point, the need for the balance in these things. In fact, I'd like to come back to the very paper that I think Steven Shrybmen presented here, where you make clear distinction, on the last page of your paper here. You say:

However confused the reasoning a review of WTO rulings on environmental or conservation measures reveals two consistent and common themes. The first is the expansive reading given to rules that limit government options that might, even indirectly, interfere with trade. The second is the exceedingly narrow interpretation given trade provisions that might create space for environmental or conservation exceptions of the free trade orthodoxy.

Here there's a very clear distinction that you've made in your review of the various decisions that have been made. So it is your concern here that the two distinctions you've made ought to disappear so that in fact there is this balance. Is that what you're suggesting? Or is it something else?

Mr. Steven Shrybmen: I think what I'm trying to describe here, apparently unsuccessfully, is the lack of balance that you can observe when you review the decisions of trade panels. They haven't weighed competing environmental conservation and economic policies very well, in our view. They've given great weight to the economic policy objectives of liberalized trade and very little credence at all to the ecological policy objectives engendered by the marine mammal protection or food safety or air quality regulations they are judging. That's the complaint, that there is a lack of balance.

Mr. Werner Schmidt: All right. If that's the case, how would you like to see the paragraph that you conclude your paper with—it's not the conclusion; it's the beginning of the paper. What we have here this morning is on page 13. How should that paragraph be rewritten if the WTO had in fact created the balance you would want? How would you then conclude if the WTO was in fact balanced between those two areas, where you have said one is very narrow and the other is expansive? How would you write that now?

Mr. Steven Shrybmen: There are two things that have to happen. One is we have to look at the rules that are being applied, and right now those rules are imbalanced. We have to review them to create a better integration of other policy objectives, not just environmental policy objectives, into the regime.

Then there's another issue, and that has to do with the character of dispute resolution, because at this point the dispute resolution processes that exist under NAFTA and the WTO are very strange creatures when compared with the traditional processes that most Canadians would be familiar with that exist under the auspices of Canadian judicial institutions. Under Canadian norms, these are public processes. We can participate—we often do as an environmental law group—and appear before a judge and say we would like to intervene; we have something to add to your consideration of these. None of those opportunities exist.

So the rules are problematic and the dispute process as well leaves a lot to be desired.

Mr. Werner Schmidt: I appreciate that. This is my last question, Madam Chair.

The point I'm trying to get to is, what is the goal you would see this group reach so that in fact you wouldn't come up with the conclusion you did? That's really what I'm after. I know what the problems are, and so do you, and you've articulated them very well. That's not the issue here. The issue is, what will the world look like if the balance you're talking about would in fact be the case? Whatever that thing is would be the paragraph that would replace the paragraph on page 13.

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Mr. Steven Shrybmen: I can't honestly reduce what we think the reforms of these institutions should be to one paragraph, and I'll provide you with a full copy of the brief.

Mr. Werner Schmidt: But that's not what we're talking about here. We're talking about a conclusion here. We're talking here about the conclusion of decisions. You've divided them into two sorts of things. What would the conclusion be? That's what we're after, and I think you—

Mr. Steven Shrybmen: I'm saying the panels aren't weighing, and the rules don't give adequate force to, competing environmental policy objectives. The outcome would be a trade regime that integrated the full array of public policy objectives identified by democratic governments as being important to our international trade relationships, not just the goal of increasing international trade, but also the goals of environmental protection, resource conservation, biodiversity, dealing with climate change, preserving cultural institutions in Canada, preserving public health care systems. All of those competing goals need to be integrated into the trade regime in a way that adequately and fairly reflects the priorities and values of Canadian society.

I'm sorry, I can't do any better than that. I'm sorry if I've disappointed you.

Mr. Werner Schmidt: No, no. You didn't disappoint me. It has just raised another question. The question is, why are the goals of health competing with others? If you integrate, why would they be competing?

Mr. Steven Shrybmen: Right now they're competing because—

Mr. Werner Schmidt: No, no. Under the ideal situation, why would they be competing?

Mr. Steven Shrybmen: I think we can remove the word “competing” and use the word—

Mr. Werner Schmidt: Okay. That's fine. Let's stop there. That's good.

Mr. Steven Shrybmen: Okay. Fine.

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

[Translation]

Mr. Benoît Sauvageau: Since Canada is a fully bilingual country, I will use the other language.

My first question is similar to the comments of my friend and colleague Schmidt on the conclusions or objectives.

My first comment is for Mr. Steven. If you are not a member of the solution, you are a member of the problem. I tried to find the outline of a solution in your comments but I did not find any. So, we must be part of the problem.

You stated that the WTO is an organization lacking in credibility and democracy because its members are not elected. My question may sound simplistic but would you suggest that Canada withdraw from the WTO, from NAFTA and from other international organizations? Are you recommending a world government?

If our ambassador to the WTO was to be elected by the Canadian people, would you be in agreement with the rules and principles of the WTO?

[English]

Mr. Steven Shrybmen: No is the short answer. I don't think we can withdraw from multilateral trade institutions. I think we have to reform them. I think we need them.

[Translation]

Mr. Benoît Sauvageau: Therefore, we need international institutions.

[English]

Mr. Steven Shrybmen: Yes, we very much need international institutions.

[Translation]

Mr. Benoît Sauvageau: So, how should they operate?

[English]

Mr. Steven Shrybmen: They should operate in a much more transparent, accountable, and democratic manner than they do now. For example, trade negotiations should be... At first instance, the development of trade policy by government should include all of the members of cabinet, surely, and not be left as some esoteric exercise to the bureaucrats, to the Department of Foreign Affairs and International Trade and their minister.

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[Translation]

Mr. Benoît Sauvageau: Could I stop you there?

We have with us someone from Industry Canada. He is a bureaucrat—or rather, since that word is not very nice, a public servant.

The problem is one of perception. You are telling us that the WTO is not effective and I am quite willing to mention your opinion in our report but, when an organization is not effective or democratic, one has to change it. Are you in favour of a world government, for example?

[English]

Mr. Steven Shrybmen: I think the World Trade Organization is, in a way, the right institution. I just think it has the wrong agenda, for example.

Mr. Benoît Sauvageau: What is the right agenda?

Mr. Steven Shrybmen: That depends on the particular question. For example, if the question is what should be the goals of the rules that govern international trade in agricultural commodities, I would argue that the most important goals should be, first, to ensure the food security needs of all the people of this world, and, two, to preserve the biodiversity of agricultural production systems on the planet.

I can demonstrate, I believe, that not only are the rules that are in place indifferent to those two policy objectives, but also they actually operate to defeat them in favour of the objective that is engendered in the WTO regime, which is to globalize agricultural production and distribution systems. It's quite explicit. This isn't my characterization of those objectives. These are the characterizations offered by the authors of the agreement on agriculture.

We do need international rules to regulate trade. We very much need them. But the objectives are wrong. That's the problem. I believe they're wrong because nobody really thought about trade policy objectives from perspectives other than those offered by Industry Canada and Foreign Affairs and International Trade. I think there's a sincere belief that what this project is about is making the world better. I don't think there's anything invidious or diabolical about the enterprise. I just think it's unbalanced.

I spent some time in government. I worked in a cabinet office in Ontario. I do understand government decision-making processes. I didn't work in the Ministry of the Environment, but if I had, I would have seen the world from an environmental perspective. If I had worked in Industry Canada, it would have been from the view of economic trade policy objectives.

There are people sitting around the table who can say that if you think about agriculture in terms of food security or climate change, because it's very energy intensive, you might come to a different result in terms of what the world should look like.

That's just one example. But we can go through the agreement and in every area engage in the same exercise, whether it has to do with intellectual property, the rules around the labelling of products and pesticide residues in food, or whether or not food should be genetically modified. For each of these areas we have the complaint that the rules were crafted in a way that ignores some very pressing public health and environmental problems. In fact, it undercuts your ability as a parliamentarian to deal with them on our behalf.

[Translation]

Mr. Benoît Sauvageau: You refer extensively to the responsibilities of the federal government in the management of sea mammals, such as whales but, in another committee, we were given some explanations about federal-provincial relations in the field of whale protection. I don't know if you face the same problem here. It seems that a whale dying in the middle of the St. Lawrence River is a federal matter whereas a live whale landing on the shore is a provincial one. But then, a dead whale landing on the shore is again a federal matter but, a whale getting sick in the middle of the river involves another jurisdiction altogether. Do we really face this kind of problems or is my story untrue?

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[English]

Ms. Annelise Sorg: Yes, we do, in the sense of captivity, actually. You're correct. Whales in the ocean are under the jurisdiction of the Department of Fisheries and Oceans. Once they are placed on provincial land, if they are alive, they fall through the cracks of the legislation since the provincial government does not consider them under their Wildlife Act, and municipal governments have no jurisdiction. If they are dead, then it's a joint venture to basically get rid of the carcass.

I think the largest problem with the Fisheries Act, in this case, is that there is no protection for marine mammals. The only thing that is regulated is how to harvest them. Using the example of the United States, it has had the Marine Mammal Protection Act since 1972. We haven't even started working on it.

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

Mr. Bob Speller: Thank you very much, Madam Chair.

I want to thank the presenters for their presentations this morning. I'm sure there are many politicians who would like to be environmentalists. That may not be reflective sometimes of what comes out the other end, but I know that all of us laud the work you do.

I have just one question. I think all of you touched on the importance of sustainable development. When you're in Geneva, though, you're faced with 140-odd countries, some from the north and some from the south. Their perception of what we see as sustainable development in environmental practices, which we think the whole world should share, might be different. Their view might be that all we're doing is trying to put restrictions on them getting their products into Canada. I'm wondering how you think we can bridge this gap and get some sort of agreement that 143 countries would agree to.

Dr. Peter Carter: For the past six or seven years the World Trade Organization has been resisting proposals within itself of multilateral environmental agreements. One of the good things that came out of the high level symposium on trade and environment last month was in the report of the director general. He said that there's overwhelming agreement and he agrees with having MEAs. This should have been started years ago. This is the imbalance. We don't have multilateral environmental agreements. I would say that is certainly the place to start so that we have an even playing field.

This is a great opportunity for economic globalization based on sustainable development. This will save the planet. This will give to our children and grandchildren the same future we saw when we were young. So let's start with multilateral environmental agreements and an even playing field on environmental and health standards. Certainly, some of the economically poorer countries will need assistance from the richer ones, but economically the world has agreed that this has to happen anyway. So there's a golden opportunity here.

Mr. Steven Shrybmen: I think that's a very good question. There are some issues that do divide environmentalists in the north and the south when it comes to the use of what are sometimes described as unilateral trade sanctions by developed countries, such as marine mammal protection legislation in the United States.

There's a trade and environment committee of the WTO, which is providing a forum for discussion of these issues. I think fundamentally the prerogative of governments to develop their own environmental policies needs to be preserved, and that might be abused in some cases for the purposes of trade protection. I think by increasing the transparency and participatory character of trade dispute resolution, those risks will be reduced, though I can't say that they would be entirely eliminated.

• 1200

If you look at this international trade regime from a north-south perspective, it perpetuates the current development paradigm, which has really resulted in a grotesque narrow distribution of wealth and power on this planet, where 20% of us who live in developed countries utilize about 80% of the world's resources.

By writing rules into trade agreements that restrict the capacity of governments to control exports of unprocessed resources, we ensure that these models of development will continue. The way trade agreements work really undermines the ability of developing countries to add value to their resources before they're exported to developed countries.

That happens because export bans or fish processing controls, such as the ones Canada has, are illegal under these regimes. But it also happens because of a policy of tariff escalation that punishes those countries for actually processing resources. As you transform a log into lumber and the lumber into furniture, the level of tariff continues to rise.

So the whole regime exists to, in a sense, deny economic development opportunities to southern governments. It also denies them the capacity to develop their own self-sufficient agricultural policies, because the World Trade Organization has ignored export dumping.

Those are the more fundamental problems, in terms of the north-south dynamics. I believe it's a mistake to get sidetracked into a discussion about the odd instance where northern environmental regulations may be put up for trade protection reasons, rather than for legitimate conservation and environmental policy reasons. I don't think that's a serious problem. There's a far more profound one that isn't being addressed.

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

If I could just conclude, I have a quick question for Dr. Carter. I know we've run out of time already.

In the executive summary and recommendations you've submitted, you stated that environmental reviews should be conducted on multilateral trade and investment agreements. Who would conduct those reviews?

Dr. Peter Carter: This is again one of the better things that came out of the report last month from the WTO director general, in which they agreed that these were a good idea. I think this was a recommendation of the committee out of the MAI, or there was a similar one. I presume they would be done on a national level, certainly in the first place. We would have the input on what the environmental ramifications and cost benefits of each particular multilateral trade agreement would be.

The Acting Chairman (Ms. Sarmite Bulte): So it would be done nationally, individually, and then taken to the WTO.

Dr. Peter Carter: Exactly, and if we developed a world environmental organization integrated with the WTO, it would be something again that could be made to work.

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

Mr. Steven Shrybmen: May I just add one short comment?

The Acting Chairman (Ms. Sarmite Bulte): Yes.

Mr. Steven Shrybmen: If you're looking for authority for that proposition, you can find it in Canada's commitments under the UN Framework Convention on Climate Change and the Biodiversity Convention, which calls upon the national government to conduct a review of significant policy objectives in the perspectives of addressing the goals of those conventions.

The Acting Chairman (Ms. Sarmite Bulte): Thank you. Unfortunately our time is up.

There was another question I wanted to ask Mr Shrybmen, especially now with the FTA negotiations.

If we assume that the FTA is not an extension of NAFTA—no one has said it is, notwithstanding the fact that statement has been made rather gratuitously here—and we actually go to include an agreement, what do we do with the side agreements on the environment and labour? Isn't it a frightening possibility that somehow under NAFTA we have the side agreements? If an FTA precedes a NAFTA and there are no side agreements, how do we deal with the environment? That's not a question I want you to answer right now, but maybe you could think about it and we could talk about it.

I want to thank you all very much for coming and for your presentations and written briefs. As I've stated, this is the beginning of an ongoing consultation; this is not the end of our consultations. Please feel free to contact members of the committee or file any additional materials with the clerk. It's incumbent on both sides to keep the dialogue open. Thank you very much.

The meeting is adjourned till 1 p.m. sharp.

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• 1304

The Acting Chairman (Ms. Sarmite Bulte): Good afternoon, ladies and gentlemen, and welcome to the Standing Committee on Foreign Affairs and International Trade. This committee and the Subcommittee on International Trade, Trade Disputes and Investments is examining Canada's priority, prior to entering into negotiations at both the WTO and the FTAA levels.

• 1305

I welcome our witnesses. We have an hour for your presentations. So that we can hear from everybody, I would ask that you keep your presentations to ten minutes each. I know some of the papers are longer, but your entire papers will form part of our record.

If you feel there are other issues that you have not had the time to address or wish to explore further with the committee, we would ask that you please file any additional material with the clerk. Remember that this is the beginning of our consultations. We hope this will be an ongoing dialogue between you and the committee. So welcome, on behalf of the committee.

Welcome, Mr. O'Connell. I will ask you to lead off this hour's discussion.

Mr. Sean O'Connell (Individual Presentation): I came to Canada six years ago. Before then, I worked a lot in Europe, and I've had a slightly glittering career. I've also worked in Asia. I want to touch on those two aspects because they might have something to do with what we're talking about today.

I did a twenty-year apprenticeship in the computing and telecommunications industry. Then I sort of shucked off the technical aspects of my career and became a consultant, going into that lovely sunlit golden land where the big money and all the prestige are.

I worked largely for the European Commission but also for Shell in the Hague. I also worked for the Thai government in their revenue department, trying to inflict a GST on the poor Thai traders. I also worked in India and Washington on behalf of the European Commission, huckstering a project that I had worked on in Europe for the commission.

When I moved to Canada, all this experience and expertise was for nothing. So now I set crossword puzzles for a living. It's an honest living and it's mine and I sleep well at night. Those are the only virtues I have.

In my journeys around, I've had tangential contact with some of the major players in the international trade game. My commissioner in Brussels was the Spanish multimillionaire socialist, Abel Matutes. He was then in charge of DG-XXIII, the small and medium enterprises directorate. Later on he moved on to DG-I, which is the foreign affairs thing, where he was responsible for north-south relations. I have enormous respect for Abel Matutes.

I also spent some time in the wonderful company of Lord Arthur Cockfield. He was vice-president of the commission for four years, between 1985 and 1989. He was then responsible for writing the single act. This is the act that led to the completion of the internal market on January 1, 1993.

I want to talk to you a bit about Arthur Cockfield and also a little bit about how the European Commission works.

Before I do, I want to clear up some misconceptions about the commission. Everyone who doesn't know anything about it believes the EC is an enormous bureaucracy. There are some conspiracy theories. I think you had at least one yesterday. I think his name was Lyndon LaRouche. They believe there's an enormous Euro-supercomputer hidden away somewhere behind the Berlaymont Building in Brussels. It's all part of this plot by the new world order of George Bush fame: international mega-corporations, homosexuals, Jews, cryto-Communists, and other ne'er-do-wells are going to overthrow sovereign national governments and institute a Communist-run capitalist single world government. As I speak, at this very moment, there are disguised UN troops undertaking training manoeuvres on the Canadian prairies, marching near the U.S. border. They're preparing for blitzkrieg strikes south of Washington D.C. to restore the anti-Christ—and you know what happens after that.

• 1310

I can definitely say the Euro-computer doesn't exist. I've been there and it's not there. I don't know about the rest of all this stuff. I believe most everything anybody says bad about Ralph Klein and Alberta. But if my experience in the EC is anything to go by, you can't trust their computer guys to install the new release of Windows correctly, let alone configure a mammoth Cray computer. And the commission can't even get the Spanish fishermen to lay off pinching Brian Tobin's turbots.

When I was in Brussels, a total of about 24,000 people—professional, technical, clerical, and management staff—worked for the commission. It sounds like a lot. It's about the same number of civil servants as Newfoundland has on its payroll. With the enlargement of the community to 15 members, I understand that the establishment is increased by another couple of thousand or so.

It's true that people like myself—who are called experts, as opposed to the staffers, who are called fonctionnaires—may at any one time run into several thousands of people, but they—we—are all on term contracts to do specific jobs, and then we go away again. I had two contracts, one to set up the Business Cooperation Network, or BC NET, and another to liaise with member states' customs and excise departments in connection with collecting trade statistics when the borders came down on January 1, 1993. Once these jobs were done, so was I.

Personally, I'm very impressed with this way of tackling staffing, and I think many national governments could use this as a model. But I digress.

It's interesting to know what happens when you first get to Brussels, Strasbourg or Luxembourg in the pay of the commission. You get turned. It isn't like being brainwashed. It's more a matter of having your eyes opened. Practically every new boy or girl who arrives comes with some kind of national, regional or ethnic baggage, thinking they're going to fight their corner against all those awful Euros. But it doesn't take them long to learn that they're there to serve the best interests of all the peoples of Europe, not just their own little band of folks at home. There are about 130 unique peoples in modern Euroland. They range from Basques, Catalonians, and Castilians in Spain to the Cornish and their kin across the channel in Brittany. You have the Dutch Friesians, Zealanders, Vlams—or Flems—and their ancient foes in Belgium, in Wallonia. You have the French Normans, Burgundians, Alsatians, the German Saxons, Bayernische, Saaren, and so on. You might think Canada has an uphill battle with its motley collection of a few dozen ethnic groups, all living high on the hog and singing loud songs about their imagined homelands. In Euroland it's a real and immediate thing. It really is.

The Acting Chairman (Ms. Sarmite Bulte): Mr. O'Connell, I don't mean to interrupt you, but according to my clock you have one minute left.

Mr. Sean O'Connell: Oh, dear.

The Acting Chairman (Ms. Sarmite Bulte): I'll give you a few more minutes. I'm just giving you the one-minute signal.

• 1315

Mr. Sean O'Connell: I want to say two things. I want to go on about Lord Cockfield and his motives behind the completion of the single act. He issued 300 regulations in a matter of three months, and 250 of them were enacted into national legislation before 1993. It was a massive undertaking. These regulations were symmetrical and fair. They enabled all peoples—not just traders but all peoples—to go anywhere they liked in Europe and work. I have the right, as a British subject, to ply my trade, live anywhere, and have full state benefits anywhere I like within Europe, with little hindrance from any national government. That is what I call free trade, fair trade.

If you want to read the rest of my comments, you can.

The Acting Chairman (Ms. Sarmite Bulte): I've glanced at them, and as I said, they will be part of the record. They're excellent. If you could just highlight the main two or three points...

Mr. Sean O'Connell: There was one other thing I wanted to say. I don't know if you guys have any choice in this matter, but there is an election coming up for the new CEO of the WTO. Roy MacLaren is the Canadian candidate for this. I want to put in a plug for Dr. Supachai. I met him and I have dealt with him several times in Thailand. He is an incredible fellow. He's a devout Buddhist, and he strikes me as being the Thai equivalent of Arthur Cockfield, a thoroughly decent man who believes that trade is an important method of securing the greatest good for the greatest number, not just a matter of increasing corporate wealth, although that's a good thing per se, but trading stops wars and it should improve the standard of living for everyone. I don't get that impression from any of the other candidates, and I certainly don't get it from Roy MacLaren. So if you do have a choice, look very carefully at Supachai. He's a great guy. He really is.

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

Next on our list is Dr. Ross Johnson.

Mr. Ross Johnson (Individual Presentation): [Dr.] Good afternoon, and welcome to Vancouver. I'm glad, Madam Chair, that you're threatening to come back here more often. You're welcome.

By way of introduction, I'm a political economist, now retired, who still maintains a very avid interest in Canadian politics, and especially in trade and foreign policy.

I believe this round of cross-Canada hearings is exceptionally important because what happens at this juncture of global development is crucial to the fate of all Canadians. Your committee has the opportunity to help Canadians forge their future in a way that no other parliamentary committee has in the recent past.

Brian Mulroney, when he became Prime Minister in 1984, said that by the time he left office, Canadians wouldn't recognize Canada. This was a political promise truly kept.

Before globalization got rolling, Canadians were a prosperous, confident, and caring people. When we emerged from the Mulroney era, we had metamorphosed into a stratified society where the rich had become much richer, the poor had become much poorer, and the middle class had become smaller and weaker. In trying to protect gains for the wealthy and prevent further losses for the rest of us, we have become a greedier and more selfish society.

In the last 20 years Canada has lost a significant amount of her sovereignty to private corporations through the various treaties we have signed. We have a permanent national unemployment rate of 8% or higher. We are experiencing a rush to the bottom of environmental protection and food safety regulations and a growing inequity in the distribution of wealth. Except for the top 2% of Canadians, who have become wealthier in comparison to other Canadians than at any previous time in our history, Canadian citizens are economically worse off under globalization than they were before it all began.

Something is wrong, and I think now is a good time to stop and figure out how to fix it.

Phenomenal changes have been and are taking place in our country, and these changes desperately need to be evaluated. We need to take a good look at where globalization and NAFTA have taken us, and by extension where an FTAA and an expanded WTO will take us. To do that we need impartial studies by independent researchers to examine all the areas affected by our headlong rush into globalization: investment, employment, environment, food safety, health care, labour standards, national sovereignty, human rights, and above all democracy. This research would have to be done and analysed through non-ideological, non-prejudged glasses. I would urge this committee to resist pressure from various groups to charge ahead with the FTA and widening of the WTO authority because their so-called research says it is the only way to go or we'll be left behind.

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Our government sets up royal commissions to determine pipeline routes, to investigate blood handling techniques, and to make recommendations concerning Canada's aboriginal population, none of which touches all of our lives in the way that globalization and free trade does. There are some elements in our society that call for referenda and discussions on things such as the Nisga'a Treaty, and yet the same people eschew any public discussion or examination of the effects of NAFTA or of globalization.

Besides studying the various impacts that current trading agreements are having on Canadian society, I would urge this committee to recommend that we take a good hard look at some of the basic and troubling questions now being asked about free trade and globalization. For example, here are six questions that need to be answered before we go any further along the present path.

Number one, do NAFTA and the WTO really encourage free trade, or is it controlled trade? In 1995—that's three years ago—The Economist did a study that found that 70% of consumer durable world market sales were controlled by only five transnational corporations. This sounds more like oligarchy than free and competitive markets.

Second, where is globalization contributing, not only in Canada but worldwide, to inequality, to overexploitation of resources, to environmental degradation, to labour standards, to health standards, to culture, and to democracy itself?

Third, for what types of things is it advantageous to have free trade? Free trade theory was developed in the 19th century for commodities and manufactured goods. Without any supporting research or further theoretical formulation, we have in the past decade added services and the free and instantaneous movement of currency and investment to the free trade list. The negotiators of the MAI had no proper research conducted to back up their assertions that the agreement would be good for the world. Instead of hard data, ideological—that is, neo-liberal—assertions were made and accepted as givens. Now advocates are pressing to have the principles of the MAI included as part of the WTO. This cavalier approach to actions that profoundly affect the lives of people all over the world must stop. Free trade in commodities, manufactured goods, and arguably in services conforms to the classical free trade ideals of comparative advantage. With investments and financial services, there is only the absolute advantage held by the rich individual, rich corporations, and rich countries over the less wealthy in poorer countries. Until research shows otherwise, investment freedoms such as that advocated in the MAI should not even be considered, let alone included, in the WTO.

Fourth, to what extent is global free trade contributing to weather disasters worldwide? In their 1998 publication, “The Living Planet Report”, the World Wildlife Fund for nature, the New Economics Foundation, and the World Conservation Monitoring Centre at Cambridge University state that more than 30% of the natural world has been destroyed by humans since 1970, with serious depletion of the forest, freshwater, and marine systems on which life depends. It is believed that much of the human misery now stalking the planet is caused by the globalization of economies, leading to overexploitation of resources, which produces increasing vulnerabilities to floods and desertification. It is chic in some circles to say that environmentalists are like Chicken Little running around yelling “The sky is falling”, but there is now so much evidence from such a variety of sources that we would be foolish not to take these reports seriously.

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Fifth, to what extent do Canadians want governments to be able to look after them when circumstances call for it? Canadians have never had a national dialogue about this. As citizens, we should understand clearly what decision-making powers we are losing to the WTO. We should be given the opportunity to express our views about this. The secretiveness and lack of transparency in Canada's MAI dealings were not what citizens of a democracy should rightfully expect.

Sixth, what is the evidence that the increased wealth created by free trade for the corporations will benefit society in general? The philosophy of the WTO is that all cultural, social, and environmental goals be set aside in favour of greater trade and investment liberalization. It seems obvious that this is not in the public interest. Proponents of globalization argue—without any evidence, by the way, to back it up—that the trickle-down effect of trade and investment liberalization will benefit everyone. In actual fact, as my figures earlier have shown, we are now moving relentlessly to reduce social and environmental standards to the lowest common denominator everywhere.

Worldwide free trade is being pushed by the richest nations in the world, every one of which became rich by protecting its own industries from outside competition. Now they don't want to allow the smaller economies to protect their own industries. This is another way of saying to them that they will never be as rich as the present industrialized world.

The large corporations want to locate in non-industralized countries, where they will enjoy the lowest environmental standards and the least regulation. Under the MAI, or the WTO version of the MAI regulations, the host country will always be a poor country, because any attempt to change the labour code or improve environmental regulations will lead to a lawsuit by the affected corporation for compensation for lost profits.

The following are my recommendations.

Number one is that this committee call for an immediate halt in plans to expand NAFTA into the FTAA and to increase the authority of the WTO. NAFTA and the WTO have not demonstrated to the general public that their way is the best way for Canada and the world.

Number two is that the Government of Canada undertake a program of objective research that would determine what the impact of NAFTA and the WTO have been. The research should also address the following questions. First, do NAFTA and the WTO encourage free trade, or is it trade controlled by corporations? Second, what is globalization contributing, not only in Canada but worldwide, to inequality, to depletion of resources, to environmental degradation, to labour standards, to health standards, to culture, and to democracy? Third, should trade be limited to commodities and manufactured items? Are financial services and investment appropriate to free trade agreements? Fourth, to what extent is global free trade contributing to weather disasters worldwide? Fifth, to what extent do Canadians want their government to maintain the freedom to make adjustments in the economy when necessary? Finally, what is the evidence that the increased wealth created by free trade for the corporations will benefit societies in general?

I'd like to thank this committee for its attention. I am very disappointed and I am angry that free trade, which is having far more influence on the lives of Canadians than the repatriation of the Constitution, constitutional amendments, or even the possibility of Quebec leaving our federation, has had such little public discussion, especially discussion that is informed by impartial research.

The power to correct this is partly in your hands. I wish you a great deal of success. Thank you.

The Chairman: Thank you very much, Dr. Johnson.

I'm sorry I skipped over Ms. Jezrah Hearne. I didn't have my glasses on. Ms. Hearne, please.

Ms. Jezrah Hearne (Individual Presentation): Thank you. Ladies and gentlemen, my background is as a communication researcher and rhetorician. From that point of view, I have to apologize for the roughness of my paper, because I'm going to have to skip through to stay with the ten minutes.

I believe the FTAA has to correct for the pernicious aspects of the FTA-NAFTA or be rejected out of hand. If accepted without correcting for these errors, the FTAA would just exponentially increase the jeopardy to Canada. Looking at the history of the FTA and NAFTA, there are some points we have to consider here leading up to an FTAA.

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First, Canada's gains from the trade deals are questionable. The bulk of this has been in raw resources, but this business with the U.S. would have happened anyway without the accords because of the Americans' buoyant economy and the greed for our resources. These resources have had their value deliberately downgraded through manipulations by the commodities investors who are to a large extent American, or, alternately, U.S. corporations have been investing in Canadian firms, an act that typically leads to downsizing or even moving the operation southward. All this constitutes a double jeopardy for Canada.

Second, free trade has enabled Canadian manufacturers and branch plant managers to move their plants to the cheap wage zones of the U.S. deep south or northern Mexico. The only recourse for our Canadian workers is the race to the bottom. Thus our economy experiences a double jeopardy in this area alone.

Then there is the fact that the protections to our social web, our culture, our environment, and our water, instilled as sidebars and set-asides in the former trade deals, are being proven by U.S. corporate challenges of their power to lack such efficacy and to thus not be worth the paper they are printed on. In less than a year, Canada has been visited by about $1 billion worth of lawsuits, all justified by these trade deals and challenging these so-called protections. Our nation's sovereignty and the democratic will of the citizenry through which protective legislation arises are thus profoundly threatened. This serves up a tremendous jeopardy to Canada.

Linked to this latter point is a fourth consideration. Along with the declamations over how labour rights, culture, and the environment are protected by these deals is the claim that the northern standards are also protected. There is the mind-numbing spectacle of the maquiladora export processing zone for all the proof you will ever need that free trade dishonours the standards of North America.

A last consideration here concerns the various provisions of the deals amounting to the worst kind of egregious surrender of control over our own economy to the corporate barons whose every behaviour demonstrates that they consider themselves to be above the rule of law, except that which they give themselves. The main such provisions are private legal standing, dispute settlement mechanism, proportionality, national treatment, removal of performance requirements, and most favoured nation treatment. What can we make of this? Clearly we have given away the shop to make a sixpence. We have lost and are losing far more than we have gained. What is at jeopardy is our sovereignty, freedom, and citizenship—priceless essential ingredients to a functioning democratic state. This is an incalculable loss.

With the above in mind as my context, I will now examine point five of the specifications, the social dimensions of trade. Operating under this framework, I will speak to only one question posed by the committee. I believe this question is pivotal to all else posed by the committee and that the entire inquiry rests upon it.

Question two is, what is going on in the Americas? What is unique, specific to this hemisphere? Most distinct in the Americas, which is not happening anywhere else on the globe, is that at the mid-northern end of the Americas you have a nation that believes it has a manifest destiny to control the entire Americas from the Arctic Circle to Tierra del Fuego. This nation, the U.S.A., meets every interaction with other nations as a battle. It must win by dominating the other party. It wants to dominate the hemisphere; witness U.S. warfare in the Americas.

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It is this bullying attitude the U.S. brings to the trade deals. It then comes out in the course of the playing out of these deals that they are skewed in favour of the U.S.A.—surprise. The World Trade Organization then looks to be dominated by U.S. interests, and it is inevitable that trade disputes will be settled in its favour. Since the bulk of the multinational colossus corporations are headquartered in the U.S., and the WTO exists solely to gratify corporations alone, it is inevitable that WTO rulings will favour the U.S. Moreover, the U.S. is guilty of cultural imperialism in wanting the products of its entertainment industry to totally dominate the cultural practice of other nations in the world in what Americans arrogantly call “world culture”. This is the dragon we are tempting in summoning up the spectre of a free trade area in the Americas.

In short, under the present likely terms and conditions of the FTAA, that is, based upon the models of the FTA-NAFTA, I cannot see that it would lead to a generalized and genuine prosperity for Canada as a whole. We would simply continue to do what we have been doing since the imposition of the free trade agreement: give away the shop to make a sixpence. However, none of this need happen if only the FTAA corrected for the errors and imbalances of the FTA-NAFTA. Towards such a goal, I make the following recommendations.

First, invite progressive social policy non-governmental organizations, NGOs, from throughout the western hemisphere into the articulation of the trade deal. By NGOs, I mean those stalwart organizations of citizens dedicated to a just and healthy world. I make a crucial distinction here with those impostors set up by the large public relations firms to cynically appropriate and destroy civil society.

Second, do not use any of the pernicious provisions as listed earlier and as would surface on close examination of the FTA-NAFTA.

Third, codify regulations that would leverage up standards to those found in Norway, Germany, and France. Integrate into these standards the aspirations encoded in the several United Nations covenants protecting human rights and the environment and to which most of the countries of the western hemisphere are signatory.

Fourth, codify regulations to protect the sovereignty of nations and the democracy of their peoples.

Fifth, set the process in place for a continual harmonization of wages throughout the hemisphere so that they are raised up to pre-FTA levels in Canada. Call for a retrenchment of top executive wages so that profits can be dispersed as higher wages to the lower level workers.

Sixth, set stringent regulations demanding that all resource-based economic development be based on principles of ecologically sound practice.

Seventh, rehabilitate—I emphasize rehabilitate—the World Trade Organization from being a vehicle for global corporate domination to being a court where citizens and governments can take their grievances against corporations for redress and compensation, which would impose the reform standards just listed upon corporate practice throughout the hemisphere and hold corporations accountable to the laws of the host nations and their populations. Bring in the NGOs to help in the transformation and running of this entity.

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Finally, eight, “tell the Americans”, to quote Sergio Marchi, “that they are not the boss of the world.” This should be codified in a statement of principle providing a constraint on United States business practice in the hemisphere.

As an aside, I believe Canada should work with all the other nations of the western hemisphere, excluding the United States, to come up with a unified position on how to deal with the bully in the sandbox. That's how you deal with bullies; you bring in peer observation and criticism and imposition of rule of law.

In conclusion, only if the process intended to formulate and maintain the FTAA draws in the NGOs and if such an FTAA renders null and void the earlier degenerate deals in the FTA-NAFTA is there a chance for freedom, truth, fairness, generalized prosperity, a healthy environment, and peace in the western hemisphere of the 21st century. The way to bring a praxis to this vision is to aim for fair trade rather than free trade.

Thank you.

The Acting Chairman (Ms. Sarmite Bulte): Thank you very much, Ms. Hearne, for your very eloquent presentation.

Dr. Olive Johnson.

Mrs. Olive Johnson (Individual Presentation): [Dr.] Good afternoon, and thank you for this opportunity to speak to you.

I'm a concerned citizen who has closely followed the progress of free trade and is alarmed at what I see happening in my country. I'm also a psychologist, so I'm particularly distressed about the impact of free trade on the mental health and general well-being of Canadian families as NAFTA tears apart the social and economic fabric of life in Canada. This used to be such a great country. It's heartbreaking to see what has happened to us in the past decade.

Those who claim that free trade has been good for Canada cite Canada's expanding trade and increasing cross-border investment. But surely it is obvious, now that these things are primarily benefiting corporations and the wealthy in Canada, that they are not benefiting the rest of us. As corporations have been free to downsize, relocate, and lower wages, Canadians have endured a sharp decline of real income and purchasing power. We've seen the conversion of millions of permanent and well-paid jobs to precarious, low-wage, part-time, and contract employment. The chasm between rich and poor grows wider every day. There's been a shocking rise of both poverty and homelessness, and we are seeing the deterioration of our health care, education, welfare, and other social programs.

Since free trade came to Canada, growth in full-time paid employment has been almost stagnant. The vast majority of jobs created since 1989 have been in the form of self-employment and part-time work. While the official unemployment rate since 1989 has averaged about 9%, the real rate is estimated to be closer to 18% when discouraged and involuntary part-time workers are included.

In 1973 the richest 10% of Canadian families with children had earnings about 20 times greater than the poorest 10%. By 1996 the richest 10% were earning over 300 times as much as the poorest 10%. This trend represents a serious threat to the mental and physical health of our people. There's now good hard data showing the relationship between health and wealth disparity. The healthiest nations are not the wealthiest, but the most egalitarian.

Since the advent of NAFTA, our health care system has been steadily deteriorating. Retention of the U.S. drug patent system and the effective monopoly profits it gives the big drug companies has dramatically increased medicare costs. More money is now spent on drugs than on doctors' payments. Colleen Fuller recently documented in her book Caring for profit how corporations are taking over Canada's health care system, bringing us closer and closer to a U.S. model of health care. The very sovereignty of our country is now seriously in jeopardy now that corporations can sue our government directly.

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In 1990 Ontario witnessed the humiliating charade of its government being forced to back off its plans for provincial automobile insurance after it was threatened with a $2-billion lawsuit by State Farm Mutual Insurance Company.

More recently, we had the shocking federal government change of mind about banning MMT in Canadian gasoline after Ethyl Corporation contested the ban with a lawsuit. It was a bleak day for Canadian sovereignty when our government paid Ethyl $20 million of taxpayers' dollars in an out-of-court settlement and wrote a letter of apology to Ethyl, which they can now use to bully other countries around the world.

I'm angry that my government should be put in such a ridiculous position. As a neuropsychologist, I know that MMT is a very dangerous product. When inhaled from car exhaust, the manganese in MMT passes directly into the brain, where it causes damage to nerve cells. Unfortunately, it will be the Canadian taxpayer, not the Ethyl Corporation, who foots the bill for the increased health costs of treating the effects of MMT.

As Canada has suffered from NAFTA, so too has Mexico. I have been to Mexico many times over the years and have been saddened to see the hardships brought to the Mexican people by NAFTA.

Mexican real wages dropped 45% in the first four years of NAFTA, and thousands of small and medium-sized businesses were wiped out, inducing many of Mexico's former middle-class entrepreneurs to abandon their support for NAFTA and join the million-member El Barzon group that wants NAFTA replaced.

Unemployment in Mexico also sharply increased after NAFTA. Three years into NAFTA, 50% of Mexicans were considered to be extremely poor, compared to 31% in 1993, before NAFTA.

The horror stories of the Mexican maquiladoras are now familiar to us all. In addition to low wages, grossly unfair working conditions, and appalling housing, workers endure an environment that has been described by the American Medical Association as a virtual cesspool.

Now that we've seen the negative fallout from the FTA and NAFTA, we can only expect the FTAA to spread the misery further afield and make things more difficult for our own country.

Saturday's Globe and Mail reported that Trade Minister Sergio Marchi had come away empty-handed from an important meeting with his U.S. and Mexican counterparts, making no headway on either the split-run magazine issue or in Canada's effort to clarify NAFTA's investment rules.

Mexico's Mr. Blanco opposed Canada's efforts and instead urged the NAFTA ministers to put together a better communication strategy to emphasize the benefits of free trade and win over the opponents of NAFTA, who are numerous in all three countries. In other words, the trade ministers were urged to ignore their citizens' real concerns and handle the opposition to NAFTA as a cynical PR campaign.

I want to say that this citizen has had quite enough of the PR approach to free trade. What I want from my government is not a slicker communication strategy, but a more fair and intelligent trade strategy. Rather than broadening NAFTA into the FTAA and compounding our problems, we need to replace these flawed agreements with sensible agreements for fair trade. Trade should not be used to drive down wages, weaken workers' rights, or damage the environment.

Fair trade would include codes of conduct, holding corporations accountable for their actions. Fair trade agreements would set out strict and enforceable environmental standards and international labour rights. Rather than dragging us all down to the lowest wage levels and environmental standards, fair trade agreements could help lift up the poorer countries.

I recommend first that the Government of Canada commission an impartial review of the impacts of free trade and investment on the lives of Canadian citizens. Second, the government should stop talk aimed at furthering trade and investment liberalization, including the FTAA, and oppose investment being added to the millennium round of the WTO talks. Third, the government should open a public discussion on fair trade for Canada. We could begin by asking ourselves what kinds of trade agreements will benefit the many rather than the few.

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We urgently need to extricate ourselves from the quicksands of free trade before any more victims are sucked into the morass and get ourselves and our trading partners onto the solid ground of fair international trade without further delay.

In closing, I want to commend this parliamentary committee for holding these hearings. It is very important that Canadian citizens have this opportunity to speak with you. Thank you.

The Acting Chairman (Ms. Sarmite Bulte): Thank you very much, Dr. Johnson, not only for your views as a concerned Canadian, but also for your views as a psychologist.

Last but not least in this panel is Mr. Gil Yaron of the Citizen's Council on Corporate Issues. Welcome.

Mr. Gil Yaron (Individual Presentation): [Citizen's Council on Corporate Issues] On behalf of the Citizen's Council on Corporate Issues, we commend the federal government and the members of the standing committee for providing an opportunity to present our views regarding international trade concerns. Such consultation is absolutely necessary in order to ensure effective, representative governance in a civil society. It represents an important precedent in the negotiation of international trade agreements.

The Citizen's Council on Corporate Issues, which I'll refer to as CCCI for short, is a Vancouver-based organization concerned with the growth of corporate power in Canadian society. Our purpose is to conduct research on the impacts of the corporate structure on society, to educate the Canadian public about their relationship with corporations, and to contest the growing disparity between the wealth and power of corporations and individual citizens.

CCCI echoes the concerns expressed by others, such as the Council of Canadians and the West Coast Environmental Law Association at this hearing and my eloquent co-panellist, about the effects of the current international trade system on the global environment, labour, and culture.

Recent WTO panel hearings, such as the beef hormone decision, clearly illustrate how the present regime is undermining our democratic institutions and the broader public interest. Our governments are gradually being restricted in their ability to develop regulation and policy. The Canadian public is left bearing the costs resulting from challenges under free trade agreements. However, we leave the discussion of the effects of international trade agreements to the organizations at these hearings more able to articulate them.

The Citizen's Council on Corporate Issues would like to take this opportunity instead to focus attention on the entity that is at the heart of the creation of the World Trade Organization and international trade agreements—the modern corporation. International trade agreements are created to facilitate the economic activity of corporations; therefore, understanding the nature of this entity is crucial to appreciating the effects of international trade agreements.

This submission presents three arguments based on elementary principles of corporate theory to deconstruct and critique structures such as the WTO and international trade agreements. The first is that despite prevailing impacts of international trade on all aspects of society, the WTO and international trade agreements established under it only recognize the economic aspects of trade and consequently the corporate actors that facilitate economic activity.

Second, corporations are fictitious creatures of statute, unsophisticated and incapable of making responsible decisions in the context of international trade.

Third, the WTO and international trade agreements must ensure that democratic institutions and citizens, not corporations, have a direct say in the development, implementation, and enforcement of international trade regimes.

I'd like to take the opportunity to expand briefly on each of these three points. First, the WTO and international trade agreements established under it only recognize the economic aspects of trade and the corporate actors that facilitate economic activity. Recent panel rulings of the WTO illustrate clearly that international trade has a direct impact on all aspects of global society, not merely the economic interests of the contracting parties.

Where decisions are made to trade resources, goods and services internationally, many factors, aside from economic values, must be considered, including social and environmental impacts. Yet the WTO and international trade agreements continue to place economic considerations above other interests and concerns.

Trade dispute panels under GATT and the WTO have consistently given priority to economic interests. This is the logical outcome when one considers the institutional structure behind free trade and economic growth. The corporation was created solely to advance economic interest through production and trade. Consequently, it is no surprise that the institutions addressing the issue of trade have considered it through the limited view of the corporation, that is, trade is limited to the pursuit of profits.

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However, with the growing scope of corporate activity and the impacts of such activity, we must revisit this relationship. If corporations are going to be making decisions that affect not only our economic well-being but also the state of local communities, culture, health, and the environment, then the international rules governing corporate activity and the corporate structure itself must be capable of addressing more than just the economic aspects of trade.

The second point is that corporations are fictitious creatures of statute, unsophisticated and incapable of making responsible decisions in the context of international trade. This point helps one to appreciate the earlier argument I just laid out.

Corporations were originally conceived as institutions existing at the will of the crown, at the will of government, acting in the public interest. A corporation could be dissolved by forfeiture of its charter for either misuse or abuse of its powers and privileges. There was a tacit or implied condition annexed to all grants of incorporation to trading companies that if the grant was misused or abused, the corporation's charter or franchise was to be forfeited. Incorporation was originally a privilege, not a right. Corporations were conceived of as fictitious entities granted prescribed powers by crown charter or by a special act of Parliament. Later, control of the corporation was transferred to shareholders, but the corporation itself remained a fictitious entity.

The primary observation to draw from this is that corporations are not real in a physical sense but rather are created and controlled by individuals. Even today corporations remain creatures of statute governed by corporate law. To this day our corporate statutes retain the power of the public through its governmental representatives to change any aspect of the corporate structure in the way in which it operates. In short, corporations have no existence outside of the public statutes that created them.

Liberalism has disregarded the true nature of the corporation and has gradually granted corporations the rights of the individual. Today corporations have the rights of free speech and assembly and of powers not even granted to individuals, such as immortality, limited liability, the ability to exchange and transfer itself through shares, and the ability to merge and amalgamate.

While it is true that our corporate statutes have been amended to grant legal personhood to corporations, the Supreme Court of Canada, in discussing corporate rights under the Charter of Rights and Freedoms, has consistently opposed this view, maintaining that the corporation is a fictitious entity.

The types of international trade agreements currently being negotiated under the auspices of the WTO and other international organizations, such as the OECD, ascribe further rights to this fictitious entity, including freedom from discrimination in investing, freedom of mobility, and access to private dispute resolution mechanisms. None of these rights are available to humans under international law. Ascribing such super human rights to fictitious entities is wrong, imprudent, and incomprehensible in light of the fact that similar rights are denied to humans. Furthermore, the structure of the corporation is incapable of making responsible decisions where the production and trading activities of the corporation affect the communities and the environment in which it operates.

Corporations are incapable of and in most cases prohibited from making such sophisticated decisions. A corporation is an economic institution statutorily mandated to act in the sole interest of its shareholders, which translates into achieving profit maximization.

Sorry, I lost my place.

The Acting Chairman (Ms. Sarmite Bulte): Before you continue, you've used up nine minutes. You're not going to be able to get through your paper, so perhaps you could just highlight it.

Mr. Gil Yaron: Yes, I will. I would like to just finish this part because it's really the most critical part.

Most decisions we make as individuals take into consideration moral or ethical considerations as well as the interests of family and community. In the case of large complex decisions, even more sophisticated decision-making processes are required. The corporate structure and classical economic theory are incapable of overseeing the complex effects of global trade. Yet under international trade agreements, decisions with global ramifications are being made solely on the economic principle of profit maximization. The international trade agreements developed under the WTO legitimize the unsophisticated corporation as the institution responsible for these decisions.

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In the interest of time I won't elaborate on my third point. I just refer you to pages 6, 7, and 8 of my submission.

I'll conclude, then, with my recommendations. Based on the above submission, the Citizen's Council on Corporate Issues requests that the standing committee instruct the ministers of foreign affairs and international trade to implement the following recommendations prior to any future consultations respecting international trade: One, adopt and advocate a more comprehensive and sophisticated definition of trade; two, expand existing business advisory groups on the various aspects of international trade agreements to include representatives of citizens' groups and non-governmental organizations, rather than creating parallel civil society advisory groups; three, insist that citizens be given equal or greater access than corporations to government in the drafting of international trade agreements; and, four, insist that the WTO similarly provide equal or greater status under international trade agreements and dispute resolution mechanisms to citizens and non-governmental organizations than is currently provided to corporations.

The WTO reflects a corporate institutional bias that trade is merely an economic matter. Its structure insulates this bias from other areas of public concern, such as cultural, social, and environmental interests. WTO's support of international trade agreements that view trade as a relationship between contracting corporate actors works to enshrine corporate rights at the expense of larger public concerns. The WTO is encouraging the development of international trade agreements that place decision-making control in the hands of corporations, fictitious creatures of statute that are unable to make responsible choices taking into consideration the many economic and non-economic aspects of trade.

We therefore urge the Canadian government to reverse its support of current international trade developments in order to ensure the survival of our democratic institutions and the protection of the larger public interest. The nature of the relationship between the corporate structure and international trade agreements must be reconsidered. The international trading system has been structured to satisfy corporate interests. Changing international trade agreements requires rethinking the corporation.

Thank you very much.

The Acting Chairman (Ms. Sarmite Bulte): Thank you, Mr. Yaron. I'm sorry we have such little time. You've raised some interesting recommendations. Although we don't have the time now, I hope the committee can be in touch with you if we have further questions or we wish you to expand on your recommendations. Thank you very much.

Mr. Lovett, you've joined us now. You have a maximum of ten minutes for your presentation, because we're already running late.

Mr. John Lovett (Individual Presentation): Okay. Thanks for having these hearings.

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

Mr. John Lovett: We need more of them, much more, I believe.

I want to apologize. I've had delays in getting the copies of my presentation ready for today, but they will be forthcoming.

The Acting Chairman (Ms. Sarmite Bulte): Whether you read your presentation now or give it to us later, it will actually form part of the public record. So there's no need to apologize.

Mr. John Lovett: Okay. Thanks.

The topic we're faced with today covers enormous grounds, and in the ten-minute span, I'll try to touch on a few things that are outside of the thing to give a general view. I'm going to speak a little bit about various histories and then predictions of what could be.

The history of Canada prior to Confederation shows us that there was a great annexation movement, which is still prevalent today and always has been in the history of this country. What defeated that annexation movement to keep this country intact was the Constitution and the joining together of the federal Conservatives, the provincial Conservatives of Quebec, and the then Reform Party. They had to join together to defeat this annexation movement, which was headed by the Liberal Party of the day. Under this Constitution, by the mid-sixties Canada had the highest dollar and was really the richest country, more than Canadians ever knew.

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In the last 35 years what we've seen, and culminating these days, is the tremendous resurgence of the annexation movement to the States, which is what this free trade area of the Americas deal ultimately is. In the history of GATT, the new GATS, and the World Trade Organization, in around 1973 the U.S. sent some 20 trade representatives over to stay in closer contact with GATT, and they had the same idea with the International Monetary Fund in the beginning of that. In the chronicles of the International Monetary Fund, the first few papers were from the United Kingdom and the U.S. They decided they should work together and do this quickly, so that they would be actually the main people behind it and controlling the monetary fund of the world.

I have to be brief on all these topics and just create an overall view.

Under our Constitution, no foreign authority should be held over any government of Canada or any of its citizens. It belongs to the country. And then I discovered last night, in searching through some Internet stuff to try to find out what the Senate is up to, that they actually have a special committee to amend section 93 of our Constitution. This is something we ought to pay attention to, because it makes the ability to go outside the bounds of Canadian law a reality, and a legal reality. I also know that the Senate is presently looking at the reality of the American dollar as our currency.

I know that one of the reasons that some of the administration in the U.S. is pushing for the FTAA is because they're afraid that perhaps South America would become a greater foreign trade partner with the European Economic Community.

All of this falls on deaf ears in the minds of the annexationists. But we have to realize, as people and as nations, that this whole direction is one that disregards the needs of people. People are no longer needed, other than just to service the industry of trade and whatever parts of the economy that entails.

I firmly believe with everything I have that in accommodating the World Trade Organization... I know that in a debate in Congress between Mickey Kantor and Ralph Nader, Mickey Kantor stated strongly that the Americans have been practising protectionists, and they still are, and right up to the very end they are protecting their own ways by not adhering to national treatment and most favourable nation and right of establishment. Right of establishment over the last 12 years in Canada is the ultimate in dumping; it's a work in progress to take over ownership and control of the Canadian economy.

So when we discuss moving into economic integration with the U.S. and with all of the Americas, who in Canada is going to be involved? Is it going to be the historic real Canadians, or the Canadians who have gotten here under right of establishment, who are not interested in the Canadian way or protecting Canada? They're interested primarily in profiting from downloading our resources to other parts of the world.

None of this has anything to do with the debate of protection against opening up the markets to the world. None of this has anything to do with trade barriers or anything like that. This is all about the ending of the nation-state for Canada. And it is obvious to me and to many people that with Chrétien and Mulroney... There's been 35 years of the same direction. With the amount of control he has on the departments that make up Ottawa and the parliamentary ways, I could only hope that you people go home and perhaps look in the mirror and examine your own sense of patriotism and do what you can to slow this process down, because most Canadians think the FTAA is in fact the FTA and they have no idea what that is. And we're 12 years later.

• 1410

I don't know how much time I have left. Suffice it to say that—

The Acting Chairman (Ms. Sarmite Bulte): You have a couple of minutes.

Mr. John Lovett: Well, there are other considerations that are afoot in the U.S.—and the people of the U.S.—that I'm not sure the Department of Foreign Affairs should be concerned with or not. One is that there is a push down there... 29 of the states have applied to have their constitution changed, and they need another five. If they have 34 states applying to have their constitution changed, it will be so.

In The Foundational Documents of The New World Order, by Vaughn Shatzer, the new constitution includes all of America, and it's a very Orwellian world. Next to that is Revelations. I don't want to drift too much into the maze of the whole thing, but this is what seems to be defeating the morale of general Canadians.

So one thing is, what else? The Americans are in control of 60% of the world commerce. That's fine and dandy, but it has nothing to do with the stability of people and nation-states. The difference between the World Trade Organization and GATT is that GATT was nation friendly. The World Trade Organization, with right of establishment and national treatment, does not recognize nation-states. All it recognizes is control of resources and control of the people who remove these resources, get them to market and get them across.

So I would recommend that we head back into using the Bank of Canada to finance the rebuilding of this country. This whole concept should be shelved. Canada should pull out of NAFTA before we can't, because there's an expansion of NAFTA. Before we can't, we should pull back and rebuild ourselves to the extent of some policies that would limit so much foreign control over the corporations and over the economy and over the resources and over the service industries. Rebuild that, and then we could go back to the World Trade Organization, if we had to, on our own terms. That would do an awful lot.

Just to make one final note, the economy of the day is just heading in one direction and that's up into the world banks. All the moneys of the world are being depleted... from being able to withdraw currencies at any time in the form of profits, and these days in Canada businesses cannot really function as businesses; they can function better as businesses that show more profit so they can be sold for profit on the stock market. And that's not benefiting people. Most people don't have money to invest, and if you don't have the money, you just can't buy.

Canada cannot function as Canada under the terms of the World Trade Organization. It is not the mandate of this government to represent the mandate of the World Trade Organization, and it seems to be pursuing that, and it seems to be blocking any... Any sense of the term “protectionism” is not allowed.

In short, and in ending, I believe that if Canada is to survive—and anybody here can understand this—we should pull back, rebuild, and then join again if need be.

The Acting Chairman (Ms. Sarmite Bulte): Thank you, Mr. Lovett. Thank you very much for your comparisons between the GATT and the WTO. We look forward to reading your paper when you have it for us.

Thank you all very much for coming.

I'd like to call upon the Business Council of British Columbia to take their seats at the table, please.

• 1414

• 1416

The Acting Chairman (Ms. Sarmite Bulte): Good afternoon, gentlemen, and welcome to the Standing Committee on Foreign Affairs and International Trade.

Mr. Lampert, I understand you're the president and chief executive office of the Business Council of British Columbia. Am I correct? You have with you Mr. Finlayson, who is the vice-president of policy.

Mr. Gerry L. Lampert (President and Chief Executive Officer, Business Council of British Columbia): That's right.

The Acting Chairman (Ms. Sarmite Bulte): Wonderful. Who will begin?

Mr. Gerry Lampert: I will begin.

The Acting Chairman (Ms. Sarmite Bulte): Okay, Mr. Lampert, please.

Mr. Gerry Lampert: Thank you. Good afternoon and welcome to Vancouver. As I was sitting and watching the last presentations, I thought how wonderful it would be if we had a large plate glass window here to enjoy a bit of our wonderful early spring. I don't envy your having to be here going through this, but they're very important sessions.

As was mentioned, I am the president of the Business Council of British Columbia, and with me is Jock Finlayson, who is Business Council vice-president of policy and also our chief economist. We appreciate the opportunity to appear before you today.

By way of background, the Business Council of British Columbia is an association representing 165 large and mid-sized enterprises engaged in business in the province. Our members, who include most of the largest companies with a presence in B.C., are drawn from all sectors of the economy and account for approximately one-quarter of all jobs in the province.

The Business Council of B.C. has a long-standing interest in international trade and investment matters as well as in Canadian government policies touching on them. We were, and remain, strong supporters of the Canada-U.S. Free Trade Agreement and its successor, the North American Free Trade Agreement. We have also been advocates of vigorous Canadian involvement in multilateral trade diplomacy through the World Trade Organization and the General Agreement on Tariffs and Trade.

Your committee is seized with a number of important issues that relate to Canada's participation and objectives with respect to future international trade negotiations. These include the effectiveness of the WTO; the scope and focus of the next round of trade negotiations, scheduled to commence within the WTO by the end of 1999; Canada's objectives and priorities in these negotiations; linkages between the agenda of international trade liberalization on the one hand and issues such as environmental standards, labour and market policy, and social and human rights on the other; and the prospect of concluding a broader free trade area of the Americas.

Now, before turning to these important questions, let me offer a few comments on the importance of international trade to the province of British Columbia.

International exports of goods and services currently amount to approximately 35% of British Columbia's gross domestic product. This is slightly below the Canadian average. In addition, like other provinces, B.C. also benefits from significant and growing imports of foreign-produced goods and services. In certain respects, British Columbia is actually more affected than any other province by the global economy and international trade rules. The reason is that B.C. depends relatively less on the United States and is correspondingly more reliant on offshore markets and capital flows than other provinces.

Prior to the Asian crisis, 45% of British Columbia's international merchandise exports were destined for markets outside of North America, with Asia alone accounting for approximately 36% of the total. B.C. has also been a recipient of sizeable inflows of offshore investment, much of it from Asia, although in recent years such investment has dwindled. Consequently, it can be argued that the multilateral trade and investment arrangements embodied in the WTO are particularly important to B.C.

• 1420

With the onset of the Asian crisis, both Canadian and B.C. exports to that region have fallen appreciably. Last year the United States absorbed about 60% of British Columbia's foreign exports, a higher proportion than before the Asian crisis but still considerably below comparable figures for Canada, where 82% of exports go to the U.S., and for Ontario at 90%. Rapid growth in the value of B.C.'s exports to the United States and also in the number of U. S. tourists visiting our province has helped to keep B.C.'s recent economic downturn mild by historical standards.

British Columbia has reaped significant benefits from improved access to the American market under the bilateral free trade agreement and NAFTA. Since 1990 the province's merchandised exports to the U.S. have soared from $6.9 billion to $16.2 billion, an increase of 131%. The fastest growth has been in exports of manufactured and other value-added products. For example, B.C.'s exports to the United States of machinery and equipment have increased by 300% since the start of this decade.

Despite the difficulties in Asia, the longer term outlook for most of the economies in that region is favourable. The prospect of economic recovery and renewal in Asia bodes well for British Columbia. But at the same time it underscores the need to ensure that Asian countries are both well integrated into the global trading system and increasingly open to Canadian products, services, and investment. This is one reason it makes sense for Canada to carefully prepare for the next round of the WTO negotiations and to look to those negotiations as a means to strengthen economic ties with Asian countries.

I want now to turn our presentation over to Jock Finlayson to address Canada's objectives in future WTO negotiations.

Mr. Jock Finlayson (Vice-President, Policy, Business Council of British Columbia): Thank you. Our view is that there are four or five top priorities for Canada in connection with the next round of WTO negotiations and also the possible negotiations toward a free trade agreement in the Americas.

First and foremost is the need to stem American protectionism. No country is more threatened by it than Canada is. Despite NAFTA, protectionist policies south of the border have continued to harass Canadian goods and Canadian producers. Experience suggests that one way to combat American protectionism is to undertake a new round of global trade negotiations aimed at opening markets. Launching a new global round can help to mobilize political and economic forces in the United States that favour open trade and oppose protectionism. Entering into multilateral negotiations also tends to strengthen the hand of the U.S. administration relative to that of Congress in trade policy making.

Softwood lumber is a very painful reminder, particularly to those of us in British Columbia, of how Canada can be hurt by American protectionism. The current bilateral softwood agreement is a classic example of what economists call managed trade. It reveals starkly the economic distortions that inevitably flow from managed trade. When the present five-year softwood lumber agreement expires, we believe Canada should argue forcefully for a return to normal free trade conditions in softwood lumber, subject to the terms of NAFTA. British Columbia as a province can do its part to bring about a positive result in this area by taking a hard look at tenure reform in our forest industry.

The second key objective for Canada is to reduce tariffs abroad and improve market access for Canadian goods and services in other countries. Average most-favoured nation tariff levels in the OECD have fallen as a result of previous trade rounds. On manufactured goods they currently stand at around 4%.

However, a more careful look shows that industrial country tariffs tend to be higher in certain key product categories of interest to Canada, notably processed minerals, forestry, and other commodity-based sectors. Such tariff escalation militates against adding value to resource-based products in Canada prior to export. It should also be noted that tariffs in developing countries are considerably higher than in Canada or other OECD nations.

Accordingly, in the next WTO round Canada should be pressing for continued reductions in both developed and developing country tariff levels. In exchange, of course, we in Canada must be prepared to bring down our own tariffs, including in sensitive sectors such as agriculture, textiles, and clothing.

A third objective is to move forward with new international rules and improved market access in the area of trade in services. Roughly a quarter of all global trade now consists of trade not in goods but in cross border exchanges of services. Most services are not traded across national or even provincial borders. But an increasing number of services are tradable. Among the most important ones are financial services, such as banking and insurance; professional services, such as engineering, architecture, and consulting; information technology; transportation services; and a wide range of knowledge-based services. Many of the product categories in which world trade is growing most rapidly are in fact services rather than goods.

• 1425

Since 1986 Canada's international exports of services have risen by more than 100%, climbing from $18 billion to over $41 billion per year. Our imports of services have risen in tandem. Last year our organization, the Business Council, published an analysis of Canada's international trade in services as part of our regular bi-monthly newsletter series. We have attached that as an appendix to our presentation for you today in case committee members would have an interest in getting an overview of what we're talking about in the whole area of trade in services.

Services do represent one of the fastest growing segments of world commerce, and they are a big growth opportunity for Canadian companies interested in international business. Let me just depart from my presentation for a moment to say that in our organization, the Business Council of British Columbia, we have quite a number of companies based in B.C. that are service producers, including engineering firms, architecture firms, professional service firms, and transportation firms, and they are generating a large portion of their total revenue from selling services to people in other countries. So it is a growth opportunity.

At present international trade in services is regulated through the World Trade Organization and its subsidiary agreement, the General Agreement on Trade in Services, or GATS. However, to date only modest commitments have been made by WTO members to actually improve access to the domestic markets. In the next round of negotiations we believe Canada should strive to advance the multilateral liberalization process for services. This will require that we in Canada do more to open up our own domestic markets to foreign service providers.

A fourth priority is international investment. Canada's share of global direct investment has dwindled in the past decade partly because economic reforms in many developing countries have made these countries more attractive to offshore foreign investors. Still, foreign investment does remain an important source of capital, technology, and innovation in Canada. In addition more and more of our Canadian companies and individuals are investing abroad to diversify their portfolios and take advantage of attractive economic opportunities elsewhere.

It's important to recognize that Canada benefits from both outward as well as inward flows of direct investment. As a country we have an interest in putting in place clear national principles and rules that will govern the treatment of foreign investment by national governments. In our view Canada should work to establish a broadly based multilateral agreement on investment, building on the existing agreement on trade-related investment measures within the WTO. The core principle underlying such an agreement would be national treatment that requires that governments do not discriminate between domestic and foreign investors in their laws, regulations, and policies. However, appropriate exceptions or exclusions from the national treatment rule can then be worked out as part of the negotiating process.

To be effective a new global investment agreement needs to include the major developing countries because it's these countries with which most conflicts occur around investment. Let me add parenthetically that was a weakness of the now aborted MAI. Most developing countries were not going to be part of that agreement in part because they attempted to negotiate it within the OECD. We think it would be better done within the World Trade Organization.

Before concluding let me touch very briefly on environment, labour, and human rights. History furnishes compelling evidence that more open markets and growing international trade and investment are powerful sources for economic growth and rising per capita incomes. For this reason in our view it is wrong to equate trade and investment liberalization with reductions in environmental and labour standards or human rights. In fact, economic development is a prerequisite for improvements in living standards, including improvements in the quality of the social infrastructure. Since trade and investment on the whole tend to encourage economic development and higher real incomes, it follows that they are also positive for labour standards and environmental protection. It's worth noting that the countries that are extensively integrated into the world economy tend to have higher real incomes and higher standards of environmental protection and labour and social standards than countries that are outside of the world economy or have only limited trade with it.

The development of agreed standards in areas such as labour, the environment, and human rights is most appropriately done in international bodies that have a clear and explicit mandate to address these issues. International trade and investment agreements are not really the best vehicles for dealing with these matters. Having said that, we recognize that environmental and labour issues in particular are likely to figure in some way in the next round of WTO negotiations given the positions adopted by the U.S. government and a number of other OECD countries.

• 1430

Finally, regarding the free trade area of the Americas, in our view this is a lower priority from a Canadian point of view than ensuring success in the next WTO round. But Canada is engaged in efforts to fashion a wider trade agreement in the western hemisphere, a process that moved forward last April, when 34 countries agreed to try to conclude a so-called FTAA by the year 2005.

In substantive terms, the Business Council of B.C. believes that Canada's priorities in negotiating objectives for a possible FTAA should closely mirror those I've just outlined in connection with the next WTO round. We also believe that the provisions of an eventual FTAA should be compatible with the key rules and principles underlying the WTO. In other words, we don't want a free trade agreement in the Americas with substantially different rules and principles from those found at the multilateral level in the WTO.

Having said this, our view is that progress toward an FTAA depends critically on the American government, and progress cannot be guaranteed. It's not at all clear that sufficient support exists in the U.S. Congress to allow the American administration to enter into meaningful negotiations on an FTAA. There appears to be greater congressional interest in a new WTO round, since this would involve Europe, Japan, and other key Asian countries that are very important trading partners for the United States.

For Canada, any work done to prepare for a future WTO round should presumably help lay the foundations for a well-crafted Canadian strategy toward the FTAA.

In conclusion, Madam Chair, Canada should take a leading role, in our view, in multilateral trade and investment liberalization, both through the WTO as well as through regional arrangements. On the whole, we believe Canada's long-term interests will be well served by continued progress toward worldwide trade and investment liberalization. At home, this strategic thrust should be accompanied by close consultation among the federal government and the provinces, the business community, labour, and other stakeholders so that Canada's negotiating priorities enjoy broad domestic support.

Thank you.

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

Are there questions? Mr. Stinson?

Mr. Darrel Stinson: I'll pass to Mr. Sauvageau.

[Translation]

Mr. Benoît Sauvageau: I will add his time to mine, alright? That was a joke.

Good morning, gentlemen. I have a few questions to ask. We have heard many groups who agree with free trade, and some who disagree. The latter claim that free trade is at the root of all unemployment, environmental problems and the failure of our students in the schools. I am troubled by your arguments because I'm not convinced.

Some groups claim that free trade is very beneficial because it will lead us to an ideal world, to human nirvana. Since you represent major corporations, I would like to ask you a few questions about a specific paragraph in your report which I do not find very convincing. During these two days of hearings, I do not seem to have stated if I am for or against. We are here to listen to you but we would also like you to be able to convince us one way or another.

When you talked about the environment and human rights, you stated that history has shown that open markets lead to an improvement in the quality of life of human beings. Very respectfully and weighing my words very carefully, I have to tell you that this statement seems to me to be without any basis. If you can give us any evidence, I would be very pleased to hear it. Also, taking into account the numerous services and opportunities that you have as a representative of the Business Council of British Columbia, I would like you to send us more information on this issue.

After having heard the figures and listened to the presentations, I tend to be more convinced that globalization has created a gulf between the rich and the poor, because the rich are getting richer and the poor poorer, and is also leading to a shrinking of the middle class.

In some member countries of the WTO, we see a terrible degradation of the environment, as well as of the quality of life and of working conditions. So, that statement from a group such as yours troubles me. In a way, that was my first comment. It may be that a very small sentence will colour the whole of an otherwise very important document.

My second comment is completely different. You stated at the beginning of your presentation, Mr. Lampert, that B.C.'s trade has increased considerably, especially with the U.S. Since you speak for the Business Council of British Columbia, do you believe it would be easier to trade between sovereign countries than between the Canadian provinces?

• 1435

Some Members: Oh!

[English]

Mr. Darrel Stinson: That's a good question.

Mr. Jock Finlayson: Thank you for the question. I'm sorry we haven't fully convinced you.

Rest assured that there are lots of studies that have been done by economists and other experts that have linked a variety of measures of living standards to trade and investment and involvement in the global economy. I'll be happy to root through some of those and send them, or at least send references of those.

The Acting Chairman (Ms. Sarmite Bulte): Actually, Mr. Finlayson, perhaps you could do that, because I have to—

[Translation]

Mr. Benoît Sauvageau: I'm sure that many economists have carried out such studies but Maud Barlow's indicates something else. There are two extremes. Were Brazil and Mexico not members of the WTO when their currencies collapsed? Since those countries have become members of the WTO, has their GDP increased? I know that there are right-wing groups and that you would be able to provide me with statistics, but I could also get other figures that could lead me to a different conclusion since it is all a matter of interpretation. Figures may be neutral but, if I may say so, some are more neutral than others.

Your statement surprises me. If you were absolutely right, we would only have to look at the increase of international trade in order to conclude that the world is not facing any problems any more, don't you think?

[English]

Mr. Jock Finlayson: It's a fair question. The relationship between open markets and standard of living—I'm using per capita income as a proxy for standard of living—is something you see evolve over a longer term. It doesn't mean it's going to be true in any one year or any short period of time. Certainly something like the Asian crisis, which is a huge destabilizing shock to the global economy, the origins of which don't lie in trade but rather in unregulated financial flows and other distortions, can derail economic progress in any particular country, whether it's Indonesia or Brazil, whether you have free trade, open trade, or not. So it's not a panacea that solves all the problems.

But there's a strong relationship over a longer-term period between participating in trade and exchange with other countries, other jurisdictions, on the one hand, and standard of living and per capita income on the other. After all, this is why countries are formed in the first place: it's so that different regions within a particular state, whether it's 10 provinces within Canada or 50 states of the U.S., have open borders with each other, at least relatively open borders, and trade and exchange with each other.

Why do they do that? Because doing that is a surefire way to achieve a higher standard of living, higher real incomes, increased consumer choice in goods and services at a lower price. The same logic we use within a country like Canada to justify trying to have a minimum of barriers that prevent us from trading from British Columbia to Alberta to Manitoba in principle applies when you move beyond a particular country and look at trading among a series of countries.

I'll be happy to send the committee some references written in accessible English, accessible language, not technical language, to try to explicate this in more detail.

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

[Translation]

Mr. Benoît Sauvageau: Could you answer my second question?

[English]

Mr. Gerry Lampert: On the second question, the figures we use in our little presentation here today, no question, are external figures. In terms of internal trade, though, the business council has been among a number of business organizations in British Columbia that have tried to convince our provincial government to engage in an opening of trade or a reduction of some of the barriers between provinces and trade. I think our province still has a ways to go before that is completely realized, but I think there has been some improvement over the last while. There's no question that our view is that the more opportunity we have to do trade across provincial borders, the greater the benefit is going to be for us here in British Columbia in all respects.

• 1440

Mr. Jock Finlayson: I will add to this that within Canada our largest trading partner is Alberta, Ontario is second, and Quebec is third in terms of the dollar value of imports and exports within Canada. And the value of our total exports to other provinces in Canada is somewhere around 20% of GDP, so it's actually smaller than it is for international flows.

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

Ms. Beaumier.

Ms. Colleen Beaumier: Thank you.

We have listened to several different groups of people today, very few of them with a middle-of-the-line approach on trade. We have people who are pro-trade at all costs, then those who are saying that trade should stop. So I'd like you to answer some of these questions.

How do you respond to those who cite the loss of sovereignty as one of the too-high prices to be paid by Canadians? When your federal government passes legislation to prohibit MMT products, does it bother you that a U.S. company can sue the Government of Canada and actually have us rescind legislation we've enacted for the health of Canadians? Is that a problem for you? How do you address that?

I've heard that the level of poverty in Mexico has increased. Do you believe that we should be including free trade of the money markets, or should we somehow exclude that or tax it to stem the problem?

Do you have a problem with the government... One of the approaches they want here is for us to sit back and look to see if Canadians are truly better off today before the implementation of the free trade agreement. How do you feel about that kind of a proposal?

Mr. Jock Finlayson: Yes, those are interesting questions. Let me start with the last one.

I'm an economist, so that's the way I look at the world. I can't speak for other—

Ms. Colleen Beaumier: Others were economists, too.

Mr. Jock Finlayson: The fundamental determinant of any country's standard of living or any province's standard of living over the long term is actually the level of productivity, the amount of output that's produced for a given quantity of inputs of labour, capital, whatever you want to measure. That is the major determinant of our standard of living. So the impact of trade on that is something you can analyse.

By trading with others we open the market. Let's say we didn't trade with anyone. Let's say our province, British Columbia—which may well suit some of the people who live in B.C—didn't trade with anyone else, that we just had our own domestic market and we closed ourselves off from exchanges of goods, services, capital with the rest of Canada or the rest of the world. We would then have a much more limited market for what we're producing here and we would not be able to benefit from importing goods and services produced by others. So we don't do that. We made the decision not to do that, as has Canada.

There's a reason for that. The reason is that in the long run you're going to have a higher level of prosperity from following that policy. If you don't like this, you can follow the policy of North Korea or other countries, which are totally autarkical, do no trade whatsoever with the outside world.

Ms. Colleen Beaumier: Okay. No, we're not denying here that trade has increased, but who is this profiting? When you talk about increased trade as being the measurement of success for your economy, where do we factor in increased homelessness? Or do you?

Mr. Jock Finlayson: In Canada in the 1990s during the period we've been implementing first the U.S.-Canada agreement, then the NAFTA, and then the WTO agreement that was reached in 1994, we've also gone through a very wrenching process of restructuring and a huge fiscal retrenchment on the part of governments at the federal and provincial levels, which in the case of the federal government is now largely over.

We also went through an experiment in monetary policy where the Bank of Canada, under the previous governor, decided we were going to drive inflation down to virtually zero percent. I was living in Ottawa, working there, while that was happening, and I remember it was a painful process for a number of those years.

So there have been a lot of other things happening in Canada in the past ten years besides trade agreements. In fact these other things that have been happening have probably had more impact on the economy than whether we've had tariff removal under free trade or not. So it's an error, in my opinion anyway, to look at one thing like trade agreements and then trace back causally every single thing that has happened in the economy to it as the cause. I don't think that makes sense.

• 1445

Ms. Colleen Beaumier: I don't think anyone is suggesting that we want to trace it back to trade. Do you have a problem with looking at a full examination of this?

Mr. Jock Finlayson: No. I don't have any trouble with it at all. We've had a case of our province—I don't have the numbers for Canada in my head, but I have them at the office—we've had basically a 120% increase in our exports to the U.S. and about an 80% increase in our imports during the time of free trade.

Right now in the case of British Columbia most of the industries doing best in our province are manufacturing or value-added industries that can sell on the American market and are benefiting from free access to the market plus the exchange rate advantage. That's one of the things that has been holding the B.C. economy barely above water in recent years.

But trade does also produce losers. It produces dislocation for some industries in some communities. That's recognized by everybody who looks at it. Those people who are negatively affected by more open trade and trade flows have a right to expect some kind of assistance, some kind of policy framework that is going to render support to those who are dislocated by changes in markets. And that's an important part of the debate you need to have in looking at trade policy.

You mentioned money flow, financial flows. I think this is an important issue. There is a big debate among economists about whether the current monetary system globally of unregulated capital flows has become highly destabilizing to trade, among other things, because of the enormous amounts of money that are swishing around, often in ways that are quite destabilizing to exchange rates and interest rates. There is support in some circles for things like the Tobin tax, which would attempt to slow that process down by levying a very small tax on financial transactions.

I think all those things are worth debating. They don't in any way undermine the arguments in favour of the benefits of exchange of goods and services through trade. But they're worth debating in their own right, because the experience of the last year, particularly the year and a half with the Asian crisis, does suggest that relying on unregulated movements on short-term capital across markets, especially for developing countries that don't have well-developed financial systems or good systems of prudential rank regulation and so on, can result in some real serious problems. And that's part of what we've seen.

I prefer not to conflate that with discussions about whether we want to have another WTO round. The WTO doesn't deal with monetary policy or the regulation of financial flows. That occurs elsewhere. Certainly we'd be happy to entertain questions on that, but I think this is something we and all the OECD countries need to look at.

Ms. Colleen Beaumier: The one that really bothers me, that is very personal to me, is that I voted to pass legislation banning what I believed was a noxious substance for Canadians, and the U.S. company has won that battle. How do you address that?

Mr. Jock Finlayson: The problem with that case—and I'm not an expert on the details of it—is that any country should be free to decide its own environmental standards, but in doing so it shouldn't be using environmental standards as a disguised trade barrier. If we want to regulate the carbon content of any fossil fuel in Canada, or if any other country that's part of the OECD wants to do that, we're free to do that. But we're not free to do it, nor should we be, if we use it as a tool to discriminate against imports as opposed to domestic production. That is the central issue around national treatment. It's not whether you can regulate or set standards in any one country; it's whether in doing so you gear it to basically discriminate against imports as compared to domestic production.

We have thousands of laws on the books federally and provincially in Canada that regulate all kinds of business behaviour, emission of pollutants, and thousands of other things, which aren't being challenged. The reason for that is they're not designed to basically discriminate against foreign goods or foreign investors relative to Canadian goods and Canadian investors. As long as we follow the principle of non-discrimination, we should remain free, in my view, to regulate as governments see fit.

The Acting Chairman (Ms. Sarmite Bulte): Unfortunately, we're out of time. Thank you so much for coming. Thank you for your brief and the addendum as well. And if you could, Mr. Finlayson, provide us the information that was requested by Mr. Sauvageau, that would be great. We'd appreciate it. Thank you very much for coming before the committee.

• 1450

I would like now to call to the table the next group of witnesses from the Cascadia Institute, Discovery Institute, and Pacific Corridor Enterprise Council.

Good afternoon. Our schedule is perhaps tighter today than it was yesterday because the committee has a flight to catch to Edmonton at 5.30, so I'm trying to keep things rolling.

Mr. Harcourt, we are going to start with you in this section, representing the Cascadia Institute.

Mr. Mike Harcourt (Spokesperson, Cascadia Institute): Thank you very much, Madam Chair. I would start by saying bonjour et bienvenue à Vancouver—to a typical sunny day, I hope, out there for you.

[Translation]

The Acting Chair (Ms. Sarmite Bulte): Thank you very much.

[English]

Mr. Mike Harcourt: I would like to give a brief introduction to the B.C.-Washington Corridor Task Force that I am co-chairing with a counterpart in Washington state. I will then have some of my colleagues very briefly describe the activities we are involved in, which we believe are a very good model and precedent for other very active corridors of growth and trade across the huge, long, famous undefended border that we have between our countries.

What I would like to do is, first of all, refer you to the brief documents that we sent to Christine to describe some of the background and some of the activities of the B.C.-Washington Corridor Task Force and some of the history. What I will do is very briefly describe a bit of the history, the reasons for the task force being established by Premier Clark and Governor Locke in Washington state. I would then like my colleague Alan Artibise to briefly talk about some of the areas that we think have application right across Canada and the United States.

We have two of our friends from Washington State: Bruce Agnew, who is with the Discovery Institute; and Jim Miller, who is the director of the Whatcom County Council of Governments.

With that, and realizing that you have a 5.30 flight to catch to my birthplace, Edmonton, I will get on with a brief description. Then we have, of course, Peter Fraser and some of the representatives of PACE; and John Winter, who will describe some of the activities to facilitate movement and trade between our areas.

With that, the brief history is that over the last decade or so we've started to look at the huge interrelationship between Washington and British Columbia in particular, but right into Oregon, in what we call the Cascadia corridor main street along I-5 and 99 highways. The B.C. Round Table on Environment and Economy did some background work on this concept in 1993, and they came out with a report. Alan Artibise, who is a senior professor at the University of British Columbia School of Regional and Community Planning and is with the Cascadia planning group and is an associate at the Cascadia Institute, has done a great deal to describe the relationship around Cascadia and to bring forward a number of specific recommendations.

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This task force is to try to capture all of the major challenges around border congestion, the movement of freight and people, and the borders right across British Columbia and Washington, to deal with the huge population and trade growth. I will say that we're not here to get into a discussion of the World Trade Organization negotiations to talk about expansion into the Americas or the trade set of activities; we're here to talk about the consequences of the growth we're trying to come to grips with in terms of congestion, freight movement, etc. Do we build more freeways or rapid train systems? How do we handle the growth of our areas of tourist destination? How do we cope with the growth of Seattle-Vancouver-Victoria, from 6 million people now around what we call the basin, the Georgia Basin and Puget Sound area, to 10 million to 12 million people over the next 30 to 40 years, in a very, very, difficult geographic area surrounded by mountains, sea in the middle, huge river deltas like the Fraser River, and very, very, rich agricultural lands up against emerging urban areas. It's a very, very tough area in which to do this growth, with an international border thrown in and over 200 different jurisdictions.

So these are the kinds of issues we're coming to grips with. We have been asked by the governor and the premier, and are working very closely with the federal departments of transportation, customs, environment, and others to look at issues on the border—for example, common border facilities and cooperation on those facilities. We're also dealing with what's called section 110, which could severely restrict the movement of Canadians back and forth along the border, and trying to see that it is repealed before it goes into effect.

We're looking at transportation issues, such as upgrading of Amtrak under TEA-21, which is a U.S. transportation infrastructure program. There is provision to fund transportation infrastructure 60 miles across the border and to cost-share common transportation corridors and facilities—a tremendous opportunity. It will require, though, reciprocal resources. We're looking at the potential to bring in a fast train, 200 kilometres an hour, from Eugene and Portland, Oregon, to Seattle, to Vancouver instead of building another freeway system.

Trucking has increased dramatically. We have a document we're going to hand out to you that shows that the southbound truck traffic observed by U.S. customs has increased 120% in the last decade—86% since the passage of NAFTA. So that's the kind of increase in volume we're dealing with. We're looking at intelligent transportation systems on both sides of the border to try to come to grips with that.

With regard to tourism, we're becoming one of the popular areas—Washington, Oregon, and British Columbia—so the concept of a two-nation vacation as a tourism marketing approach is being looked at. Some of our aboriginal friends would say you've got it wrong; it's a three-nation vacation we want to look at, that the Georgia Strait and Puget Sound basin is really the Salish Sea, and we should be including that in our activities. We're quite open to that, and we're working with the aboriginal community to have that be part of our activities. And of course we want to gear up all of this for the probable awarding of the 2010 Winter Olympics to Vancouver and Whistler, so we're going to need to deal with these congestion and transportation issues.

The issue of growth is the fourth area. I signed four protocols with previous governors to come to grips with growth, environment, transportation, economic, and trade issues, and we're expanding on those. As a matter of fact, from May 27 to May 29 a number of experts, political leaders, NGOs, and aboriginal leaders are coming together to deal with the growth issue. How do you maintain a high quality of life and yet double your population in one of the most difficult geographic areas in the world in which to do that?

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So those are some of the issues we're coming to grips with. To give you a bit more detail of the opportunity for cross-border collaboration, I'd like to introduce my colleagues, who can give you a bit more information. I'll start with Alan Artibise.

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

Mr. Alan Artibise (Spokesperson, Cascadia Institute): Thanks, Mike.

Good afternoon, ladies and gentlemen. I will also try to be quite brief.

I think it might be useful to spend a moment or two giving you some perspective. I was born and raised in Manitoba and have been living on the west coast for many years now. Like many westerners, I grew up with concerns about central Canada. Before the question is asked, I think it's important to get some perspective about why we're doing what we're doing in the Cascadia region.

Whenever I'm interviewed by the national media, be it television, radio, or the print media, they always ask if this is some form of separatism out on the west coast—cooperating with these guys, and so forth. I usually refuse to get into any debate, because this is not a question for us of whether we cooperate with our neighbours to the south, but how we do it. As former Socred leader Robert Thompson said, “Americans are our best friends, whether we like it or not”. I think that's a very important phrase to understand.

The fact is that in this region, unless we cooperate, harmonize, and work together with our neighbours to the south, we cannot achieve the liveability, the kind of environment, and the kind of economy we would like as British Columbians and that we would like to have as a strong British Columbia contributing to a strong Canada. So it's not a choice, in my view, but rather a question of working in a mode that increasingly around the world is a mode we need to recognize in this country.

The new economic units in the world—and my field is regional development—are really what we call city regions, and Cascadia is a city region. We function together even though we have two national governments, several state and provincial governments, and literally thousands of local and regional governments. But we're effectively one unit. Water, air, and increasingly trade and capital don't recognize political boundaries as they once used to.

So harmonizing what we do in the areas Mike Harcourt has just described to you is something that will lead to a better life for us. This is something that has been going on in the first instance in spite of reluctance on the part of the Government of Canada and the Government of British Columbia to get involved. We've been dealing with these issues for over a decade now. You're going to hear from PACE, which is one of the early organizations involved in this. Another one you might have heard of in other areas is the Pacific Northwest Economic Region. There's the Cascadian Metropolitan Council, the Cascadian Mayors Council, the Sustainable Communities Network, the trade and transportation task force, etc.

These kinds of events happened despite what senior government may have been thinking at the time, but we have been encouraged very much by three important pieces of legislation over the last decade: the open skies agreement, the shared border accord, and of course NAFTA.

Those are the contexts in which we operate. Our goal is nothing less than to become a model, quite literally globally, for the kind of cross-border cooperation that respects sovereignty and culture but at the same time learns that cooperation can achieve things that you cannot achieve alone. It's in that spirit that we have developed the kinds of personal ties that are reflected in the tens of millions of people who cross the border every day.

We really urge your committee and the Parliament of Canada to understand the need to have more focused policies regarding the border. I am struck, as I'm sure many of you are, as an international committee travelling in Europe, that if Europe can survive and thrive without borders, then spending two or three hours waiting in a line-up at a border really begs questions.

I'm not saying that tomorrow we should get rid of the border. I'm not sure we should ever get rid of it. But we need to move toward a different description and understanding of that border: what we're trying to protect, and what we are spending a lot of energy and money on that is unnecessary. At the national level, despite the shared-border accord, I don't think we've really focused our attention appropriately on that and the kinds of benefits that may come from more radical thinking about those issues. That's why the context for what we're doing here needs to be a global one.

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Our motto in Cascadia is that we cooperate regionally so we can compete internationally, because our competition in this region is not the port of Seattle, but the port of Singapore and other ports around the world. And only by cooperating, and not building unnecessary infrastructure but sharing infrastructure, can we thrive, as many cross-border and transborder regions in Europe are beginning to do. We in North America I think tend sometimes to be far too arrogant and we think we don't have lessons to learn from Europe. I believe we do in this particular field.

So it's in that spirit that the corridor task force is a recognition, if you like an institutionalization, of this relationship, with strong ties to the federal government. I don't know if your committee is aware, but there is in the federal government an interdepartmental working group on transportation and trade corridors that brings together Transport Canada, Revenue Canada, Foreign Affairs, etc., which is a good sign that the Government of Canada is starting to recognize this as a very important issue—not an emerging issue, but one that is on the table now. We certainly encourage you as members of Parliament to support the work of that group and perhaps enhance it.

With that comment, I'd like to call on my colleague with whom I've been working for many years, Bruce Agnew, who is the director of the Cascadia project in the Discovery Institute. I'm the director of the Cascadia Institute in Vancouver, B.C. So he and I are, at the staff level, the two who try to bring substance to many of these things.

Bruce.

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

Mr. Bruce Agnew (Spokesperson, Discovery Institute (Seattle)): As Alan indicated, the Discovery Institute has been the primary focus for the Cascadia initiatives in the last decade, and I want to direct your attention to the document we should have passed out, called “Connecting the Gateways and Trade Corridors”. I hope you have a chance to look at it.

We were approached by Phil Condit, the CEO of the Boeing Company, as well as the port of Seattle, port of Tacoma, and the Washington legislature, to come up with a long-term plan for connecting gateways and trade corridors. The gateways we are talking about are Vancouver, Seattle, Tacoma, and Portland. The trade corridors are the I-5 and the northwest rail corridor Amtrak runs on, as well as the east-west trade corridors that connect to the north-south gateways.

This project is now complete in phase one. Phase two will develop the interconnection between the north-south gateways and the east-west trade corridors, including the Columbia and Snake River system of barge traffic from the interior, the Trans-Canada and interstate highways system of Interstate 90 and 84, and transcontinental rail.

At the suggestion of British Columbia and Oregon leaders, the Cascadia project is also looking at the upgrade of the inland corridor, which would service Alberta and the interior of British Columbia, down through Washington State, Spokane, and into Highway 97 in Oregon, which works as an alternate corridor between the Trans-Canada, Alberta, and eastern British Columbia to California and Interstate 5.

So what we are doing with this study is looking at not only the international trade flows, both in terms of NAFTA and the free trade agreement, but also the existing transportation system and its capacity to handle those trade flows and the international travel element. You heard Mike and Alan refer to Amtrak. We envision a high-speed rail system similar to the northeast corridor that connects Boston, Washington, and New York, with high-speed trains that would connect our great airports in Vancouver and Seattle, Tacoma, and Portland.

Phase two of the project, which we are just engaging in this year, will look at specific projects, including the redesign and tunnelling of Interstate 5 through Seattle. Interstate 5 is the third-busiest truck corridor in North America, and as it goes through Seattle, which forms an hourglass, there are severe congestion issues. So we're looking at tunnelling rail and highway systems through Seattle.

We're also looking at a series of rail and highway improvements between the ports of Seattle and Tacoma, and freight mobility working through our state Department of Transportation and rail and trucking sectors. As we've talked about, with my colleague Jim Miller, our partner at Whatcom County, we are working on a business plan called the International Mobility and Trade Corridor Program, which will look at a seamless Canada-U.S. border and ultimately relocating some of the highway and rail networks that cause congestion at the border now, as well as improving access to Vancouver's airport and the Tsawassen ferry terminal.

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A lot of people don't realize it, but there's a growing group of Washington citizens who access the Tsawassen ferry at Vancouver International Airport instead of going to SEATAC. We need to have border systems and infrastructure and transportation connections that can help that. We're also looking at a new Columbia River highway and rail bridge servicing the Portland area.

In addition to capital projects, the gateways and trade corridors plan is looking at some functional programs. We're looking at a possible Cascadia corridor development corporation that could mix and match public transportation funds, private development, and rail and highway funding. This would be divided for governance purposes into about eight different regional infrastructure banks, so local officials would have a say in land uses and the transportation corridors.

We're looking at reforming the transportation planning process, which has been a major problem for companies in the northwest, because right now it's fractured along the corridor in different local government jurisdictions.

We're looking at maximizing technology in terms of not only telecommuting but also technology to move freight. We're also looking at expanding so-called smart growth environmental strategies to incorporate housing in our transportation corridors to a greater degree than they are now. Of course, with the listing of salmon—the Chinook salmon is an endangered species in central Puget Sound—all transportation developments will have to be looked at in terms of environmental impacts to the resource. So that will be part of this corridor concept.

This is an idea at this point. We are looking at the St. Lawrence Seaway as a model. We're looking at some of the Asian and European infrastructure programs. We will be finishing this report within a year or two with public and private funding.

The gateways plan can work locally, however. Jim Miller is here from Whatcom County to talk about the border business planning effort, which we view as a laboratory for cooperation. Its lessons can be translated into the other corridors around the northwest and western Canada.

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

Mr. Miller.

Mr. Jim Miller (Discovery Institute (Seattle)): Thank you, Bruce, and good afternoon.

We are a regional council in Whatcom County, which is in Bellingham, Washington, just about 45 miles south of here. A regional council might be somewhat unfamiliar to folks from Canada. It is a loosely knit organization of local jurisdictions, essentially, including port districts, if there are port districts in their cities and counties, within a certain geographic area. So we represent all of the local jurisdictions along our five border crossings between the U.S. and Canada in Whatcom County.

As a regional council, we also are an MPO, which is a metropolitan planning organization, for the federal government. As an MPO, we are able to receive transportation funds directly from the federal government, which is a little different, I think, from the way it's done north of the border.

To put a little sharper edge on where we are and how we got there with Bruce, about two and a half years ago Bruce and I and some representatives of PNWER sat down and started discussing the multitude of problems and layers of issues that surround the border and how to look at it a little more comprehensively. We decided there was federal legislation and in federal funding that was going to be forthcoming that we might be able to take advantage of in identifying problems and then going after some money to solve some of those problems. That was about two and a half years ago.

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About two years ago that thought was formalized with a group called the IMTC, the International Mobility and Trade Corridor. It's a binational group. I think you have a handout with some bar graphs on it. It pretty well explains the process. It's a binational group that is public and private. We have all the local jurisdictions on both sides of the border, as well as Revenue Canada, Transport Canada, the Ministry of Transportation and Highways, and all of the U.S. counterparts. On the private side, we're very fortunate to have as our co-lead the British Columbia Chamber of Commerce. John Winter is here and will address that a little later. So it truly is a public-private effort and a binational effort.

The first thing we did was call for all the plans on anything at the border—infrastructure primarily, but anything else that related to the border. We brought them into our office. We had a stack of plans four and a half feet high. We then created a matrix and found out where some of those plans overlapped, in other words, where there was duplication of efforts. We also found out where there were gaps in the plans, where we had problems and where we identified needs.

Out of that, over the next two years, we created eleven different projects that addressed the problems we identified in this two-year process. Then we requested funds from the federal government to allow us to study them, to put in some infrastructure in some cases, and to put in some intelligent transportation.

Most of our initial efforts—and we recognize this—here at the border are aimed at providing a world-class infrastructure system for this region of our two countries. In order to do that, we must have justification and plans in place and coordinate them with the governments.

We've used this most recent iteration of federal highway funding, which is called TEA-21, Transportation Equity Act of the 21st Century, to do that and build on the plans. Some infrastructure improvements are included in there and some intelligent transportation. But the thought is to get ready for about three and a half years from now, when we'll be looking at actually putting things down on the pavement.

Interestingly enough, what our federal government defines as a border region is not necessarily just a narrow band, it is 60 miles on either side of the border. Can we spend U.S. funds in Canada? The answer is yes, depending on what the project is. There are a lot of good things that can come out of this.

The IMTC project is really now being held up by our federal highway department around the country as the model of how local planning can take advantage of not just local planning but binational cooperation, and how to solve problems. It's being held up for people to look at and study in various parts of the country.

We submitted our first round of applications back in January. We've been informed by people in Washington D.C. that on the eleven projects we submitted, in their words, if we aren't in the top group in the country, we are the top in the country. So based on merit, we have done very well through our efforts.

It will now move into the political arena in Washington, D.C., and we will probably be hearing the results on just how we have done to get the funds we've requested in about a month. I was in Washington, D.C. two weeks ago and the official word was late spring. They all smiled when they told me that because it depends on where you live in the country when late spring is. In our case, it could be really late. We're hopeful that by the end of May and certainly by June 21, we should know exactly where we stand.

One of the other efforts we have been working on at the border has been the expansion of our expedited clearance program, which is called the PACE program. We've done that in conjunction with a lot of groups. We worked very closely with Immigration, Customs and Revenue Canada on how to better implement this, and not just in our area. We're trying to get this across the entire U.S. border because of the ease and simplicity of the system versus some other things that are in place in other parts of the country.

That concludes my remarks. I'll turn it back over to Mr. Harcourt.

Mr. Mike Harcourt: In conclusion, as you can see, we're busy.

The Acting Chairman (Ms. Sarmite Bulte): That would be an understatement, Mr. Harcourt.

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Mr. Mike Harcourt: We think there's a tremendous requirement here for national leadership in both countries. TEA-21, the Transportation Equity Act, has $218 billion to be allocated over the next four or five years to these types of transportation and mobility improvements. We think there is a need to recreate and reposition the concept of the border, and there's a need for new, innovative structures, as we've done in the past in our relationship—the St. Lawrence Seaway, the clean-up of the Great Lakes. A lot of creativity has happened, and we think that's the key here.

We're here to promote cooperation. If you look at our border, under the border there is the Sumas aquifer, which is half on the U.S. side and half on the Canadian side. It doesn't matter who puts animal wastes or pesticides or sewage or septics into that aquifer; it's equally harmed. It's the same with air pollution; it doesn't screech to a halt at the border. We are together, as Alan said, whether we want to or not. We want to be. Washington State is one of the great trading partners of British Columbia.

So we're here to share these ideas with this very important parliamentary committee and to answer any questions you may have, and of course for you to hear about Peter Fraser and the PACE group, and for John Winter to add to our comments.

The Acting Chairman (Ms. Sarmite Bulte): Thank you very much, Mr. Harcourt. What I'd like to do is perhaps move on to the Pacific Corridor Enterprise Council and then come back if we have time for questions.

Now, Mr. Artibise, I have just one question for a point of information. It's not really a question. You talked about there being an international working committee on... what was the correct name of that committee?

Mr. Alan Artibise: It's the Interdepartmental Working Group on North American Trade and Transportation Corridors. Its secretariat, if I can use that word loosely, is in Transport Canada, but it brings together at least four, if not more, federal government departments.

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

Mr. Fraser, welcome.

[Translation]

Mr. Peter Fraser (Chairman, Pacific Corridor Enterprise Council): Thank you, Madam Chair. I am a Canadian from the beautiful province of Nova Scotia.

[English]

and I eventually ended up on the west coast. I am a Canadian and an American. I grew up in Cape Breton Island and was educated by Jesuits in Halifax at St. Mary's High School and University. I now use my American citizenship and I have resided in Seattle for 20 years as of this summer. During that time I got to know a lot of great people like Mike Harcourt.

In the fall of 1988 I was on a special assignment for the Canadian Trade Commissioner Service to a firm in Seattle known as The Rocky Company. It's not one that's listed on the stock market, but the gentleman, Jay Rocky, who owns and operates it, has one of the best marketing companies and teams in the U.S. Pacific Northwest. He has always had an eye on Canada. I heard of him before ever coming to Seattle, because he had had contracts from the Canadian government.

Our assignment in 1988 was to look at the free trade election that was going on at that time and to find opportunities for the private sector. Out of that came this organization, the Pacific Corridor Enterprise Council—PA for Pacific, C for Corridor, and E for Enterprise.

I'm going to go away from the notes that were tabled because I want to be brief with you, and I'm sure you can analyse these things further at a later time.

In our second year of operation, we had about 200 members, owners and managers of small and mid-sized businesses from both sides of the border, from Alberta, British Columbia, the Yukon, Washington, and Alaska. In our second year of operation, we invited the Premier of British Columbia at that time to come to speak at our meeting in Seattle, and we had no difficulty in getting him there. But we noticed that he spoke very much about the environment and the think-tank operations. PACE is an organization that looks at practical matters in free trade and how they work for the private sector, particularly for small businesses.

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In that regard, we are here today with three of our directors, who represent the kinds of activities that are important to us and which we feel you need to know about.

John Winter is a director of PACE, but he's also the president and CEO of the B.C. Chamber of Commerce, which has 23,000 members throughout the province of British Columbia, and he's on our board to work as the Canadian liaison with the COGS, the group from Bellingham that you heard about from Jim Miller.

K. David Andersson is a partner in the law firm of Clark, Wilson here in Vancouver, a large law firm, and he specializes in business immigration. This is one of the great issues and problems that we deal with every day in PACE. He confers with our members and provides lectures throughout British Columbia and the U.S. Pacific northwest on those matters. He is licensed as a lawyer in both the state of Washington and the province of British Columbia.

James Kohnke, who is our tourism and transportation specialist, is representing PACE because he knows the history of commercial transportation and he knows the issues all the way from Alaska to California and into Mexico. Jim is also secretary of our volunteer-managed board of directors. He is chairman of our transportation committee, and for the past two years he has worked very closely in attending and participating in all of the meetings that Jim Miller and Bruce Agnew told you about earlier.

In our second or third year of operation, we invited Bruce Agnew to one of our board meetings in Seattle to get a political view on free trade and where he was going with his Cascadia project. In the last two or three years we have come together with an umbrella group, and it was through this that we began to work feverishly together, realizing that there is more to this—what we call a Pacific corridor—than think-tank opportunities and practical solutions.

For example, we realize that an organization like ours should bring to your attention the fact that... and I don't want to appear political, because I've read this in newspapers up and down the coast here. But there is a per capita income in British Columbia, for example, of about $18,000 after taxes. In the state of Washington, the per capita income after taxes is about $35,000 a year. This creates wonderful opportunities for Canadians to literally go south, and British Columbia's brightest and best are doing that. This is something that maybe Ottawa needs to look at.

I want to tell you a little bit more about PACE. Our chairman—she likes to be called chairman—is a woman who travels on the Team Canada trade team of the Prime Minister, Mrs. Wendy McDonald. She is chairman and CEO of B.C. Bearing Engineers here in Vancouver. She couldn't be here today, as she is in Mexico tending to her own business. She has an office in the U.S. as well, in Portland, Oregon, and she was into Chile before Chile entered into a free trade agreement with Canada.

She is also chairman of the Canada-Latin America business council's B.C. chapter, and of course this is reflected in the PACE activities. We are and have been extremely active with the west coast of Mexico, shall we say, the Baja California region. We have members from that area in our organization. Mrs. McDonald led our first trade mission to the Baja, to La Paz, with the governor of that state as our co-host in November 1994.

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We're planning a return visit this fall with our incoming chairman, another well-known businessman in British Columbia, Mr. Allan Skidmore. Allan Skidmore is the CEO of the company consumers would know as Speedy Auto Glass, an international company. He'll be taking over our reins in the summer—as a matter of fact, at a meeting to be held in Vancouver on June 22, with the COGS, Cascadia, the Bellingham chamber, the B.C. chamber, and the Vancouver Board of Trade.

It was the Vancouver Board of Trade that really, more than any other organization, made sure PACE continued to exist. It was the board of trade's leadership ten years ago that brought a private sector group together, along with the late Peter Manson, who was a partner in the law firm of Ladner, Downs and our first chairman. They led groups to Ottawa and to Washington, D.C., in hopes of finding a way out of what they saw even ten years ago as a bottleneck at the border just 40 miles from here.

The solution they wanted was for North America to become somewhat like Europe is today. Once you enter it or leave it, when you return you're stripped to the buff and then you're let go anywhere you want to go in North America rather than having to deal with Customs and Immigration. They came away with something called now, ironically, the “pace lane” at the border. This is an express lane for passenger vehicles that was intended for cross-border business commuters. This has been very successful, and although it is not an institution as yet, all of us at this end of the table are working together, hoping it will be signed into law and be more than just an experiment.

I want to now let Mr. John Winter take the floor.

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

Mr. John Winter (President, B.C. Chamber of Commerce, IMTC Project; Director, Pacific Corridor Enterprise Council): Thank you, Peter, and good afternoon, Madam Chair. Thank you for the opportunity to address this group today.

As you've heard, I'm here in somewhat of a dual capacity, in the sense that I'm representing the Canadian counterpart to the IMTC project that Mr. Miller has referred to, and at the same time, I'm representing the board of PACE and the British Columbia Chamber of Commerce. My remarks will be presented on behalf of those groups.

The British Columbia Chamber of Commerce is a volunteer not-for-profit organization and serves its members as the provincial federation of autonomous community chambers of commerce, boards of trade, and corporate members. Known to be in operation as early as March 1867, the chamber was re-established in 1951 with the following mandate: to develop a true cross-section of opinions of the British Columbia business community, to present members' opinions to the provincial and federal governments, to promote trade and commerce, and to improve the economic and human well-being of the people of British Columbia.

The chamber now represents more than 24,000 businesses—we've gone up 1,000 since Mr. Fraser started—and 110 local chambers throughout the province. It is truly the voice of B.C. business, and it's in this capacity that the B.C. chamber is pleased to have the opportunity to make this presentation today.

British Columbia has a unique combination of natural advantages, including a favourable climate, bountiful natural resources, and its location on the Pacific Rim. Over the years this has encouraged immigration and investment and resulted in an economic growth rate greater than that of the rest of Canada. Recently, however, B.C.'s economic growth has slowed, in part because the business climate is becoming increasingly unfavourable. B.C.'s economic growth is now lagging behind the national average, as business and investment forsake British Columbia for jurisdictions that demonstrate a more pro-business attitude.

The Asian crisis and the resulting drop in resource prices have demonstrated just how global our economy has become. It is because of this global economy that we need to continue to drive towards global trade liberalization. Multilateral rules will govern this global economy by creating predictability and stability that is being undermined by protectionism. We need an open, rule-based system, not unilateral protection.

Canada appears ready to leap into trade agreements with other countries in the Americas as well, and we are certainly in favour of such actions. We would, however, ask that we pause in this process to reflect on the progress that Canadians have made as a result of the free trade agreement with the U.S. and the subsequent North American Free Trade Agreement. The benefits are obvious, but problems still exist.

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Last year, as part of the IMTC project, the B.C. Chamber of Commerce convened a public policy forum to examine the impediments that exist today to truly free and open trade with our neighbours to the south. What we learned would strongly suggest that there is much work to be done to truly ensure a free trade environment between Canada and the U.S., one that was envisaged by the negotiators.

Problems impacting the movement of goods, services, and people are ongoing and rampant. Competing agendas exist in Washington and Ottawa that continue to cause NAFTA to underperform. Weak infrastructure stands in the way of free trade. Improvements seem to take forever. Owners and operators of small and medium-sized business on both sides of the border are exhibiting great unrest over costly delays.

Some feel that the economy of this two-nation region known as the Pacific corridor is in fact being threatened. The border infrastructure was built for another era and now severely hamstrings our cross-border trade. B.C.'s trade with the U.S. has a value of about $1 billion per week, and about 70% of that trade crosses this border in trucks. Suffice it to say that B.C.'s trade with the U.S. is of paramount importance to our economy.

Trucking associations estimate that it costs about $65 an hour to wait at the border for clearance. This cost will find its way into the manufacturing costs of Canadian goods and will contribute to Canada's growing problem of successfully competing on the international front. Businesses here that rely on exporting and importing face a couple of primary challenges. They are in the areas of transportation and access to border crossings.

To begin with, on transportation, Canada has no national highways plan. There is little distribution of federal funds for transportation coming B.C.'s way. There is no federal commitment to spending on key infrastructure. South of the border, as you've heard, there is great competition for federal funds dedicated to the improvement of U.S. international borders. Business and trade organizations in Washington State have been working with local governments for quite some time to ensure that the border crossings between B.C. and Washington State gain some benefit from these allocations.

In Canada, we are in danger of being left at the gate. We need strong commitments to two primary corridors in this province, specifically highways 99 and 97. They provide the primary west coast routes for the movement of goods between our two countries. We have no such commitment.

As for border crossings, there is much evidence of Canada's willingness to adopt meaningful change if it will benefit the movement of goods across our border. That's the good news. Until now, however, it's simply talk. A blueprint for action has been issued by Revenue Canada, but to be of benefit will require cohesion and cooperation between government agencies at all levels and across borders. Many of the solutions focus on the use of electronics, technology that already exists. It's important that this technology be introduced immediately. The cost of not improving the infrastructure and of not addressing the border-crossing issues is simply too great. It is the lost opportunity cost.

An additional key issue raised at the policy forum focused on the recent spate of problems being faced by Canadian business people attempting to travel to the U.S. Running into sometimes hostile immigration forces is becoming a frequent event. Stories too legion to go into in this document would indicate that such problems are certainly not within the spirit of free trade agreements, and demonstrate a less than full commitment to the agreement. Clearly, our border crossings are under great pressure, as are other access points such as airports.

Open skies has gone a long way toward increasing the tourist volume between the two neighbours. The Alaska-Vancouver cruise ship industry is testimony to that. As well, the favourable Canadian dollar exchange rate has had great impact on the rubber tire tourist. It would seem we are successful in spite of ourselves. But usually successful pace lanes, referred to a moment ago, between B.C. and Washington are still classified as experimental. Vast sums of money are generated each year on both sides of the border by this initiative, but none seems to be reinvested where it matters most.

It is the objective of business organizations like the B.C. Chamber of Commerce to work with our trading partners to make sure our political leaders understand the importance of clear access and not work to offset the effectiveness of such links. A seamless border is, and should be, the common goal. It is important to get this right before tackling other free trade agreements. As I said at the outset, we need an open, rule-based system, not unilateral protectionism.

Thank you.

• 1540

The Acting Chairman (Ms. Sarmite Bulte): Who is next?

Mr. James Kohnke (Director and Chair, Transportation Committee, Pacific Corridor Enterprise Council): Thank you, Madam Chairman and members of the committee.

As we all seek a model for border infrastructure, I believe I speak for all members of PACE when I say we're collectively concerned and distraught over the current prevailing impediments to free trade under the U.S.-Canada Free Trade Agreement and the North American Free Trade Agreement, NAFTA. Obviously while still seeking solutions to these current restraints, we're hesitant to endorse and encourage extending the boundaries of the free trade area without ensuring that protective measures will be undertaken to correct current deficiencies.

We are mindful that free trade is only really free when foreign trade practices are fair and non-tariff trade barriers and restrictions are removed, so as not to negate the spirit and intent of the free trade undertaking. There are many examples of non-tariff trade barriers and restrictions, and I will endeavour to outline some of them with sufficient clarity that their significance will not undermine nor obscure the realities of their relevance.

Physical infrastructure such as highways and border crossing stations, particularly on the U.S. side, have not been improved and upgraded to keep pace with increasing volumes of cross-border traffic. For example, traffic levels have more than doubled since the U.S.-Canada Free Trade Agreement, and enhanced infrastructure remains incomplete and/or in planning stages at the Blaine Pacific Highway crossing, which is reported as being the fourth-busiest truck crossing and the third-busiest auto and people crossing point on the U.S.-Canada border. During 1997, 1,268 trucks crossed northbound into Canada, on average, each and every day, and 1,083 trucks crossed southbound into the U.S., on average, each and every day. This volume was on par northbound, but increased by 27% southbound during the first half of 1998. This is in addition to a combination of in excess of eight million vehicles going in both directions at the Blaine Peace Arch and Pacific Highway crossings.

No adequate traffic separation system has yet been introduced at the Pacific Highway crossing to efficiently separate the movement and flow of automobiles, trucks, buses, and duty-free customers, all rushing to get through the same border crossing, using crossover lanes, which creates accidents, congestion, and delays. Delay time for commercial transport has been evaluated in excess of $40 million each year.

The forthcoming funding availability in the U.S. to international border crossing and trade corridors under the Transportation Equity Act for the 21st century is expected to correct some of these infrastructure problems. Canada, however, does not have similar legislative authority to allocate gasoline and fuel taxes to specific purposes, and thus these funds simply flow into general revenue for discretionary distribution by the Canadian authorities.

Thus, from the Canadian side we look forward to seeing the implementation of long-overdue improvements to the U.S. infrastructure at U.S.-Canadian international border points. However, we are concerned that Canada does not have comparable legislation to ensure that future Canadian funding will be readily available to meet and match the improvement anticipated on the U.S. side of the border in accordance with the terms of the 1995 U.S.-Canada shared border accord.

Coordinated U.S. and Canadian technological and computer infrastructure remains largely theoretical. However, in our view, this represents the best solution to the processing of the interchange of U.S. and Canadian traffic, which should be inclusive of special pace lanes for trucks that can qualify for expedited electronic processing.

On secondary user fees, U.S. customs have obviously recognized that their computer system is inadequate and have proposed assessing user fees to pay for upgrading their computers.

• 1545

I would refer you to an attachment, a Canadian Press report outlining the Clinton administration's plan to raise $163 million per year via customs user fees, to which the trucking industry is adamantly opposed on the basis that such a proposal levy is illegal under both NAFTA and the General Agreement on Tariffs and Trade. This, we suggest, is another example of efforts to impose a non-tariff trade barrier and restriction with significant additional cost.

Also, we have some secondary documentary controls that are of concern. Under the new U.S. immigration law, the U.S. Illegal Immigration Reform and Immigration Responsibility Act, the impending imposition of section 110 to document, record, and control the entry and departure of every person other than a U.S. citizen—be they immigrant, visitor, tourist, or authorized traveller—who enters and exits the U.S. will also trap, delay, and impede international commercial traffic in the long line-ups and corresponding border congestion.

If 45-minute delay time equates to in excess of $40 million each year, 12-hour delay time obviously equates to in excess of $640 million each year at a single crossing, an amount that international trade could obviously not sustain. This non-tariff trade barrier and restrictive secondary boycott will be more technically and legally addressed by my PACE colleague David Anderson, of the Clark, Wilson law firm.

Under new interpretive and/or regulatory U.S. customs requirements, vessel owners and agents are being required to report in detail on in-transit cargo in a similar manner to what might apply to circumstances if such cargo were discharged for importation into the United States rather than being simply in transit. Compliance is apparently being demanded under severe potential penalties of $5,000 or more plus possible detention of the vessel.

These requirements represent particular compliance difficulty with vessels loading at the port of Vancouver, B.C., that subsequently call at nearby Puget Sound ports in the U.S. with in-transit cargo bound for foreign ports. I refer to Vancouver Port Authority exhibit 2.

High volume of in-transit traffic from the Vancouver, B.C., area and the close proximity of subsequent ports of call in nearby U.S. waters makes it impossible in many instances for shipping lines to provide U.S. customs 48 hours' advance notice via electronic means. Obviously, vessels are still in stages of loading cargo up to the time of departure for U.S. ports, where they may well arrive after steaming time of eight hours or less. Given the geographic circumstances and the time restraints in gathering the requested data prior to or even on arrival, these new reporting requirements are problematic, to say the least.

The fact that such in-transit cargo can be trucked through land border crossings with little or no particular problem on a generalized description is a discriminatory application of reporting informational requirements, and has the potential of diversion of traffic through the heavily congested B.C.-Whatcom County border crossings.

The fact that in-transit cargo is treated differently by U.S. customs when moving via an overland mode as compared with a marine mode is of additional concern, in that referenced reporting requirements could potentially be imposed at inland border crossings at some future time, and thus escalate congestion and cause havoc to international trade and commerce.

Despite the fact that Mexico is a duly authorized and recognized participant within NAFTA, Canadian cargo moving via marine mode to Mexico is apparently now subject to U.S. control and reporting requirements if the marine vessel should call at a U.S. port during its transit passage to Mexico.

Normally sidebar agreements are not permitted to supersede or modify the conditions of a master agreement such as the U.S.-Canada Free Trade Agreement and the North American Free Trade Agreement. The 1996 Canada-U.S. softwood lumber agreement appears to be an exception. I refer to attachment exhibit 3, a report on the Canada-U.S. softwood lumber agreement by a knowledgeable participant.

• 1550

The highly controversial softwood lumber agreement based on quotas is due to expire in March 2001, and continues to be the source of lumber trade disputes between Canada and the U.S. Such a supplementary agreement to NAFTA should never have been agreed to by Canada, and was undertaken simply to bring some stability to the uncertainty created by a continuous dispute mechanism, activated by a U.S. lobby group, supported by U.S. competitors. The erosion of NAFTA provisions for the lumber industry continues, and another appeal process has been activated.

In summary, these unfair non-tariff trade restrictions undermine confidence in NAFTA, and the objective to expand free trade to other markets is viewed with concern. Corrective measures need to be undertaken to ensure similar problems do not become commonplace with an expanded market.

All segments of the transportation industry, whether they be marine, rail, highway, or air, are ultimately interdependent on the free interchange of goods and must cooperatively strive for seamless transportation systems in their own self-interest, to mutually serve common economic causes.

Thank you.

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

Last but not least—

[Translation]

Mr. Benoît Sauvageau: On a point of order, Madam Chair.

[English]

The Acting Chairman (Ms. Sarmite Bulte): I think we have one more speaker.

[Translation]

Mr. Benoît Sauvageau: I would like to speak about it before the next witness.

[English]

The Acting Chairman (Ms. Sarmite Bulte): Do you have another speaker, Mr. Fraser?

[Translation]

Mr. Benoît Sauvageau: I would like to make a point of order before hearing the next witness.

Thank you very much. Could we ask the witnesses to mail us their position about the WTO and about a free-trade zone of the Americas? Thank you.

[English]

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

Mr. Mike Harcourt: We're not here to comment on the FTAA or the WTO. That wasn't the purpose of our presentation. If you want my personal opinions, I have strong opinions about them, but that's not what I'm here to do. I'm representing many people in British Columbia on this trade corridor and this growth area.

I have publicly expressed opinions about the free trade agreement and NAFTA in the past. I'm critical about the inadequacies of both, and I'd be quite prepared to talk to Mr. Sauvageau about this in that capacity. But I am here as the co-chair of the Cascadia corridor task force to discuss the issues we have raised with you.

Mr. Benoît Sauvageau: You're not here to discuss the WTO and the free trade agreement of the Americas. Is it possible to mail to us your positions on these issues?

Mr. Mike Harcourt: Okay.

Mr. Benoît Sauvageau: Sorry about that.

Mr. Mike Harcourt: That's okay.

Mr. Peter Fraser: Our position is brief, Madam Chairman.

On the WTO and the FTAA, when PACE was first organized it was hoped that within five years the U.S.-Canada Free Trade Agreement would be working as predicted. Before the five years were up, NAFTA came along and we extended our sunset clause to 1999, to accommodate our members interested in Mexico. In the past year, we completely removed our sunset clause, so we would be ready for an FTAA. Certainly we are proponents of the WTO.

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

Mr. Andersson is last but not least. We're running a little late, so I would ask you to highlight some parts of your presentation for us.

Mr. David Andersson (Director and Immigration Ombudsman, Pacific Corridor Enterprise Council): Thank you very much, Madam Chair.

At PACE we speak in order of seniority, so I am last.

The Acting Chairman (Ms. Sarmite Bulte): But not least.

Mr. David Andersson: I understand I have about two minutes, so I will limit my presentation to two points and two documents, if I may.

We've tabled two documents for you. One is on PACE letterhead and urges you to consider your lobbying efforts in the United States for the complete repeal of section 110. I would be happy to entertain questions about section 110, if you have any.

The second document is authored by Dr. Papademetriou. He's with the international migration policy program at the Carnegie Endowment for International Peace. He was in this region visiting us about a month and a half ago. This is the paper he presented to the U.S. Congress. I think it provides some very good insight into our border issues here.

• 1555

My two points are that NAFTA and the free trade agreement before it, in terms of treaties, simply brought immigration policies and laws to a standstill between Canada and the United States. Under the free trade agreement this worked. Under NAFTA it became a little more problematic, because we had a third party whose immigration relationship with the United States was vastly different from Canada's.

On some of the real problems we have with NAFTA today, the constituents of PACE who phone me on a daily basis are the people who get turned away at the border because they don't quite fit in the right category. There are 65 enumerated professions under NAFTA that will allow you passage into the United States, three of which have been identified by the USINS as fraud funnels by Canadians. Those include the management consultant category, the scientific technician category and the computer systems analyst category, because of their allowance of alternative credential presentation, such as experience in lieu of education.

Those are my points.

The Acting Chairman (Ms. Sarmite Bulte): You say the FTA between Canada and the U.S. wasn't problematic, but when NAFTA came in it became more problematic. If we assume we will proceed to get into a free trade area of the Americas agreement, what do you see as its effect on problems of immigration at that point? Will they be compounded 32-fold more than they are now?

Mr. David Andersson: Indeed immigration is a very complex issue and it involves many facets. There's the control of the criminal element entering our countries, as well as the facilitation of legitimate business interests providing trade in goods and services.

I commend to you page 5 of Dr. Papademetriou's very good submission to Congress. In the middle paragraph it talks about our current relationship with Canada on the one side and Mexico on the other side. You can't enter in a tripartite treaty without treating all people equally. Dr. Papademetriou says “Clearly, such progress is likely to occur at different speeds. By acknowledging that the ultimate aim of our policy is the equal treatment of both countries—” and let's say more countries if we open the doors, “—we give ourselves the flexibility to treat both of our NAFTA partners within a single framework...”

We can't have, in my submission, an identical immigration policy on the northern border as they have on the southern border. It's just not possible. He outlines that as the ultimate objective, and the reality is we have to work toward implementation of it over a longer timeframe.

Let me backtrack to clarify my point a little. When we had the free trade agreement, we still had the same 65 enumerated professions that could cross into the United States. This became more complicated when we added Mexico because the processing of professionals on the southern border is procedurally different and it has to be so, according to the United States.

The Acting Chairman (Ms. Sarmite Bulte): Why does it have to be so?

Mr. David Andersson: Take our immigration relationship with the United States. We are the most favoured alien in the eyes of the INS. We are visa-exempt. You don't need a visa; you don't even need a passport to cross the border into the United States. All you need is a birth certificate and a driver's licence. You just need a birth certificate according to the regulation, although the border guards would prefer you to have a driver's licence.

Mexico, on the other hand, has not made the visa waiver pilot program, which is the second-most-favoured tier of alien that the Immigration and Naturalization Service recognizes. Mexicans still require visas to enter the United States. So it can't be procedurally the same.

• 1600

We can appear at a port of entry and present our credentials and be allowed entrance. They still have a visa processing situation to go through before they appear.

The Acting Chairman (Ms. Sarmite Bulte): Perhaps we can draw on you for more information in this regard, since we're running out of time.

One of our first presenters today was from a service area. She talked specifically about visas, how she actually exports to forty different countries, and the problems with the temporary business traveller in five to ten days. So I think there's a whole area we can perhaps examine together at a later time.

On behalf of the entire committee, I want to thank you all for coming. We've been honoured and privileged to have you at our committee table today. Thank you for your presentations. Thank you for taking the time to come to speak to us.

As I've said to all of the other witnesses who have come here, this is the beginning of a dialogue; it's not the end of the consultation. We urge you to keep that dialogue going with members of this committee. Thank you very much for coming.

I'd like to call the next group of witnesses to the table. Ladies and gentlemen, please take your seats. I'm running behind, and I don't like that. We want to be able to give everyone an opportunity to speak.

I should tell you, we have a time constraint from the original time because we have to be on a bus at 5.30. We will be leaving for Edmonton. When they did the schedule they didn't take into account the time we need to actually get to the airport to catch our plane.

If you can bear with me, we can start. I know you have wonderful written presentations because I've leafed through them very quickly. Please summarize them so everybody has a chance to speak. We find it works best if there is some time to have a dialogue with you.

So without any further ado, I would like to call upon Cory Ollikka from the National Farmers Union.

Mr. Cory Ollikka (President, National Farmers Union): Thank you, Madam Chair.

Recognizing the time constraints I will try to be as brief as possible. We've provided the committee with a 12-page brief, which I will not read, of course. I'll just be taking excerpts from it, so it won't be much use for you to follow along in it.

The NFU welcomes this opportunity to present the views of Canadian farmers to the standing committee. The NFU is the only voluntary direct membership national farm organization in Canada, and is also the only farm organization incorporated through an act of Parliament, in June 1970.

The NFU is non-partisan and works toward the development of economic and social policies that will maintain the family farm as a basic food-producing unit in Canada.

• 1605

As you may be aware, Canadian agri-food exports have doubled since 1989 and farmers' net incomes have fallen 19%. Exports are five and one half times higher than in 1975, yet net farm income is 25% lower. For farmers, increased trade resulting from the Canada-U.S. Free Trade Agreement, the North American Free Trade Agreement, and the World Trade Organization agreement has yielded few if any measurable benefits.

These agreements have embattled and weakened orderly marketing agencies: milk, poultry, and egg marketing boards, the Canadian Wheat Board, the Ontario Wheat Producers' Marketing Board, and our few remaining hog marketing boards. These agreements severely restrict our ability as a nation to fashion agricultural safety nets that will effectively shield Canadian farmers from increasingly volatile world markets. These agreements also threaten Canadian laws that regulate foreign land ownership, laws that protect our environment, and laws currently under consideration that might inject tiny elements of competition into the western grain transportation system.

Regarding farm safety nets, the NAFTA and WTO agreements have increased trade and internationalized markets. They have also led to lower and more volatile prices for farmers. It is unacceptable that these agreements also limit Canada's ability to deal with those low and volatile prices through the design and implementation of effective safety net programs. The NFU therefore recommends that in all negotiations the federal government assert a sovereign right to design and implement the effective safety net programs and all other policies necessary to safeguard Canada's farm families.

Regarding supply management and orderly marketing, the 1999 round of WTO negotiations will take direct aim at so-called state trading enterprises. They will directly threaten the Canadian Wheat Board, the Ontario Wheat Producers' Marketing Board, and to a lesser extent Canada's milk, poultry, and eggs supply management agencies. A more direct threat to the supply management agencies will be the focus of these negotiations on tariff reduction and market access.

The aim of the U.S. and some other nations is clear: use existing trade agreements and negotiations and new ones to eliminate all barriers to their corporations' freedom to buy and sell anywhere in the world. The Canadian Wheat Board, the Milk Marketing Board, and other orderly marketing and supply management agencies are such barriers not to free and fair trade, but to unrestricted corporatist trade.

Canadian federal and provincial ministers of agriculture, emboldened by their success in doubling agri-food exports between 1989 and 1997, declared last year, in July 1998, that they would redouble those exports by the year 2005. Doubling and redoubling exports requires expanded market access. When Canada goes looking for this market access in the upcoming WTO and FTAA negotiations, it will be asked to put something on the table. It will be asked to provide more access to its markets. It will be asked to make sacrifices.

There is little left to sacrifice in Canada except supply management and marketing agencies such as the Canadian Wheat Board. Many farmers fear that when Canadian trade negotiators go looking for market access, the CWB or supply management might be the price they're willing to pay.

While trade agreements have provided few if any benefits to farmers, the orderly marketing and supply management agencies threatened by those agreements provide many. Clearly farmers who are serving the domestic market within a framework that prevents oversupply and pays them based on their cost of production, such as dairy farmers, have fared better than farmers who are in export-oriented sectors of the Canadian agriculture economy such as hogs and cereals.

In the face of such evidence, it would be clearly foolhardy to even consider weakening Canada's supply management and orderly marketing agencies in order to gain increased market access and increased exports. The NFU therefore recommends that the Government of Canada refrain from using Canada's orderly marketing and supply management agencies as bargaining chips in international trade negotiations.

In conclusion, when faced with the criticisms of the current agri-food trade system, supporters of that system often charge that the critics are opposed to trade. The NFU supports trade and prosperity as long as the two are linked. For farmers, they currently are not. As long as Canadian WTO negotiators remain within the narrow confines dictated by the U.S. negotiators, we are unlikely to make any progress in solving the problems that plague farmers around the world.

The Canadian government must work to expand the terms of reference of the WTO negotiations. They must move beyond the mistaken conception of trade equals prosperity for farmers falsely implied in the current WTO regime and must move toward a more results-oriented practice. It must work with governments around the world to forge an international agreement on trade in agricultural products that supports farmers, the environment, and rural and urban economies.

• 1610

The NFU therefore recommends that the Canadian WTO negotiators work with those from other countries to diminish the WTO's single-minded focus that is on exports acceleration, deregulation and the destruction of institutions that support farmers. Further, the NFU recommends that the Canadian negotiators work to expand the boundaries of discussion at the WTO and thereby make it possible for outcomes to support farmers all around the world.

Thank you.

The Acting Chairman (Ms. Sarmite Bulte): Thank you very much for a very interesting presentation.

Next we have the B.C. Council of Marketing Boards. Mr. Mykle.

Mr. Arne Mykle (Spokesperson, B.C. Council of Marketing Boards): Thank you very much. You did a good job on that as far as the pronunciation is concerned.

I have a little bit of background for your committee with respect to the Council of Marketing Boards. It represents the eleven marketing boards and commissions in the province of British Columbia. With us today we have representatives from turkey and from chicken as well from the milk industry, and our resource person, Mr. Dolberg, who has arranged for us to be here, and also has made this presentation.

I think I could probably read through our brief as quickly as Cory has done here. I think it's important for your committee to understand that Cory made the representation on behalf of the NFU. This will be on behalf of the Council of Marketing Boards, and Ms. Holm's will be on behalf of her representation. So we're here somewhat separately, but we were certainly warmed by some of the words and the thoughts that came from Cory as to some of the positions that their particular organization have put forward here this afternoon.

I would like to say that we do welcome you here, and we welcome the opportunity to be able to meet with your committee. Unlike the speakers who were here before us who talked about the general economy with respect to British Columbia being under stress, I would like to refer to you, on the first page here, that the four sectors represented by dairy, egg, and poultry have actually in the last five years seen an increase of $150 million of activity right within the province of British Columbia. There are very few, other than maybe on the technological side, who can boast that. So here we are, a renewable resource, and we're actually gaining some ground.

I would also like to point out to you that B.C. is the third-largest producing province of dairy, egg, and poultry products, behind only Ontario and Quebec. So the impact of these trade negotiations are just as important for our producers as they are for central Canada. We would certainly like you to recognize that as well.

The four, the poultry, egg, and... I say four, but it's more than that. The dairy, egg, and poultry sectors represent 40% of B.C.'s agricultural sector and are responsible for thousands of local jobs. These sectors have over the years been responsible for consistent and steady growth, as indicated in the graph. It's important to stress, however, that B.C's dairy, egg, and poultry sectors, as well as agriculture generally, are under considerable pressure from many directions, including higher input cost and increased competition within the marketplace. This is true at both the production and processing levels and has been documented in a number of recent studies.

One of the problems we do have arising, though, is that as a result of the preceding trade negotiations there's been some fallout that's had some negative impact on the producing sector. More specifically, I would say there's been downloading from the federal government with respect to some of the services that have been provided by way of inspection, which is putting us somewhat at a competitive disadvantage. Also, when they eliminated the Western Grain Transportation Act and the feed freight assistance program, British Columbia in particular was discriminated against as the only other province that has been impacted. I would want to direct your attention specifically to the box on page 2 of our presentation when you have a little bit more time to review that.

We find this, as B.C. producers and livestock producers, to be quite offensive. We've made representations nationally to Collenette, the minister responsible for transportation, and also to the minister responsible for agriculture and the Wheat Board. So there are many people who have heard that. And the B.C. Chamber of Commerce will be making a presentation nationally on our behalf with respect to it because of its discrimination against the B.C. livestock producers.

• 1615

There is also a need for Canada to take a hard look at its overall support to agriculture as compared to other World Trade Organization members. Background information developed by Agriculture and Agri-Food Canada for last week's conference toward an agricultural trade position indicates that 1995 reported domestic support levels for Canada, Japan, the United States, and the European Union were respectively at 16%, 64%, 28.6% and 42%. How can Canadian agriculture realistically be expected to compete over the long term in such an environment? We're out in front of the others as far as we're concerned as agricultural producers in this country, and we don't want to be harmed by any further negotiations that may occur without the others at least catching up to the same level we've had.

Canada's negotiating position should be a unified one. We do support the elimination of export subsidies. And this is where we are already well ahead of the other countries. I think you've heard that before, but it bears repeating when we're already down at zero.

We need to establish fair rules. The next round of rules must achieve that, ones that are binding and that are enforceable, not just guidelines.

We support state trading enterprises such as the Canadian Wheat Board and the Canadian Dairy Commission with respect to their roles, but the rules must be transparent and they must be seen as not being impediments but as an instrument that's available to producers for the movement of their primary product.

We are in support of maintaining over-quota tariffs. We believe that the supply management system that exists within Canada is a policy instrument. It's a sovereign right for us to be able to make those kinds of choices. And in order for us to operate those choices we need to have these over-quota tariffs as they currently exist.

It might be of interest for this committee to know that in terms of the fill rates of the TRQs as a result of the Uruguay Round, Canada has a plus 90% fill rate of these TRQs. We're good boy scouts. The United States is only at 50%. The European Community is at 70%. And the world overall on average is at a 60% level. Let them get to our level before we have to move.

We believe there should be caps on domestic subsidies, but it would be nice if it was a cap that applied to all so that it would be fair. And we show here graphically that by way of subsidy comparison Canadians are receiving domestic subsidies at about the 16% level, the United States at 32%, and the European Community at 42%. And any observers of agricultural trade know that they've already started cranking up their treasuries getting ready for the next round. That, unfortunately, will be an expense for a lot of Canadian producers, regardless of what your particular stripe is as it relates to grains or livestock production.

Canada should vigorously defend its right to maintain effective marketing structures. More specifically, we should seek allies to pursue World Trade Organization rules that certainly confirm the right of countries to grant marketing bodies the power to regulate the volume of domestic product and have cooperative central desk selling agencies and to be able to pool returns.

In conclusion, on behalf of British Columbia's dairy, egg, and poultry producers, we'd like to thank you for this opportunity to appear before your committee.

We would in summary like to emphasize the following.

First, the future of Canadian agriculture is dependent on a government commitment to provide the domestic programs and policy instruments necessary to ensure the stability and the competitiveness of Canadian farmers, regardless of what international trade agreements are entered into.

Secondly, B.C.'s dairy, egg, and poultry sectors are fully supportive of the trade positions that have been put forward by our national organization, most notably the objectives set out in First Things First and in the trade position developed by the Canadian Federation of Agriculture. These positions provide a sound basis for the establishment of Canada's initial agricultural negotiating mandate.

I would like to say that I think all of us here were in attendance in Ottawa early last week working toward the federal Minister of Agriculture's initiative toward a consensus. I think we were somewhat pleased by the results, and I'm sure you'll be hearing from your colleagues with respect to those particular developments. It was also very encouraging for us to see a good number of provincial ministers of agriculture in attendance, as well as maybe some of their senior representatives. We thought it was a very positive result.

Thank you very much.

The Acting Chairman (Ms. Sarmite Bulte): Thank you very much, Mr. Mykle. Would any of your colleagues like to make any additional comments to your presentation?

• 1620

Mr. Arne Mykle: We're here to answer any of your questions. If there's something they may wish to embellish upon, I think that would be a welcome opportunity.

The Acting Chairman (Ms. Sarmite Bulte): Why don't we go to Ms. Holm, so that we have all three presentations, and then we'll open it to questions.

Ms. Holm.

Ms. Wendy Holm (Individual Presentation): First of all, I'd like to say I'm pleased both as a Canadian and as an agrologist to have the opportunity to appear before you today to address two issues, farming and water, that will require particularly diligent attention by Canada's trade negotiators as they prepare themselves for the upcoming round of the WTO and beyond.

By way of qualifying myself to speak before this committee today on the subject of agriculture and water, I offer the following overview of my credentials. I'm an agrologist, an agricultural economist with close to 30 years of Canadian experience in the areas of agriculture, economics, trade, competition policy, industrial organization, regulation and its effect on private sector performance, strategic planning and farm policy. I also have particularly current expertise in the area of international support policies for agriculture, international competitiveness, sustainable agriculture, Canada's climate change priorities, greenhouse gas emissions and the Kyoto accord, cooperatives, the role of agriculture in community economic, social, and environmental sustainability, and policy approaches to ameliorate the very deep crisis facing Canada's farmers.

I'm a former president of both the B.C. Institute of Agrologists and the Vancouver branch, B.C. Institute of Agrologists. I'm a former B.C. director of the Agricultural Institute of Canada and a former director of the Okanagan Valley Tree Fruit Authority, VanCity Credit Union, VanCity Enterprises, and VanCity Foundation. In the past decade I've had the privilege of chairing the board of trustees of Ethical Funds Inc. and receiving both the Queen's commemorative medal for service to community and the B.C. government award for community programming.

I'm the person who first raised concerns with respect to water's inclusion in the free trade agreement, and I'm the editor and contributing author of the book Water and Free Trade. I presently sit as second vice-president on the board of directors of Mensa Canada.

In the short time I have before you today I wish to leave you with two very important points.

First, to ensure continued Canadian sovereignty over her water resources it is critical that water, harmonized commodity coding system item No. 2201.9, be explicitly exempted from any and all provisions of international agreements, including the WTO and the FTAA.

Second, to ensure continued sustainable stewardship of Canada's productive farmlands and the provision of healthy, nutritious, and fairly priced food to Canadian consumers, we must ensure the sustainability of an independent and economically viable farm sector. To accomplish this, our trade negotiators must stand apart from the U.S. trade position on agriculture and defend better the priorities of our farmers at the international bargaining table.

Because I have said a great deal about water over the last 12 years, I'm going to speak first about farmers.

There are a number of myths that warrant exploding when it comes to Canada's farmers, perhaps the most significant of which is the myth of the prudent path. It has been suggested by some that on matters of foreign policy and international trade Canada is simply following the prudent path taken by the rest of our trade competitors.

Last year I had the privilege of preparing a report for the B.C. Fruit Growers Association that looked at, among other things, the level of foreign policy support for farming in OECD member nations. I turn your attention to the handout I gave you. The front page is simply there for you to reference the report, which itself is several hundred pages. And I would add that this report is available from the B.C. Fruit Growers Association in Kelowna for the copying cost of $20.

The attached graphs on that report prepared from just-released OECD statistics show that with the exception of Australia and New Zealand—and I would love the time as a professional to document why the yellow brick road to New Zealand is not the one we want to follow—Canada has cut its farm support programs faster and sharper than any other OECD nation in the world. I will turn your attention to chart 12. You will see along the bottom of the chart country names and three bars. The red bar is the level of farm support in 1986 and the last bar is the farm support in 1996. Canada has cut its farm support programs faster and sharper than any other OECD nation in the world, whether you look on a per hectare, per farmer, or per full-time farmer equivalent.

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If you look at the figures for levels of support per capita for Canadian agriculture per hectare, in chart 13, which is small at the top of the page and larger at the bottom of the page, the total transfer associated with agriculture per hectare of farmland is $66 per hectare, compared with $161 per hectare in the United States, ranging up to $4,000 per hectare in Switzerland and $15,000 per hectare in Japan. Per capita, for every man, woman, and child in Canada, $161 is spent on agriculture, compared with $259 in the United States, $322 in the European Economic Union, and $935 per capita in Switzerland.

If you look at the third chart, chart 16, noted in the handout, total transfers associated with agricultural policies per full-time farmer, again, it's the same story. Canada has, per full-time farmer, the equivalent of approximately $11,225 in farm supports, compared with $27,000 in the United States, and it goes up significantly with the other countries.

The last chart shows you the amount of food as a percentage of consumer expenditures. Of all the countries, Canada has the lowest percentage of food as a consumer expenditure of any of the OECD nations—and those are all OECD figures.

It is a myth that if farmers are simply competitive, the markets will provide. The other side of that myth is that subsidy is a dirty word. Benefits are considered by economists to be positive externalities, goodies enjoyed by society that the market neither recognizes nor rewards. As we've just seen from some of the figures we have briefly presented to this committee, other OECD nations are replacing bad farm subsidies with good farm subsidies at the policy level.

Government supports for agriculture in Canada, measured on a per hectare, per farmer, or per capita basis, are dramatically below all of the other OECD nations. I think this is very important to understand, because the message that comes out to Canadians and to farmers is that this is simply the way of the world, and we simply have to get on with it. It's very important to understand that other nations of the world are taking a fundamentally different approach to the role of agriculture and the importance of agriculture in the economy and are looking at ways to support farmers with grain subsidies. We're not doing that in Canada.

Our farmers are superstars in the sustainable farming category. In B.C., groups such as the Fraser River Basin Council have documented the importance of sustainable agriculture as a fundamental pillar of community economic, social, and environmental sustainability. Yet, poignantly, we're also a nation in which our abuse of policy relationships, a vacuum really, with our farm communities is putting the very sustainability of farming at grave risk.

Increasingly, from the prairies are coming stories of economic devastation. To me, one of the more poignant was hearing how Canada's top young farmer in 1997 lost his fourth-generation farm to punishing hog markets. In B.C., three years of bad weather, too much heat, too much rain, late springs, wet falls, a year of hail, a year of 40 degree temperatures and prolonged drought, bad markets, and poor follow-up policy solutions have many farmers twisting in the wind waiting for a government bereft of solutions and dollars to come forward with some answers.

We can't starve the child and open the window and cut off the heat in this winter of economic devastation for Canada's farmers.

There's also a myth that growing bigger and larger is all that's needed: simply restructure; the sector simply needs to reorganize itself to meet the new challenge of global markets. In the United States, according to chicken king Buddy Pilgrim—I have not heard of a better moniker anywhere than “Buddy Pilgrim”—there are no independent chicken farmers left. Agri-food giants like Monsanto, American Home Products, and others are positioning themselves to colonize Canada's farmland. When large integrators get involved in farming, both farm returns and sustainable farm management practices suffer as integrators seek to attach larger and larger shares of the farm margin, causing decapitalization of our farm sector. This is not because capital is bad, simply because capital responds to opportunities in a very predictable way. Economics is simply about the physics of capital.

If I were to pour a glass of water down a bumpy surface, everyone would know how the water would move in response to the bumps and hollows of the surface as it made its way down to the base, not because you necessarily understand the particular molecular properties of the water and the surface it was passing over but because you understand that water will respond immutably and fully predictably to certain principles of gravity and form.

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We know that water, when spread across the landscape in fine tributaries, is nurturing and productive through irrigation. We also know that left to its own devices, water tends to draw to itself. When it does, it increases in velocity and force, becoming difficult to control and destructive.

Capital, too, responds to similar and equally immutable rules. When it's spread out fairly evenly across society in fine tributaries, we have a strong middle class and economic growth. When it draws to itself, it leaves vast arid regions of the economy in great swollen rivers. It is destructive and costly.

The role of the state, then, is to create the small run of river dams that ensure capital, as it is moved through our economy, spreads out and backs up into those fine tributaries, to ensure a productive economy and a strong middle class, so when society gets to the medium term, it is as it should look: healthy and secure and bountiful.

You must bear in mind when you negotiate on behalf of Canada's farmers the capital interests of concentrated players in the agri-food sector and Canada's role in assisting to create the policy dams, not just regulatory but capacity-building, that are necessary to sustain and enhance Canada's farm sector.

How is the world going to adjust to the new demands facing the food sector? The Royal Bank's view is through sustainable intensification, which is really in large measure a euphemism for genetically modified products and foods.

The challenge, rather than producing more food on less land, is to keep land in agriculture and to farm it sustainably. In many cases this means reduced yields, but what Mother Nature takes away, she gives back in terms of higher market values for sustainable, commercially produced organic crops.

It is somewhat in fashion also to argue on a trade level that the matters touched on so briefly in this presentation are the business of policy-makers, not trade negotiators. This is the smoke-stack approach to policy.

Because of our close trade ties, Canada is often in the position of supporting the American position on matters relating to international trade. Tying ourselves to the U.S. trade agenda in agriculture is like tying our farmers to the bowsprit of an icebreaker. It is the interest of multinationals to colonize Canada's foodlands like they have her water. It is the interest of Canadian communities that you be aware of this and defend Canada's sovereignty over farm policy.

A farmer would not send a steer to do a bull's job. Please ensure that as our negotiators go to the world trade table, they are effectively equipped to do the job that needs to be done.

I have a few brief notes on water. I apologize for speaking more about farming than about water. Water is critical and deserves equal treatment, but Maude Barlow has taken up the discussion on water and is doing a very admirable job.

I would remind you that it was farmers who first told Canadians about water in 1988. Now look where we are at. We are being sued under an investor state dispute mechanism over denial of access to a good that a minion of trade lawyers pranced up and down denying was a good some ten years ago. Today, B.C.'s lawyers can't even get into the room when federal lawyers discuss with the lawyer for Sun Belt the lawsuit for close to half a billion dollars that an American company has launched against Canada.

I attach for your reference my recent submission on water and the MAI. All of the points made are fully relevant to this committee's consideration of water's role as a commoditized good under the WTO and why it needs to be exempt. If anyone would like to hear any more on my position on water, I would be glad to give it to them. I could come to Ottawa and do it.

At the upcoming WTO table, I urge you to defend supply management, defend Canadian sovereignty over farm policy support measures and water, and respect and defend the integrity of Canada's independent farm producers.

As consumers increasingly call for market tricks—organic, non-adulterated product—that today's agri-food transnationals have grown too large and stiff to perform, and hoist on their own petard, they hang and die from their own weight, it will be the small and more fleet-footed players who grab and hold the competitive edge on domestic and world markets. Our farmers are ideally positioned; let's make sure we have not wiped them out.

Thank you.

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

Colleagues, do you have any questions?

Mr. Darrel Stinson: Yes, thank you.

I'm from a farming and ranching background, and I remember when our biggest fight used to be in provincial trade barriers that were stopping us from moving stuff between Alberta and B.C. So this has become a much bigger problem today.

• 1635

What I found and what I heard here was on clarity of rules with regard to subsidies. When we go into these agreements, what classifies as a subsidy here in Canada might not in the United States, and that's where a lot of the disagreements tend to come from. So how can we regulate what exactly is a subsidy and make it standardized right across the board so that everybody knows what they're playing with here?

Also, with regard to dairy farmers and poultry farmers, a lot of the farmers bought quota. They've invested quite heavily in quota, the same as some people did in RRSPs or whatever, and this is what they're looking at maybe for retirement. I kind of see that being dissolved through these agreements. Do you agree with that?

The Acting Chairman (Ms. Sarmite Bulte): Who would like to answer? Mr. Mykle and then Mr. Wiebe.

Mr. Arne Mykle: Mr. Wiebe has indicated to me that he'd like to make reference to the subsidy rules, so I will defer to Mr. Wiebe.

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

Mr. Dan Wiebe (Spokesperson, Turkey Marketing Board, B.C. Council of Marketing Boards): Thank you.

The CFA, by the way, represents a good percentage of Canadian agriculture, and we would support some kind of independent committee that would make sure that all countries abide by the same rules and not just shift their support program, say, from export to green. We feel that Canada has abided by the rules, and there needs to be some kind of measure of protection that the rest of the world also follows.

Mr. Darrel Stinson: Do you feel you could then fairly compete if everything was the same in the rules category under the subsidies?

Mr. Dan Wiebe: Canada has a lot at stake in exports, for instance, the grains, pork, beef, etc., and generally Canada will benefit if the rest of the world will abide by the rules like Canada has.

Mr. Darrel Stinson: Thank you.

The Acting Chairman (Ms. Sarmite Bulte): If I could just follow up on that, who would this independent body be? Would it be part of the WTO? How would it be made up?

Mr. Dan Wiebe: We would support a WTO-type of committee, which would be independent and which would ensure that there is no misuse and abuse of the rules, as we see happening around the world.

The Acting Chairman (Ms. Sarmite Bulte): Mr. Ollikka, you had a comment, and then Mr. Mykle.

Mr. Cory Ollikka: Yes, Madam Chair. With regard to the definition of subsidies, I think you have to separate the notion of what are export subsidies. There are subsidies in the world the direct intention of which is to subsidize the movement of products into that market, and the result, of course, is to depress the prices of those things. What we as farmers worry about is that the definition of subsidy is going to be expanded to what is now called a non-tariff barrier, so that things like orderly marketing and supply management are going to be seen as barriers to international trade, whereas in fact they are impediments to transnational capital walking into our domestic arena and walking over us as small producers.

So whether you're talking about export subsidies or subsidies period, you have to be very careful to separate those that are export subsidies and those that are protective subsidies of a domestic industry.

The Europeans will say our export subsidies protect our farmers, but the result on the international market is much different. Our supply management sectors and our collective selling agency, the Canadian Wheat Board, do nothing to depress prices internationally. They are mechanisms of our own collective design that protect our industry and should be seen as domestic programs.

The Acting Chairman (Ms. Sarmite Bulte): But didn't the WTO rule against us with regard to the end use of milk?

Mr. Arne Mykle: There was a decision that did come from a panel in dairy. Canada has decided that they're going to appeal that particular decision because in their view that decision was flawed. So for us to make any particular comment until it has gone through the full trade dispute remedy would probably be a little bit of folly on our part because it would be conjecture.

In response to Mr. Stinson, when we entered into the free trade agreement with the United States, I think chapter 7 dealt with agriculture. As a result of that particular agreement, Canada and the United States were supposed to sit down and draw up what would be permissible and not permissible subsidies.

I don't like to answer a question with a question, but it might be appropriate for your committee, because these agreements are actually under this department, to find out what developed as a result of those definitions of subsidies that were part of chapter 7 of the free trade agreement, if there is anything there. I have a feeling that they both were very earnest at the start that they were going to do something, but in the final analysis I think they deferred on it and they're probably not even sitting any further.

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Mr. Darrel Stinson: I think you're right there.

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

[Translation]

Mr. Benoît Sauvageau: Mr. Ollikka would like to add something.

[English]

Do you want to add some things?

Mr. Cory Ollikka: Yes, thank you very much.

Just to add to that, I think in the definition of “subsidies” we have a tendency, when we talk about policy, to separate the private sector from the public sector as well. “Economies of scale” is another euphemism applied across the board to farming and agriculture. What do those economies of scale do when you turn them into transnational capital? Ms. Holm is very articulate, and I've been using the water metaphor all winter. It's a good one.

If we're focusing at trade talks all the time on what government subsidies and government moneys are doing to the world economy, what they're doing to the agriculture sector, and on and on, what happens to the scale of capital in the private sector? How is that capital allowed to behave?

For example, has increased agriculture trade benefited the Canadian economy? Well, 79% of Canadian wheat flour mills are foreign-owned, and 78% are owned by the U.S. Archer Daniels Midland itself owns 52%. Ninety-three percent of Canadian malt plants are foreign or U.S.-owned. Sixty-six percent of durum flour mills are U.S.-owned. Ninety percent of Canadian pasta plants are foreign-owned. Sixty-six percent of Canadian beef-packing plants are owned by Cargill and IBP together.

These entities, when they're working in the international market, have enough clout to manipulate those markets. There have been class action suits in the United States against Cargill for price-setting, and against a number of corporations of this size. So if you're talking about subsidies, what is happening on the private sector side?

This is why the NFU maintains that you need to expand definitions where they need to be expanded. You don't just expand the definition of trade subsidies to include things like marketing and supply management. What are these bodies transnationally that represent such conglomerates of capital doing to the international markets? That needs to be focused on as well.

Mr. Darrel Stinson: Doesn't it go even further than that? I mean, you're restricted in many other areas where maybe these other countries aren't, like in what types of pesticides you use. Does this not all have to come into this?

Mr. Cory Ollikka: It's a big job. There's no doubt about it, yes.

Mr. Arne Mykle: That was the point I wanted to make earlier, that Canada's producers in many respects as a result of the Uruguay Round are now disadvantaged. We've done some downloading here and it's gone right down to our primary processors and also to the producers with respect to carrying those costs. In the United States programs, they don't have to do that; they're still being covered by their treasuries in some other way, shape, or form.

Pesticide review has been going on in Canada ad nauseam, and it never seems to deliver the results that our horticultural producers need in order for them to be competitive. We come out of the gate sometimes too late because somebody else has picked up on that competitive advantage because we couldn't use it. That's something we've got to be very careful about as we go into this next round—that we don't disadvantage ourselves as Canadians.

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

Mr. John Jansen (Spokesperson, Milk Marketing Board, B.C. Council of Marketing Boards): Thank you, Madam Chair.

I think the Uruguay Round has given us an experience in terms of some of the issues that have fallen subsequent to that agreement. We have found, for example, that the language was unclear in certain areas. You talked about subsidies. The new wording now is “multi-functionality”—that you have social, environmental, and religious reasons distorting or impacting on trade.

For example, in Switzerland they're saying that the farmers in the Swiss Alps or on the mountainsides are there for tourism reasons, and shouldn't be counted as production. Japan has said to me as minister, when I was international business minister, that the price of rice is four times the world price and that's because rice is part of their religion. The United States has allocated Jamaica as a favoured nation in terms of exporting ice cream to the United States. There is no dairy industry in Jamaica.

• 1645

There are things in the agreement for which the wording is so loose. These are things we're talking about. Definitions have to be tightened up. We have to establish a better mechanism for ensuring that people will abide by the agreement, whatever the agreement's going to say, and there has to be a proper appeal mechanism. We have an appeal currently, you're correct. The way the appeal has gone and the impact of it is going to be dealt with normally under our appeal to the trade.

I think these are issues we have to address in the next round to make sure that we have a common basis. Canada has been clean in terms of reducing its subsidies; the other nations, the EU and United States, have not.

[Translation]

The Acting Chair (Ms. Sarmite Bulte): Mr. Sauvageau, do you have any questions?

Mr. Benoît Sauvageau: I would like to make a comment.

If I understand correctly, Mr. Mykle and Mr. Ollikka, you agree with the Canadian Federation of Agriculture, do you not? I think it is important to get your confirmation.

I want to congratulate you and to thank you. After having heard so many witnesses, I must say that one group seemed to me to be very convincing—and I must underline that I am not speaking now on behalf of the Committee—and that is the farmers, in Quebec as well as everywhere in Canada. Dairy producers, egg producers and poultry producers have always given us the same message without it being redundant. Your representations have been very well articulated and I believe that other lobby groups should try to emulate you. I wanted to congratulate you.

In closing, I would like to repeat the words of a representative of the Union des producteurs agricoles du Québec who stated recently that, contrary to what we had seen in the Uruguay Round, Canadians farmers now have a common position and that, if the government does not adequately defend that position, it will have to face a strong reaction from farmers because they are now very strong. It is undoubtedly to your benefit to have established a strong, united and coherent position, which we have heard during all our hearings. Thank you.

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

[English]

Mr. Bob Speller: I guess the only comment I had on water was your last point about the British Columbia government's lawyer not being able to speak to the federal... Who's the British Columbia government's lawyer, do you know?

Ms. Wendy Holm: I wasn't speaking of the individual, I was speaking of the government itself being able to be at that table and in that room, be privy to the discussions between the federal government and the lawyer for Sun Belt. Mr. Carten is the lawyer representing Sun Belt and Snow Cap in the investor state dispute mechanism suit, at least the Canadian person representing the U.S. companies' interests. The people who are representing the interests of people in British Columbia, the policy-makers and lawyers from British Columbia, in my understanding, are not allowed to even be privy to the discussions between Carten and the federal government on the investor state dispute.

Mr. Bob Speller: I'm not aware of that, because normally in these situations the provincial governments work hand in hand with the federal government.

Ms. Wendy Holm: I would expect so. That's not my understanding.

Mr. Bob Speller: Okay. It's something I'll certainly look into, but I would be surprised if that's not the case.

In terms of Mr. Wiebe, who's also a member of the Canadian Federation of Agriculture, I'm wondering if you could outline for the committee members and follow up on what Mr. Sauvageau said in terms of the collective force of Canadian agriculture in this next round. What exactly have your group and the different groups done, and the National Farmers Union also, in terms of getting that collective voice together? Certainly the last time around it was a lot slower coming. It's nice to see that voice coming together, particularly given some of the difficulties, obviously, that agriculture faces in these sorts of negotiations.

Mr. Dan Wiebe: Certainly I'm pleased to say that the Canadian Federation of Agriculture has spent an enormous amount of time at trade talks and in trying to bring the different sectors of agriculture in Canada together. A lot of time has been spent in arriving at compromise positions.

• 1650

The compromise we have reached has suited not only the export industries—grains, oilseeds, cattle, pork—but it has also come to an agreement with the supply-managed industries. For example, we support the removal of export subsidies. We support capping domestic support. We support the initiatives that all of agriculture holds dear: the preservation of the farm and increased efficiencies.

Without going into a lot of detail on the CFA trade statement, which is available, we've had many meetings, nationally in Ottawa and in sectors across the country, where there has been a good consensus developed. We feel confident that our government is aware of this position. We are certainly happy that your committee is coming across and listening to the different sectors of agriculture across the country.

Mr. Bob Speller: Mr. Ollikka, when you respond could you also respond to your last recommendation? You recommend that “... Canadian negotiators work to expand the boundaries of discussion... and thereby make possible outcomes which support farmers around the world”.

Mr. Cory Ollikka: Okay, you want me to address your first question.

The Farmers Union has been working since the last round of world trade negotiations closed, liaising with other farm organizations, with supply management sectors and provincial governments, federal governments, all the various political parties. You do all the networking you can—citizens groups, what have you. Networking seems endless, so it's good that you can, as citizens and citizens groups, come together to work on these issues that concern us all.

On the last particular recommendation the Farmers Union made, that we expand the boundaries of discussion of the WTO—that's the one you're concerned about?

Mr. Bob Speller: Right.

Mr. Cory Ollikka: Just let me clarify something first. You have more than one committee moving, don't you? You have committees in other parts of the country right now?

Mr. Bob Speller: That's right.

Mr. Cory Ollikka: Okay. Were you in Winnipeg yesterday, or was that a different subcommittee?

Mr. Bob Speller: That was a different group.

The Acting Chairman (Ms. Sarmite Bulte): That's the other half of it.

Mr. Cory Ollikka: The Farmers Union has separated our... Rather than submit a 28-page brief in one spot, we divided it among our people. We spread ourselves, like capital, thinly across the country.

The Acting Chairman (Ms. Sarmite Bulte): Like we are doing.

Mr. Cory Ollikka: Like water—just like you're doing.

The brief that was presented to your other subcommittee yesterday in Ottawa specifically stated on page 6—and you'll no doubt receive copies of those documents:

The National Farmers Union recommends that the Canadian government work with farmers to develop numerical objectives to serve as benchmarks against which Canadians can measure the success or failure of Canada's agricultural and agri-trade policies.

Now, if you're talking about how we expand those parameters, I touched on that just a couple of moments ago. You can expand the notion of subsidy and international market distortion to go beyond the public sector and include some massive private sector entities. You can expand negotiations to deal with those types of bodies. But what you need to do domestically is you need to set up something to measure your trade objectives against. I don't believe that was done after the last round of trade negotiations.

We met with you and a number of MPs last week in Ottawa. We laid in front of members of Parliament a graph that showed the statistics I quoted right at the beginning of my presentation: export in agrifood products has been skyrocketing, and net farm income has been plummeting. Why is that? I mean, we're not pointing to the Canadian negotiators and saying they sold us down the river and their intention was to destroy us. That's not the objective at all. What we're saying is that there probably was no goal in mind when the results of these trade negotiations were arrived at.

How about net farm income, for example? We should have guiding principles enshrined somewhere saying that the results of our international trade need to be, for example, that net farm income rises. What's wrong with that? Why not set up some parameters like that against which you can measure the results of your trading policies and the trade agreements that are eventually signed?

• 1655

So that's one area in which we think the Canadian government and the negotiators can go to the bargaining table and expand the parameters, not just tear down barriers to trade. That would be fine, but who is it going to benefit? There needs to be some sort of benchmark against which we can measure those performances.

I hope that answers your question. Thank you.

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

I have a quick question, Mr. Ollikka. With respect to your concern—you rhymed off figures of the concentration of foreign ownership in the agricultural sector—perhaps it's trite to say, but is this not where our competition policy should be focusing, one of the things the competition policy should address?

Mr. Cory Ollikka: I think so. I'm not familiar with the intricacies of our anti-combines legislation, and on it goes. I know, for example, there are some regulations in the United States that I'm told are far better than even some of our Canadian regulations with regard to anti-trust legislation. I think they have a packers and stockyards act, which some of the northern plains research councils and producer organizations in the United States are working on to try to get the teeth that are inherent in that legislation to bite into the backsides of Cargill and IBP, for example.

I think what we need—and we're talking about FTAA and WTO—is to expand those negotiations to multilateral agreements that inhibit the flow of capital, that regulate the flow of capital. What's wrong with that? The Bretton Woods agreement of 1944, following World War II, said we should liberalize trade in this world. There's nothing wrong with liberalizing trade, but on the same hand, you have to be able to restrict the flow of capital so that the wealth that is generated by production in one country can stay in that country. I think what you need is to have multilateral agreements on the flow of capital, as well as to liberalize trade. It's not just a domestic problem.

The Acting Chairman (Ms. Sarmite Bulte): Okay. Let me ask another question, and again, this might be rather trite. Is it too late to require a minimum amount of Canadian ownership to deal with these issues?

Ms. Wendy Holm: Yes.

The Acting Chairman (Ms. Sarmite Bulte): It is too late.

Ms. Wendy Holm: Probably. I'd like to add a comment.

The Acting Chairman (Ms. Sarmite Bulte): Yes, please do.

Ms. Wendy Holm: With respect to the competition stuff, we tend to judge competitiveness based on the in-markets for these large companies. We say okay, there are enough people selling hams into the post-processing market and offering them on the retail market, where we say there's a reasonable amount of competition. But if you look at the small segment of farmers who have a choice of dealing with one or the other—hog processors—that competition is not there as strongly.

It depends on what level we measure it on. Because if you're two large companies and you're a concentrated economic power, it becomes very quickly evident to let's say two companies that there are things it doesn't make sense to compete on, and there are other areas where it makes sense to compete. So they define things as pre-competitive and post-competitive, and they limit their competition in areas that are not beneficial to them.

It doesn't make sense to chase farmers with more and more higher-value contracts. It makes sense to keep the contracts low and shrink the margins at the farm level, to pick them up at the processing level. Ideally, from their strategy, you want to leave just enough money in the farmers' pockets to keep them coming back next year and producing the animal you want. But that doesn't necessarily mean the farmer is farming sustainably.

I just wonder, too, if I could add one quick point, as an economist, on subsidy. We use the term “positive externalities” to refer to benefits we get from something that are external to the market. So if you have a litre of milk, a dozen eggs, or a pound of potatoes, the value of those three commodities has a certain value on the market. The fact that we have farmers producing them sustainably also has value to us, as a society, in terms of environmental, ecological, and community benefits, and the continued provision of a competing source of supply to eliminate price increases if we don't have our local supply, and on and on.

When you take away trade barriers and open up markets to competition, the farmer is not going to be paid for those benefits by the marketplace. At the same time, if they see high land costs, if they see pressure from urban expansion, they're facing a lot of higher costs. It's simply not tenable to expect that the farmer is going to get the cost of covering all of those benefits strictly from market policy.

• 1700

The cows on the hillsides in Switzerland have an economic value that brings people to the region and that has a benefit to tourism. So the state says if you put bells on your cows and they become picturesque, we will add a little into your income to reflect the tourism benefits. It's a legitimate value. We tend to point and laugh and say, oh those Europeans, but rather than do that, we should look at the way they're positively constructing policies to support the farmers sustainably in that agriculture in a way that doesn't distort production decisions, doesn't distort the economics of agriculture, but recognizes that there are benefits to that farmer being there beyond simply the products they produce. These are green subsidies and they are permitted under WTO.

The problem is that Canada is so close to the United States, and the United States' position is so inimically related to the large contract integrators who are opposed to these sorts of things because it maintains an independent farm sector that we sort of get swept along by the tide.

The Acting Chairman (Ms. Sarmite Bulte): Just before I go to Mr. Mykle, Ms. Holm, you did say that if anybody wants to know more about water... I would love to hear more about water and why you felt ten years ago that it was going to be covered as a commodity. We don't have the time—

Ms. Wendy Holm: I think I'm the only person who read the trade agreement.

The Acting Chairman (Ms. Sarmite Bulte): Anyway, my concern is whether there are other red lights we should be watching for, but perhaps we can address that after.

Ms. Wendy Holm: I would enjoy that conversation.

The Acting Chairman (Ms. Sarmite Bulte): We'll go to Mr. Mykle, and then we're going to have to wind it up so we can catch our flights.

Mr. Arne Mykle: Mine is a very summary comment. As a producer who's been in the Fraser Valley producing chickens for 41 years, I think the trade agreements have actually threatened. While the subtleties are there, the margins have dropped in my particular sector by 40% in the last six or seven years. Although there are three purchasers of my product, I don't have the freedom today to move to another processor, because they've got good excuses for why they don't need to take me today.

I'm afraid in my particular commodity, which is broiler chickens, we are following, unfortunately for us, the American model. And if you want to see what the American model is in chickens, just look at how many are still producing broiler chickens and turkeys along the 49th parallel states. They've all exited and gone to the low-cost areas. If you want see that happen with respect to one of the most healthy sectors in British Columbia, as it relates to dairy, egg, and poultry, all we have to do is open up the borders a little bit further. We will evaporate—very, very quickly—because what falls off the back of a truck in the United States is enough to satisfy all of Canada. That's how large they are.

Thank you very much for the opportunity to be here today.

The Acting Chairman (Ms. Sarmite Bulte): On behalf of the committee and my colleagues, I would like to thank you all for coming. Thank you for your briefs and presentations. Our time has been limited, but in the last few days we'll have seen 70 witnesses and heard from 70 people here in Vancouver.

What I've been stating on behalf of the committee is that we see this not as the end, but as the beginning of our consultations with you. So please, if there are other issues you feel the committee should address, either send addenda to the clerk or contact the committee members, because in order for us to have some kind of input, it's important that we have a continuing dialogue, that we talk to one another not necessarily only at committee hearings when we travel across the country. So thank you again.

The meeting is adjourned until 9 a.m. tomorrow.