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]

Wednesday, April 28, 1999

• 0900

[English]

The Acting Chairman (Mr. Jerry Pickard (Chatham—Kent Essex, Lib.)): Good morning, ladies and gentlemen. I'm going to call the meeting to order, so we can get underway without further delay. We're really looking at the agenda, trying to determine recommendations going back to the minister with regard to the World Trade Organization agenda.

We're very pleased this morning to have the Chamber of Commerce coming forward. Nancy Hughes Anthony will start off as our first witness this morning. Nancy, rather than going through a long introduction and so on, I'll just turn it back to you. I imagine about a ten-minute presentation will be adequate. That will give us a lot of time for everyone to bring their information forward, as well as for questions at the end.

Ms. Nancy Hughes Anthony (President and Chief Executive Officer, Canadian Chamber of Commerce): Thank you very much, Mr. Chairman. As mentioned, I am the president and CEO of the Canadian Chamber of Commerce. I am very pleased to be here today to talk about trade policy priorities for Canadian business.

Mr. Chair, we have tabled a brief with the committee, which I trust you have. It gives the combined views of the Canadian Chamber of Commerce and the Canadian Council for International Business, which is an organization with which we are affiliated.

[Translation]

I would like to stress that the Canadian Chamber of Commerce is the largest and most representative commercial association in the country. We represent some 170,000 members through 500 local chambers of commerce in all the provinces and territories and all federal ridings.

[English]

I'd like to introduce Milos Barutciski, a partner with the law firm of Davies Ward & Beck. He is vice-chair of the CCIB's trade policy committee. For those who may not be familiar with the CCIB, it is the Canadian business community's voice at the International Chamber of Commerce and also at the business and industry committee of the OECD.

Due to time constraints, I will be brief. I will be making the presentation on behalf of both the Chamber of Commerce and CCIB. Mr. Barutciski will participate in the question period following.

Mr. Chairman, good morning. I have a few remarks to start. The approaching WTO ministerial, and indeed the entire WTO agenda, we clearly know is vital for Canada and for Canadian business. Canada lives by trade and by interacting with our international partners. We are an economy that needs open borders and a sound international rules-based system. The WTO regime and the many regional and bilateral trade relationships are vital to improving access for goods, services, and investment.

Canadian business is very confident of its ability to compete with the world in an era of more open borders. For us, globalization is a word that represents opportunity. We know that for some Canadians that confidence is not as certain, and they are being spooked by global phobia. However, we at the chamber feel you cannot hide behind protectionist walls. You certainly cannot stop the world and get off, as some people may want to do. We feel a forward-looking liberalization agenda on trade and investment is imperative for the continued business success of our members and for Canadian prosperity.

Mr. Chairman, we congratulate you for the process in which your committee is engaged—part of Canada's transparent approach to developing trade policy. In some countries this kind of hearing would certainly never take place, and we congratulate the government for having this kind of process.

We feel it's certainly essential that all Canadians take an interest in trade matters and be consulted, because trade is so fundamental to our economic well-being, and the more Canadians appreciate this fact the better.

However in these consultations, and during this process of negotiations, I would like to stress that the business community should not be seen as just another non-governmental group whose views need to be listened to. Business is the engine of the economy. Our activities and performance determine how a country fares economically. It is the sum of businesses and activities that make up Canada's trade and investment balance.

Business has a direct interest in the outcome of these negotiations because our members' activities are directly governed by the regulatory frameworks arriving from trade and investment agreements.

• 0905

So let me clarify, Mr. Chairman. Business is not asking for a special status, but we point out that in any trade negotiation, the government needs the best information available to be successful. This information can only come from the business community, and we encourage you to use the community for that purpose.

As we consider Canada's position for the coming negotiations, it's essential to note that the once clear division between domestic and international issues is now very much blurred. The result of negotiations affects not only the international trading or investment environment, but may also dictate our responses domestically. As we know, modern trade agreements encompass much more than tariffs, customs procedures, and border measures.

In the Canadian context, the implementation of WTO results on non-tariff matters often falls within the purview of the provinces. This makes it imperative that provincial and territorial trade ministers be on-side with Canadian positions internationally. Canada really cannot effectively negotiate internationally if our approaches are being second-guessed at home or if sub-national jurisdictions are competing at cross purposes with each other.

I'd like to review very briefly some of the key recommendations in our brief. I won't be touching on all of them. We have some recommendations related to process and some specifically related to the content of the negotiations.

First of all, I'd like to address the issue of the scope of the WTO negotiations. There is currently a debate as to whether the negotiations should only deal with the current built-in agenda on services and agriculture or whether a comprehensive round should be initiated. We at the chamber support the latter, with the proviso that a complete round should not preclude WTO members from reaching and implementing early decisions, where possible.

The Uruguay Round approach of kind of keeping everything—nothing is agreed until everything is agreed at the end—led to a very drawn-out timetable. We hope there will be ways to move ahead on agreed elements as soon as specific agreements are reached.

Second, progress in liberalization of trade and services is critical. One of the fastest growing components of the Canadian economy is services. The current General Agreement on Trade in Services has set up a framework for a progressive liberalization in the trade of services. The new negotiations due to start in January as part of the WTO's built-in agenda will be an important opportunity to improve commitment on market access and national treatment.

Third, our brief outlines in detail the danger of using trade to achieve non-trade objectives. The business community remains very concerned about the introduction of measures that have the potential effect of distorting trade as a way to achieve non-trade objectives. There's great pressure on governments to have the WTO and trade agreements incorporate measures in such areas as environment or labour. We agree these issues cannot be absent from a trade agreement, but it's more a question of how to deal with them.

A trade agreement cannot be burdened with every externality if it is to function efficiently as a trade-regulating mechanism. These other items are not the WTO's core business and should be left to multinational organizations that are specifically designed to deal with them.

The fourth point I want to make is that there are several emerging issues where the WTO needs to build consensus. Clearly the built-in agenda of the WTO will, in itself, represent a substantive negotiation in some difficult and often sensitive areas. But there are a number of emerging issues that really represent complex challenges to the WTO as it builds up its capacity to deal with a wider range of commercial issues. I just want to flag two of them.

The first is how to establish a multilateral investment framework within the WTO context. Clearly a multilateral framework for investment that provides for liberalization, non-discrimination, protection, and dispute settlement remains a very important goal. We support this continuing work as a way of developing consensus within the WTO on how to eventually incorporate a high standards investment framework within WTO disciplines.

• 0910

The second issue involved the interaction between trade and competition policy. We were pleased to learn that a special WTO working group in this area will continue its work to examine this extremely complex interface. As with investment, Mr. Chairman, it's our hope that the WTO can work toward developing consensus and a broad understanding of how the WTO will eventually negotiate rules in this important area.

Mr. Chairman, here are some final thoughts for you and your colleagues, as members of Canada's Parliament. Canadian businesses can't be competitive internationally if they are not competitive at home. The best of trade agreements will not help a company to compete if it is being undermined by domestic restrictions. Moreover, the gains we make in better trade rules or liberalized access will not matter if these advances are not matched at home by better productivity and an appropriately structured domestic policy environment. Here I'm referring to issues such as taxation, fiscal policy, and regulatory burden.

I would also point out that we can't effectively sell open trade with other countries if we can't trade effectively between provinces. Clearly, internal trade matters are not within the committee's purview—I understand that—but it is difficult for Canada to argue for continued liberalization internationally when business often remains hamstrung within our own borders.

Mr. Chairman, thank you for the opportunity to appear before this committee. My colleagues and I look forward to discussing our views with you. Merci beaucoup.

The Chairman (Mr. Bill Graham (Toronto Centre—Rosedale, Lib.)): Thank you very much, Ms. Anthony, and please excuse me for being a bit late. Mr. Pickard is always ready to pick it up.

Ms. Nancy Hughes Anthony: You came just in time, sir.

The Chairman: I have some questions, anyway. It's time to get some questions going.

We'll pass now to the Canadian Drug Manufacturers Association, please. Mr. Keon.

Mr. Jim Keon (President, Canadian Drug Manufacturers Association): Thank you, Mr. Chairman, and good morning, ladies and gentlemen.

The Canadian Drug Manufacturers Association is very pleased to be here today to give you our thoughts on what we believe are important aspects of the upcoming World Trade Organization negotiation. My name is Jim Keon. I am the president of the CDMA. With me today are Michael Weingarten, who is the vice-president of sales and marketing for Apotex International, and Ed Hore, of Hazzard & Hore, who act as legal counsel to the CDMA.

Like the previous group, we have as well provided a brief, which goes into more detail on our issues to the committee.

The CDMA represents Canadian-based generic pharmaceutical manufacturers and fine chemical manufacturers and distributors. We have companies all across Canada, in virtually every region. Our members are listed in the back of our brief. We believe the upcoming negotiations could be very important to Canada's generic drug industry and to the cost of our health care system. Today we will outline the reasons why.

Canada's generic drug industry has been a national success story. The industry is known worldwide for producing high-quality, affordable medicine. In 1998, sales of prescription generic drugs in Canada totalled about $1.1 billion, which equalled about 14% of the Canadian prescription drug market. Nevertheless, we filled about 41% of all prescriptions. The difference, of course, between the dollar amount and the volume amount is the much lower prices that generic drugs are sold for.

Canadian generic companies have also been increasingly successful in exporting their products, with exports now in the range of $300 million per year. Unfortunately, however, for the industry as a whole, and particularly on the brand name side, the situation is much worse. Canada's overall trade deficit in pharmaceuticals reached $2.7 billion last year. We would note that despite more than 10 years of increased patent protection in Canada since the days of Bill C-22 in 1987, the foreign-owned industry, with subsidiary companies that make up the brand sector in Canada, has continued to close Canadian manufacturing operations and rely ever more on imports to supply the Canadian market. The result has been an ever increasing trade deficit, which is laid out in our brief with statistics that come from Industry Canada.

• 0915

We believe the federal government should be very concerned about the trade imbalance in this important sector and should use the upcoming World Trade Organization negotiations to improve Canada's standing.

While the generic industry has been successful in Canada, Canada is only a small part of the world market. For generic companies to grow and develop, therefore, they need access not only to the Canadian market, but also to world markets on a timely basis.

I'd just like to interrupt my comments to ask Michael Weingarten to briefly describe for you the initiatives of Apotex in the export marketplace. As you may know, Apotex is our largest generic company in Canada. After Michael has done that, I'll come back with a few concluding remarks on some of the issues we consider very important.

The Chairman: Mr. Weingarten.

Mr. Michael Weingarten (Vice-President, Sales and Marketing, Apotex International Inc.): Thank you, Jim, Mr. Chairman.

Apotex Incorporated is the largest Canadian-owned generic drug manufacturer involved in the export of generic pharmaceuticals since the early 1980s. We're currently exporting to 115 countries around the world. Our major export markets are currently Mexico, Germany, Hong Kong, Jamaica, Vietnam, and the Czech Republic.

Our business internationally is comprised of a network of agents and distributors, as well as 15 subsidiaries and two joint ventures. All of these customers are dependent on the Apotex Incorporated product development pipeline for building their businesses.

In many cases, due to the export restrictions in Canada, we're unable to supply products whose patents have expired in the target countries. This forces us to either look outside of Canada to produce product elsewhere, or look to other countries or companies for supplies where these restrictions do not exist.

In 1998, Apotex International achieved total ex-factory sales of approximately $60 million. We're projecting growth in 1999 to around $80 million and sales of $115 million for the year 2000. Although international sales currently account for a small percentage of Apotex's total sales, the international market consumes around 1.63 billion tablets and capsules, which translates into around 38% of our total company production. Over the next two years, we anticipate these numbers to increase to 51%, and 60% of total units produced by the company.

These numbers are important for the following reasons. Apotex Incorporated has recently completed a $100-million manufacturing expansion at our facility in Toronto. As the number of units sold internationally increases, there's an obviously greater dependence by our company on the international marketplace. To continue to develop this business, we have also allocated $85 million for this year and $100 million of investment income in the coming two years to help develop our business around the world. From the figures outlined above, it's obvious that a tremendous number of employees' jobs are dependent on the continued growth of Apotex Incorporated in Canada.

We feel very strongly that the Canadian government should take the position in the WTO renegotiations that it's gone far enough in protecting the pharmaceutical intellectual property and work toward progressive changes that will favour Canadian-owned international businesses.

Thank you.

Mr. Jim Keon: As a general matter, the member companies of the Canadian Drug Manufacturers Association believe that powerful patentee pharmaceutical lobbies around the world will very likely attempt to use the renegotiation of the World Trade Organization to force changes to the TRIPS agreement, the Trade-Related Aspects of Intellectual Property Rights agreement, and thus to Canada's laws increasing intellectual property rights for pharmaceuticals. The pending and potential TRIPS renegotiation may therefore impact on CDMA members' businesses more directly than on most other Canadian sectors. The issues in the renegotiations will also affect drug prices in Canada and the viability of Canada's public health care system.

It is essential that the CDMA be kept informed and involved as the process goes forward, and we would of course be happy to assist the government with these complex issues. We're certainly very pleased with the opportunity and the process here today.

In the pending renegotiations of the TRIPS agreement, we believe Canada should rigorously oppose any increase in the intellectual property rights covered by TRIPS, especially if the proposed changes would render Canada's current pharmaceutical laws non-compliant.

Issues that may arise include the general exception clause in TRIPS, article 30, and the CDMA believes Canada should take the position that this article permits an export exception in Canada's patent law, which, as Michael mentioned, would allow a generic drug manufacturer to export its product to other jurisdictions where patent protection may not be in place. The lack of an export exception is costing Canada jobs, investment, and export earnings.

• 0920

As well, we believe Canada should take the position that a regulatory submission, or Bolar exception, which Canada's Patent Act now has, allowing a generic drug manufacturer to work a patent if the work is reasonably related to the filing of a regulatory submission, should continue to be allowed.

A related exception, a so-called stockpiling exception, which again currently exists in Canada's Patent Act, allows a generic company to manufacture and stockpile a product during the last six months of a patent. The regulatory submission and stockpiling exceptions are, as you are undoubtedly aware, the subject of a WTO trade challenge currently brought by the European Union. The impact of these, if Canada is unsuccessful, will be a significant delay of several years in the entry of generic drugs into the Canadian market, a significant downsizing of the Canadian generic industry, and an increase in cost.

Another article of TRIPS that's likely to be raised in the pharmaceutical context is article 39(3) of TRIPS, which deals with pharmaceutical regulatory data. Again here, without going into detail, our view is that Canada should resist pressure to go further and to make a change to this article that would be more favourable to big multinational pharmaceutical companies.

The upcoming renegotiations raise critical issues for Canada, which has a trade deficit in pharmaceuticals and a public health care system to support. Canada must go into the renegotiations resolved to fight against changes to TRIPS that will increase drug costs for Canadians and undermine our health care system. Canada should also seek changes to certain articles, where necessary, to safeguard its vital interests in affordable drugs, health care for Canadians, and a viable and growing generic drug industry.

Thank you for your attention.

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

We will next go to Alcan Aluminum Limited.

[Translation]

Mr. Daniel Gagnier (Vice-President, Environmental and Corporate Affairs, Alcan Aluminum Limited): Thank you, Mr. Chairman.

The Chairman: It seems that all Quebeckers, including representatives of the Association des manufacturiers de bois de sciage du Québec, want to come here, to Toronto. I don't know why. Ms. Debien, people are leaving la belle province for the opportunities in the beautiful city of Toronto.

Mr. Dan Gagnier: I am a Quebecker, but there's a difference: I was a deputy minister in Ontario and Saskatchewan.

The Chairman: You are the consumate Canadian then.

Mr. Dan Gagnier: Indeed.

Mr. Chairman, in the near future we will be submitting to you a document we intend to present to the Ministers of Foreign Affairs and International Trade about the positions of the Manufacturers and Exporters Alliance.

Today, we will present our comments about the three major stakes of international trade that interest us the most and will have repercussions on Canada's aluminum industry. These particular stakes concern access to markets, which is essential for us as we are a multi-national firm that operates in 30 countries, intellectual copyright, investments and environmental protection.

[English]

First of all, one of Alcan's major preoccupations, having been in the export business, in the manufacturing business internationally, for close to 100 years, is the issue of market access and what we call “ethical standards”. We have a code of conduct, and you will see in our presentation that we highlight what's important to us in terms of our experience over those 100 years.

We are a global industry. We've just reorganized into two global businesses, one for primary metal and one for global fabrication. When you look at Alcan, you're looking at somewhere in the order of 160 plants around the world. We are the second largest primary producer of rolled products, and we employ close to 40,000 people.

While more than 50% of our assets are in Canada, we have raw materials, power, smelting, fabricating, and recycling assets and sales offices in 30 countries. Our first ingot was fabricated in Shawinigan, and it was exported in 1902 to Japan. So we began internationally.

From 1982 to 1997 we invested more than $9 billion in Canada in new plants, of which close to 10% has been allocated to environmental protection. In our Alma smelter, which is under construction, a $2.2-billion investment...the environmental component of that smelter is one of the largest single components, accounting for close to 22% of the investment. We produce 2.3 million tonnes of aluminum in Canada, we're the third largest primary aluminum producer, and we have 10% of the world production capacity.

• 0925

You can see from our submission where we export. But what I'd like to point out is that we generate in this country $4 billion in value-added content and we sustain 41,500 permanent jobs. Most of our exports are to the U.S., the EU, and Japan, where consumption of aluminum represents about 70%.

The EU is a net importer of primary metal. They import today close to 60% of all their requirements.

Between 1985 and 1988, aluminum imports have risen from 1 million tonnes to 2.9 million tonnes per annum in the European Union. Yet the EU remains, amongst all, one of the few countries that maintains a tariff against unwrought aluminum, and you have to ask yourself why. Developing countries have tariffs—China, India, and Brazil—and certainly we're aware of that and we know why they hold to them: in order to develop their industry. But that's not the case in the European Union.

Apologists for the EU tariff pretend it protects European jobs. In fact, only 6% of Europeans are employed in primary production. The tariff enables European producers to charge a market premium irrespective of whether the duty is actually payable. What that means to us is that there's a U.S. $445-million overhang, of which $305 million U.S. was retained as windfall profits by European producers. You may say, so what? We in Canada, with over $1 billion in investment in European rolling mills, are not in the position to supply our own mills, because every time we import a tonne of aluminum it adds a minimum of $32 to our cost. So it makes us less competitive in terms of providing for our own needs in Europe. It's a very specific case, and I wanted to use it to demonstrate to you the importance of market access issues.

I'm going to move on to talk about a number of other issues. Intellectual property rights are important to us. We're also a major purchaser and exporter of technology. We're concerned about intellectual property rights because we know we need the protection and the enforcement of those in this next round to be as clear and as transparent as possible. Improved protection against infringement and recourse to adequate remedies is needed, good practices should be encouraged through more effective international rules, and patents should be effective and easy to obtain. The cost of obtaining and maintaining patents in the European Union is three to four times that of the U.S. That's a significant disadvantage to us.

• 0930

Trade and environment is another area where we've been increasingly engaged, and here it's been a difficult dialogue. It's been a difficult dialogue because for a company like Alcan, where we do believe in sustainability, we have increasingly three E's: we have environment; we have energy issues, with their social impact; and we have economic issues.

In the debate that's taking place, the third E is oftentimes discounted or put aside, and I want to be absolutely as clear as I can that the biggest single economic issue that I think we will face and that Alcan believes we will face in the next four or five years is the issue of climate change and the impact it will have on trade and environmental issues.

It's anybody's game. It's anybody's game because, quite rightly, the people of the world are increasingly concerned. There are north-south issues; there are developmental issues; there are environmental issues; and there are some very pointed agendas.

There are people who use methodologies like life-cycle analysis in a proper way, some in a flawed way. There are laws that have been enacted that discriminate against various materials. There are already in our own country provincial regulations that discriminate against aluminum for...well, let me put it this way; I consider them to be non-tariff barriers.

I'll mention two. One is a tax levy only against the aluminum can in Ontario, which was introduced under cover of an environmental rationale some time ago. It has led to a decline of the aluminum can in the Ontario market from 22% of market share to 9%. That's a radical decline in the use of the can.

The other one is a can quota in the province of Quebec. Canada's biggest aluminum producer maintains a quota limiting the development of the can. These are really very useful arguments to us when we promote the consumption of aluminum in third countries.

So I'm using two examples to show that trade barriers are being created under other agendas for quite legitimate purposes, but they're having a distortion in terms of how they impact on our particular product, and there are many examples of how it impacts on other products.

I think one of the most important things we can do in the next round is to clarify rules concerning import levies, export credits, all of the regulatory instruments, and really try to understand how we can enhance our ability to be successful exporters, to be responsible world citizens, to take part in the dialogue that's ongoing about sustainability, and to recognize that there are some legitimate issues and concerns here, and there are very pointed agendas with, I would say, unforgiving margins of tolerance around how success is measured.

• 0935

Canada would benefit from a more open and expanding multilateral trade system. One of our major challenges, I think, as a country in the next multilateral round will be to expand Canada's access to markets, in our case Europe. And the international community should strive to get the price right by discouraging subsidies, tariffs, non-tariff barriers, intended to gain unfair competitive advantage.

Thank you, Mr. Chair.

The Chairman: Thank you very much.

Next we'll go to Stelco, Mr. Belch. You should have been here yesterday; we had the steel union. You could have been with them instead of all by yourself with this gaggle of businessmen. You could have been right at home.

Mr. Donald Belch (Director, Government Relations, Stelco Inc.): Well, I thought you had planned it, Mr. Chairman, so that I would be on the opposite corner from Alcan today.

The Chairman: Don't worry about that. There are no provincial levies against steel cans, so you're sitting there with a big smile.

Mr. Donald Belch: That's correct.

It's very interesting to follow a presentation by Alcan, because the steel industry around the world is quite a bit different from the aluminium industry. It is not as oligopolist, I might say. Stelco is certainly Canada's largest steel company, and we are only 35th in size in the world. So when we come to issues of trade policy, quite often it seems that steel companies in Canada are large compared to the suppliers that are on the opposite side of the table, but we are very small in terms of the world scale.

The largest producer in the world, POSCO South Korea, last year actually produced more than five times as much as Stelco did.

The Canadian steel companies also have a unique focus compared to the aluminum companies. It is a domestic market focus. The capacity has been built to serve a domestic market, in large part because of the value of steel. The cost per tonne of steel is quite low compared to the cost of transportation. It serves a very local market very well, and that's why it remains the material of choice in the manufacture of motor vehicles, appliances, commercial construction—those sorts of things. The natural market for Canadian and indeed North American steel is a 500- to 750-mile radius of the plant. It's no wonder then that steel-consuming industries in North America are located between southern Ontario and Chicago, and stretching south into Ohio and Pennsylvania.

In many other parts of the world, steel production capacity exceeds domestic demand substantially. The ownership of the facilities in many parts of Europe and South America was originally with the government. In the past 15 years those governments have realized that businesses could operate the plants more effectively if privately owned, and the fact is those businesses were established both to provide employment and to survive on exports, and they still rely on exports to maintain a high-capacity utilization. Due to high capital costs in the steel industry, it's critical to maintain high-capacity utilization.

In 1998, for example, the European Union exports of steel dropped 15 million tonnes. Mr. Gagnier related the kinds of trade restrictions in the EU. If you can have a geographic area of the world with that kind of drop in exports, it demonstrates the crisis that existed last year in Asia, South America, and the Middle East. That volume of drop was the total size of production in Canada last year.

Stelco, Dofasco, and IPSCO are each quite different Canadian steel companies, and they've consistently been amongst the most profitable in North America. The sales of each are predominantly in what I would call a local, albeit Canada-U.S., market. In 1997 and 1998 Canada had a trade surplus in steel with only one country, the United States. Deficits with the rest of the world more than outstripped that one surplus situation. It's not that the companies cannot compete. The trade that exists, exists because of an oversupply in the rest of the world. This committee, I believe, listened to Mr. Peter Clark last year, who often, in Ottawa, is on the opposite side of the table from me. He indicated that you cannot export steel around the world without dumping.

• 0940

This lengthy prologue has been undertaken just to set the scene for some comments on the international trade process, because fair trade is most important to both Stelco and Canada's steel companies. It's impossible to sell hot-rolled sheet for $250 Canadian a tonne, which is what the Russians were doing last year. The only way to protect Canadian jobs and investment is through sensible application of fair trade laws. The fair trade laws themselves only kick in when unfair trade has become injurious, as it did last year. Revenue Canada was prompt in its investigation of a complaint Stelco filed on hot-rolled sheet from France, Romania, Russia, and Slovakia. However, the complete process of proving injury at the Canadian International Trade Tribunal is lengthy and can become burdensome when lawyers from the other side press for mounds and mounds of paper to prove every last scintilla of injury evidence. By contrast, the process in the U.S. places the onus on the exporter to prove its shipments did not injure.

In the concluding round of the Uruguay negotiation, tariffs on steel were put on the bargaining table in return for a multilateral steel accord. It was to resolve the steel problems that we're still dealing with. As one who was assured by the Canadian government that tariff protection would only be given up if the MSA were achieved, I'm quite cynical of the ability as a negotiator when time is expiring and there's a desire to come up with a good agreement. As we know, we gave up the tariff protection, but we did not deal with the issues that still plague us.

At the moment, tariff protection for the Canadian steel industry is diminishing quickly on imports from the rest of the world. It would not be bad if the tariff reduction were reciprocal, but only Canada, the U.S.A., the EU, Japan, and Korea participated in the reduction. Other countries had not committed to reduce in return for an MSA, so they had no reason to voluntarily follow the Canada-U.S. lead. It will be difficult then for Canada to negotiate meaningful change in the next round of the WTO for the steel sector, now that it has used up its major bargaining chip.

One side effect of the reliance on unfair trade law to address underpricing of imports is also the need for a dispute resolution should the injury ruling result in a challenge. Canadian steel companies, including Stelco, have not had to use the WTO dispute resolution but are among the most exposed to NAFTA by national panels. Such panels are intended to be a speedier resolution of dispute. On occasion they are. However, our experience even currently is that the panel selection process can be lengthy and the timeframe for resolution can stretch out to that of the courts. It will be important for Canada to ensure that the WTO dispute resolution process does not get bogged down in the fashion we have seen within the NAFTA.

Government procurement is another issue that is important to steel producers. It is not that steel companies sell to governments; we do not. However, government capital spending is important to our customers in many jurisdictions. In spite of the opening up of government procurement in both the Uruguay Round of the WTO and in the NAFTA, Canadian steel producers find their product shut out of many major U.S. markets, including federal highway spending. The U.S. Department of Transport regulation prohibits even the use of foreign iron ore pellets in the steel that's used in highways funded by the International Surface Transportation Efficiency Act. The short form of that is ISTEA, and you can see how the Americans have ISTEA wherever they go.

For that reason there are no exports of reinforcing bar from Canada to the U.S.A., while the U.S. is the largest source of reinforcing bar imported into Canada. Rebar, as it's known, is a very basic product made by at least five producers in Canada, from Montreal to Edmonton. The lack of exports reflects the fact that U.S. distributors do not want to maintain double stock, those permitted in highway projects and those that can be used in commercial projects. The effective result is a ban on imports from Canada.

• 0945

In conclusion, Mr. Chairman, simple economics dictates that most steel markets should be local. Transportation costs can be significant relative to the value of the sale. It does not make sense to ship basic carbon steel long distance. Because of the North American market, which is so open on both sides of the U.S.-Canada border and can be impacted severely by the oversupply in the world, unfair trade laws must be responsive but not burdensome.

Of even greater importance for producers in Canada, steel supply to the one local Canada-U.S. market needs to be free of the restriction that currently limits access to the highway- and bridge-spending market in the U.S.

Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Belch. I have one technical question. ISTEA, I take it, is a federal statute.

Mr. Donald Belch: Yes, it is.

The Chairman: Are there state restrictions that are just as important, or are most of the ones you're talking about in your brief federal?

Mr. Donald Belch: It's a federal restriction.

The Chairman: Yes, that one is, but are there—

Mr. Donald Belch: It's the one that provides all the funding to the highways.

The Chairman: Thank you very much. So they're federal.

[Translation]

I now give the floor to the Association des manufacturiers de bois de sciage de Québec, which is paying us a visit.

Mr. Jacques Robitaille (President and Director-General, Association des manufacturiers de bois de sciage du Québec): Only for a short while, unfortunately.

Allow me to introduce myself. My name is Jacques Robitaille and I am the President and Director-General of the Association des manufacturiers de bois de sciage du Québec. I would like to introduce the two people accompanying me: Ms. Brenda Swick-Martin, our legal advisor in matters related to international trade, and Mr. Jean-Pierre Grenon from the Donohue company, who is also a member of our board of directors.

I would like to thank you for giving us an opportunity to present the point of view of the Association des manufacturiers de bois de sciage du Québec.

The Association des manufacturiers de bois de sciage du Québec is the largest association of wood producers in Quebec. Our members produce more than 90% of Quebec's softwood lumber. We represent 165 sawmills covering all of Quebec's regions. The economies of about 200 communities all over Quebec depend directly and principally on this industry. We have 128 regular members and 220 associate members, and they range from large integrated pulp and paper and sawmill companies to small producers.

Our industry is very important to Quebec's economy. I believe only agriculture and tourism are as widespread throughout Quebec. Fifty thousand jobs in sawmills and the forests depend directly on our industry.

The industry is growing in Quebec. In the last 10 years, we have almost doubled our production, which now accounts for 7.3 billion footboard measure. When we compare our production with the quotas currently allowed under the agreement with the Americans, we see that about half of our production is covered by the quotas.

Quebec's production represents 26% of Canadian production and is worth $4 billion per year. Our exports are more than $2 billion. Obviously, the U.S. is our major market since 72% of our production is destined for the American market.

In the last five years, our industry has made major investments on the order of $1 billion in order to increase production, bump up productivity and maintain market retention levels.

• 0950

[English]

The success of Quebec's softwood industry is substantially dependent on its ability to export wood and wood products. The Canadian lumber industry alone is responsible for $13 billion in trade per year.

Almost three-quarters of Quebec softwood lumber production is destined for export, predominantly to the United States of America. Exports to the United States are subject to the Canada-United States Softwood Lumber Agreement, which regulates the volume of softwood lumber exported to the American market. Other export markets include Europe, Japan, the Middle East, and East Asia.

The industry is also experiencing increased production and export of value-added products, particularly during the last five years.

Canada must continue to be concerned with trade in goods, which includes wood and wood products; market access; standards, which can be technical barriers to trade or sanitary or phytosanitary health measures; and trade remedies such as anti-dumping and countervailing duty actions and safeguard actions.

With respect to trade in wood and wood products, we urge the Canadian government to pursue continuing reduction in tariffs with an established timeframe.

There are an increasingly large number of WTO dispute settlement cases that involve standards or health-related issues. The Quebec softwood lumber industry is directly involved in one case where the Government of Canada is seeking to challenge the European Community's imposition of heat treatment restrictions on imports of kiln-dried lumber from Canada. The AMBSQ continues to strongly urge the Government of Canada to work to ease the heat treatment certification burden imposed on exports of kiln-dried lumber to Europe.

To highlight the impact of that, at the beginning of the nineties the level of export of Quebec producers to European markets was around 6% of the production. Right now we are down to less than 1%.

With respect to trade remedies, an area of historical concern to this industry, having been party to several CVD investigations by the United States, Canada should continue to seek improvement to the anti-dumping and subsidy rules and procedures to mitigate any negative impact on the access of our exports to foreign markets.

The AMBSQ supports a strong and effective WTO dispute settlement mechanism. While our industry has not been directly involved in a WTO dispute, we have been indirectly affected by the Canada-United States WTO periodical dispute. Our industry has been threatened with retaliation by the Americans, and we have written to the Government of Canada stating clearly that the Quebec softwood lumber industry must not be adversely affected by the periodical dispute.

We believe the WTO dispute settlement process must be transparent and eventually provide for the ability of private commercial interests to make representations before the WTO panels. The issues in dispute settlement cases are becoming too important and the ramifications too great, leaving companies with no other choice but to seek active involvement in the process.

The realization of such direct involvement may not be until some time in the future, but in the interim, private commercial interests should at least be afforded the opportunity to formally petition the Government of Canada to initiate dispute settlement proceedings and receive a formal decision from the government, with reasons, if it decides not to initiate. Private commercial interests in the U.S.A. and Europe now have the ability to petition their governments to initiate the WTO dispute settlement proceedings.

• 0955

China offers a vast potential market for Quebec, and AMBSQ believes China must accede to the WTO on the same terms and conditions as other member countries. The impact of China's accession and its exports to Canada could be substantial. This underscores the need that China be bound to adhere to the disciplines and obligations of the WTO, in opening its own market and in its exports of goods and services abroad.

With respect to trade and the environment, Canada's position in the upcoming WTO negotiations must in no way undermine the sovereign ability of nations to manage their own natural resources, including forest management practices. The Quebec lumber industry has a well-established environmental ethic and engages in responsible forest management practices. Environmental measures must not be used as a measure of imposing unjustifiable, non-tariff barriers to trade, such as technical regulations that provide for discriminatory treatment among imported products or between imported and domestically produced goods.

At present, the Quebec industry ships a small percentage of its softwood lumber to South America. We believe, however, that this will be an increasingly significant market for Quebec softwood companies in the future, either for export or increased imports and joint ventures. For these reasons, the AMBSQ requests a sectoral advisory group for the lumber industry to assist the Government of Canada in meeting the industry's objectives for this market in the upcoming free trade area of the Americas decision.

In conclusion, although the WTO is a very important instrument in international trade, it's not well known to many private commercial interests. For this reason, it is imperative that Canada adopt a strong communication and consultation strategy in the process for defining Canada's priorities and objectives, as it proceeds to the next round of WTO negotiations.

Merci.

The Chairman: Thank you very much. We'll now pass to the period for questions.

Before I do, perhaps I can ask a generic question to Ms. Hughes Anthony. This is something—

Ms. Jean Augustine (Etobicoke—Lakeshore, Lib.): Be careful how you use the word “generic”.

The Chairman: That's true. I'll be very careful how I use the word “generic”. Maybe I could ask a patented question of Ms. Hughes Anthony.

You said in your paper you recognize there's a need for trade and environment issues to be addressed...environmental human rights and labour issues to be addressed—let's not necessarily link them to trade. But you don't want to burden the trade agreement with these issues. That's the way you put it to us.

Mr. White yesterday made a very eloquent statement, which I think a lot of us picked up on. He said it's all very well that business says this, but business goes to the ILO, they sign on to a lot of agreements, and then they go off and do things around the world that have nothing to do with those agreements, and don't even adhere to them.

Speaking for myself, personally, but I think for other members of the committee as well, the biggest question we will have to grapple with in this whole hearing is what are the relationships between these other elements and the trade agreement and how do we have an orderly world in which they work? It's no good to say you're going to have a trade agreement that ignores these if you're going to ignore the environment, human rights, and labour. In fact, the new trade agreement will collapse because people won't have anything to do with it. It's very clear.

• 1000

So if you're saying don't burden the trade agreement, what is business' answer? Do you then say we have to have an ILO that is functional, an environmental agreement that is functional, a human rights code that is functional, and somehow an overarching institutional arrangement that will sort out the conflicts between those and impose some rationale between them, or what?

At the moment it looks like business is just trying to escape by saying “Hey, we want a nice trade agreement, and that's going to go on the way the world has always gone on”. I don't think, from the public hearings we've had until now, the Canadian public is going to go for that, and I have a big suspicion the public around the world will not go for it.

I'm kind of pre-empting my colleagues' opportunity for questions, but I think that's the question bothering a lot of us, so maybe I could ask that one first.

Ms. Nancy Hughes Anthony: I certainly did not want to leave that impression from my remarks. If I did so, I would seek to correct that.

The Chairman: You didn't give me that impression.

Ms. Nancy Hughes Anthony: I know. These are very complex issues. I think you're absolutely right that there needs to be a public appreciation for the way this whole system will work, and a public sense of confidence in it.

I wonder if I could just turn to my colleague, Mr. Barutciski, for some comments on the way it might work.

• 1005

Mr. Milos Barutciski (Partner, Davies Ward & Beck; Vice-Chair, Trade Policy Committee, Canadian Council for International Business): Thank you, Nancy. Thank you, Mr. Chairman. It's always a pleasure to address my own MP as well as the chair of this committee.

Some hon. members: Oh, oh!

Mr. Milos Barutciski: I'll ask you about public works later.

Nancy correctly points out—and if you look at her prepared text you'll see the remark—that if dealing with these very important issues, be they labour, environment, or other social issues, requires stronger institutions, for example, strengthening of the ILO procedures and the like, then let's do that. Let's deal with them in the forum that has the institutional capacity, the institutional history, and the technical competence to deal with the very kinds of issues we're talking about—labour issues, environmental issues and the like.

The WTO is a highly specialized body in its own right, much like the ILO. However, with 500 staff and its own institutional inclinations and bent, it is simply not the adequate or proper body to address these other complex issues that bring into play a host of other governmental and public policy objectives that clearly impact on trade but are unrelated in terms of what they are.

The danger of injecting that process, of weighing and balancing these other policy concerns and objectives, into an institution whose primary purpose is not to address those concerns is to some extent...you will muddy the waters and make the decision-making process much murkier. You will lead to unpredictable distortions of trade. In going forward, both governments and businesses won't know how those issues will play. By putting them in the right place and then perhaps negotiating something global that addresses the interfaces, you can focus.

The Chairman: I don't want to interrupt you, but we've heard that argument. We understand that. But our problem is, who is going to trump whom when there is a conflict? That's the problem.

If Mr. White persuaded the members of the ILO to adopt a rule that said if a government or a country did not adhere to basic core labour standards it couldn't benefit from the trade agreement, would you would you accept that that would prevail over the trade agreement, or would you go back?

• 1010

Mr. Milos Barutciski: I understand your question a little better.

The Chairman: For the environment and human rights, it's the same thing. What's going to prevail? There's no problem about understanding overloading the institution. We've all gone through that. Who's going to trump and who's going to decide who trumps?

Mr. Milos Barutciski: I think I understand your question better. That issue is one that probably doesn't belong in either the ILO itself or any other international focused arrangement. The international committee will have to address directly how an institutional mechanism and a decision-making process can be devised so that when a decision is made internationally to give precedence to this public policy objective in this context, the environmental concern outweighs and is greater than the trade concern. Then that is made in a transparent fashion and everybody knows why that decision was made, rather than, as I indicated earlier, trying to inject it in a context where we're not quite sure.

The Chairman: Okay. Anyway, that's the kind of problem we all have.

[Translation]

Excuse me, Ms. Debien, for appropriating your question.

[English]

Mr. Obhrai.

Mr. Deepak Obhrai (Calgary East, Ref.): Thank you.

Thank you for coming. I apologize for being a little late, but I have some pressing business at home.

I suppose that being the chairman of the committee he has stolen my question. We've all been grappling, as you say, and that's why we're here. We have heard all the submissions, and I want to see how business operates.

Jacques alluded to the point Mr. Graham was making in reference to the environmental code of conduct. That's good, because in Canada we have a code of ethics. But when you start moving to other parts of the world and getting into the WTO, you start getting into an area where free access to business starts impacting very heavily, as Mr. Graham said. That's what we are grappling with.

Stelco and the aluminum people have indicated very well the trade barriers that are over there, which is what needs to be addressed, but I think the bigger context coming into play is because of WTO's dispute settlement mechanism, which is an effective tool that other organizations are now having. Everybody is looking at the WTO to use that to address many of the social issues.

So the question we're grappling with is whether or not under the WTO business is going to have a free hand to go over there or to face something such as what Jacques said, which is no sovereignty infringement.

Mr. Milos Barutciski: I appreciate the issue, and it is a complex issue. At the same time, the answer isn't going to be found, in our submission at least, in injecting those very important concerns in a body.... The chairman pointed that out. The challenge is to devise appropriate dispute settlement mechanisms that (a) bring the issue to the point where a decision needs to be made and (b) integrate the multilateral decision with regard to an environmental, social, or labour issue with other aspects. A labour decision may very easily have an environmental impact and vice versa.

If you impose strict environmental measures and then chat with a developing country government representative about what the employment cost of adopting these measures will be for their country, you're going to get a very pointed answer. So you need a mechanism that rises slightly above both the WTO and the ILO and perhaps—

• 1015

Mr. Deepak Obhrai: Let me put it in a scenario. When a Canadian business such as Stelco—and I'm not singling it out—goes into another country that has a stricter standard of environmental control, probably the Canadian company would come along and say this is a barrier to trade. Where is that going to head?

Mr. Milos Barutciski: You've opened the door to a slightly different issue. It's part of the same thing—

Mr. Deepak Obhrai: I'm just using one as a generalization.

Mr. Milos Barutciski: Let me take this example. Environmental issues have been dealt with repeatedly in the context of the WTO, the GATT, and in fact the FTA and NAFTA using the GATT article XX(g) exception, which is a conservation-based exception. In the early days, when there was the dolphin-tuna decision coming out of Mexico's complaint against the U.S., the environmental NGOs and conservation interests, quite rightly, I think, raised a host of concerns about things that were said in that decision about the ability of governments to regulate for environmental purposes.

If you follow the jurisprudence both before and after that decision in 1990 or 1991, you'll see that decision was a bit anomalous. In fact, the last panel that addressed that one point, environment under XX(g), in the most recent turtle-shrimp case went out of its way to do something that is really quite unusual for a GATT panel to do. After rendering its decision, it said, let's stop for a moment and say what we are not doing; we are not saying that government should not regulate for environmental purposes—and I'm practically quoting here. Clearly they can and should and do. We're not saying they shouldn't do so unilaterally, bilaterally, or multilaterally. Clearly they can and should.

Those issues have arisen in other contexts besides trade and environment, and I noticed a degree of frustration among GATT panels. With regard to regulatory measures that have this trade-distorting impact, what the panel was highlighting was that of the eight or nine cases that have considered that issue, XX(g) environment in this case, every single one of them was fundamentally litigated, not over a legitimate environmental measure but over a trade-distorting or protectionist measure that was cast as an environmental issue.

A perfect example is the very first chapter 18 dispute under the Canada-U.S. free trade agreement over the landing requirement of west coast salmon and herring. The panel said, we understand the environmental rationale, but you don't land, count, and weigh every single fish in any other fishery in the country, so why are you saying it only has to be done for an export-related market? Basically the panel was saying you can deal with it. The jurisprudence is quite strong, but don't do it in a colourable fashion. Come to us with a real environmental, health, safety, or labour type of restriction.

Mr. Deepak Obhrai: This was done by the WTO.

Mr. Milos Barutciski: The case I'm talking about involved a Canada-U.S. binational panel. It was preceded by a GATT panel that was identical in terms of the issues. It was the 1997 or 1998 decision of the WTO appellate body where they said, stop for a second, this is what we're not saying.

Mr. Deepak Obhrai: Thank you.

The Chairman: Thank you very much.

Madame Debien.

[Translation]

Mrs. Maud Debien (Laval East, BQ): I would like to address you, Mr. Chairman, first and tell you if we have guests from Quebec today, it is because Quebec is open to the world. That being said...

The Chairman: That being said, Ms. Debien, I remember people from Montreal telling me all the time that they would never go to Toronto because is was the Queen City, etc.

Mrs. Maud Debien: My first question is for the Canadian Chamber of Commerce and follows up on the questions of the Chairman and Mr. Obhrai. You can see that the link between trade and the environment is of great concern to us, and I will add so are issues related to human rights and social causes. Tell me if I have correctly understood your colleague's comment, Ms. Anthony. According to him, it seems, there should be a supranational body independent of the WTO to deal with these issues.

• 1020

There are currently major international bodies under the UN that deal with these issues, but you know as well as I do that they have no regulatory or disciplinary powers. The WTO is the only international institution with disciplinary powers.

Would it be possible and realistic for the International Labour Office or the International Labour Organization to become an executive arm of the WTO? I know we can't ask the WTO to look after everything unless it decides on its own to create a structure to study these issues. Would it be realistic, in your opinion, for the ILO to become the executive arm of the WTO?

My second question concerns investments. We all saw what happened with the MAI. You spoke of an effective structure within the WTO to deal with investment issues. Are you proposing a new structure within the WTO to directly handle these investment issues?

My third question is for Mr. Keon of the Canadian Drug Manufacturers Association. You mentioned having supply difficulties due to certain restrictions. Could you give us any examples? Your examples included six months of stocking up before patents expire, which was challenged by the WTO. I would like you to elaborate a bit on this statement because it is not clear for me.

My fourth question, obviously, concerns tariffs on steel. Mr. Belch, you said that Canada had dropped out of the steel tariff dispute early. That makes me think about what many agricultural producers have told us, that Canada had respected the standards in this field, particularly in terms of subsidies and quotas, and had carried out its duties, while the European Union and the United States in particular, had not done this. What you are telling me, finally, is that Canada, as with agricultural production, has done its duty while the others have not. If I have understood, that is what you are saying.

My last question is for Mr. Robitaille.

The Chairman: Ms. Debien....

Mrs. Maud Debien: Yes, yes, it's the last one.

The Chairman: Your five minutes are almost up, the witnesses will not have enough time to answer your questions.

Mrs. Maud Debien: Mr. Robitaille, has the problem of heat processing lumber been brought to the WTO? That's my last question. I apologize, but it is important and it calls for the time needed.

The Chairman: It is very important, but the others also have important questions.

Ms. Nancy Hughes Anthony: Let me begin.

[English]

The Chairman: We'll have to get quite rapid answers because—

[Translation]

Ms. Nancy Hughes Anthony: I will try to be brief.

For the first question, I do not think we have necessarily suggested a new structure. We said—and I will ask my colleague to supplement my answer—that a mechanism at the international level is needed to act as a link between the various bodies and their work. Is there sufficient consensus within the WTO for this to happen? It may not be necessary to create a new structure or mechanism.

In terms of investments, we wanted to stress that there is currently a working group within the WTO looking at trade and investment. In our opinion, it should be encouraged.

• 1025

There has also been much work by the OECD, which is involved in the work being done by the WTO. In our opinion, it is very important that the work of this group be carried out. It is not necessary to have another structure.

Mr. Milos Barutciski: As the Chairman indicated initially, the issue of structural decision-making institutions devoted to disputes over differing policies concerns everyone. Your suggestion is interesting, but I do not believe it will satisfy those interested in the environment, human rights, etc. This is primarily because, if labour rights and environmental issues came under the purview of the WTO, these issues would be secondary to its major focus on trade. Thus, it could be said that it is less important than trade. This is one of the major reasons why I do not agree with this suggestion.

Secondly, if it is decided to do it, modifications to the structure or mechanism of the WTO will we absolutely necessary. This would change the organization completely. Millennium negotiations would be completely different from what the parties are ready to do today. I believe then that this task is practically impossible.

[English]

The Chairman: I'm afraid I really am going to have to stop it there. We're at eight minutes and we've got three more questioners to go. We'll get another crack at those same questions from somebody else.

Mr. Blaikie.

Mr. Bill Blaikie (Winnipeg—Transcona, NDP): I just have a few comments, to which people can respond if they like. First of all, I'd say in fairness to the Chamber of Commerce and to Mr. White's comments that he was also critical of the Canadian government for signing agreements at the ILO and then not paying any attention to them. He didn't single out the business community.

I think one of the things that's important in this whole debate about the WTO, globalization, and free trade is that we not caricature each other's arguments, and in that respect I was a little bit concerned about your opening remarks, Madam Hughes Anthony, when you were talking about globaphobia and setting up what I think is a false dichotomy between you people who deal in the real world and these people who want to hide, who want to erect walls of protectionism, and all this. I think this is a kind of caricature of what's really happening in the debate, because as you yourself admitted, the distinction between domestic and international law and policy is increasingly being blurred by the WTO. There are many things that were once the exclusive purview of democratically elected governments that are now regulated by these international trade agreements. Certain things that used to be possible are not possible, like drug patent legislation, etc., certain forms of which are ruled out.

It's not always the case that if you have...well, what is the old saying? Sometimes if you're paranoid, it's because somebody is after you. And there are things to be concerned about here. There are things that we all should be concerned about if we value the ability of our own governments to intervene in the public interest, the common good, or whatever the case may be. So I would just caution you against that kind of stereotype of the argument.

No one is suggesting, not even the strongest critics of the WTO and of the current model of globalization, that there can be some retreat into the past. It's not a question of trying to avoid a rules-based trading regime. It's a question of what kind of rules they'll be, who's making the rules, what the process for making those rules is, what kind of balance should be struck in those rules between the environment, human rights, trade, and those kinds of things, what kinds of priorities are to be assigned, and enforceability, which I think is the critical matter.

• 1030

Of course, the problem for so many critics of the current model is that there's only enforceability in one area. I don't think you would be arguing, at least I hope not, on a national level for what you seem to be arguing for on the international level, that labour law nationally should just be some kind of Canadian labour organization that pronounces about what would be nice, but without enforceability. Because that's what we've got internationally. We've got an ILO that says what would be nice, what would be good, what would be true, what would be beautiful, but it has no enforceability. We wouldn't accept that at the national level. And if we're going to have a global economy, then we have to replicate at the global level what we've achieved at the national level in order to make sure our economy is a humane one.

I don't think these are forms of phobia; I think they are legitimate concerns. So I would just ask you not to portray the critics in that particular way.

Ms. Nancy Hughes Anthony: If I may just comment, Mr. Chair, I didn't mean to be disrespectful at all. I do think—and certainly the organization of the chambers of commerces will appreciate—that with over 520, 530 member chambers, in every community we have people who understand their community and who bring forward to us the fact that sometimes it's a difficult dialogue to speak in their communities with people who may be afraid of global expansion and don't necessarily see the connection between freer trade, jobs, and prosperity. So certainly the chamber feels it has a responsibility to continue that dialogue and try to bring these two parties together, and I didn't mean in any way to be disrespectful.

I would just say that I think a lot of people would say there's work to do to try to fix the ILO, that there are things that can be done to improve the ILO internationally. That may be a separate piece of work, and I don't think I should take up the time of the committee to speak about that today.

The Chairman: I think, to be fair, though, Mr. Blaikie, you'll recall—and I was struck by it yesterday—that Joan Grant-Cummings, from the National Action Committee on the Status of Women, told us that the WTO was responsible for rape and for the destruction of women, and that in fact we should get rid of the WTO. Get rid of the WTO! Those were her words. She said we should get rid of the WTO. So there's a community of interest out there saying that. Whether that's phobia or not, I think it's something we have to seriously address, because I don't believe you believe that. I think you believe in a responsible system, and we are all trying to struggle for that. So I think there's a problem out there that's deeper than maybe anybody realizes. Certainly, that's what I'm getting through these hearings anyway.

I'd like to turn to Ms. Augustine, and then Mr. Pickard.

Ms. Jean Augustine: Thank you.

My question surrounds some of the discussion that has gone around the table. I think some of the factual directions we can get from your brief. But I am still grappling with this whole context of the WTO. We were told it's inaccessible and unresponsive to civil society and that it's created some hostility toward that organization. The critique that has been offered to us throughout...yesterday we heard categorical statements that the WTO has no value for any country, any citizen; it has no way of making citizens and their countries better off, financially or otherwise.

I was intrigued at the beginning of Alcan's presentation, where you said quite strongly that based on your long international experience, you see that liberalization creates jobs at home and abroad, promotes technology transfer, and enriches the international community.

• 1035

The arguments we heard yesterday from a good deal of the individuals from civil society, like NGOs and others, were almost all to the contrary. They critiqued the FTA, the NAFTA, and the WTO, and as the chairman just said, in terms of its responsibility to women's lives and a whole series of social issues....

There was a group that met in Northumberland County. They spoke to us for the thinkers who got together in a forum of some kind, and they had about three or four basic questions. Maybe I'll throw them out to you and see what the responses are around the table.

One question was this. How can government singly and/or collectively control large multinational corporations? You can critique the question itself as to whether it is legitimate. It's one they threw at us. Second, how will free trade impact on the social systems that we as Canadians value? Third, what price should we have to pay to be one market?

• 1040

I'm still grappling with responses to those questions, and I wonder, with the experience and the thinking you've done in this area, if you can make some interventions that can help me in my thought processes.

By the way, it's very good see Mr. Keon and Apotex. I know the work you do in this area.

Mr. Dan Gagnier: I'd like to have a crack at this because I've been listening to this and trying to square the circle, if I can put it that way. The questions are not easy, but in this instance, the answers lie, I think, in the individual policies and governance structures of big multinationals.

I've been to the WTO. I've been to the meetings, the so-called consultation meetings with civil society, along with some 250 or 300 participants. The WTO is struggling with how to come to grips with the things they know and have developed over the years and that work in terms of trade issues and with the global agenda on social and environmental issues, where the interests are quite different and where there is no parallel mechanism that has the same kind of enforcement capability. Until we find one, we will continue to struggle with that issue.

There was a suggestion by the director general of the WTO, I think, that what we need is a world environmental organization. I don't know if that's the answer. If I step back to your three questions, the price we pay is consistency. We know that from a hundred years of experience in these countries. Consistency does have a price. It means you cannot have two standards. You cannot have one standard for Quebec, one for l'Allemagne, one for B.C., and another for India.

If we're really going to be global, the standards have to be applied globally. This is not easy. When we end up looking at a business investment in China and the Chinese say to us that they don't want to do—or pay for—an environmental background ambient air study, the Alcan answer is, fine, we don't have a project. This is not easy. It means you either believe in the environmental and social policies that are part of the core values of your organization—even if it's a business organization—or you don't.

Where industry gets caught out is they talk but they don't walk the same way. We've all had that experience. Alcan's not perfect; we've slipped in some places. But I can tell you one thing: we have written it down. We have a code. It is used with every employee who joins Alcan. The performance of our plants—whether they be here or anywhere else—on labour, on community issues, and on environmental issues is directly tied to their bonuses, in other words, to the remuneration of the people who run those businesses. If they do not do it, if they do not comply, if they cannot comply, if they will not comply, if they're found out, there's a zero tolerance policy. In other words, you can mistakes and you can learn from them, but if you persist in a certain comportment, the rules are quite clear.

• 1045

We have had cases where that has happened. Perfectly good engineers, perfectly good marketing people, perfectly good salesmen have been taken into an office and told “We're sorry, we'd rather work with somebody else”. But the price is consistency and the price is very difficult to execute.

The other issues you relate deal with the execution of policy and governance. I don't have to go to an ILO to worry about whether Alcan is complying with its labour agreement. My board hauls me up before it twice a year and has me report to them on whether we are or not. If we're not—let me put it this way. I don't think I'd want to go to that board meeting if we weren't and try to explain why we weren't.

It begins with what I call the business ethic of industry, in this case of a multinational, and it moves into the kind of international institutional structures you need. If your ethics are right and your business codes are well understood, if they're part of the value system of your business, whether the ILO wants to look at it, the WTO or the WEO, you name it, we'll go there and defend ourselves successfully.

The Chairman: Thank you.

We'll go to Mr. Pickard.

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

Quite frankly, I think the major problem comes down to the fact of where we are going with all of the trade negotiations. It was stated very clearly yesterday that sustainability of programs—the environment, the prosperity of people, and the movement forward of our economic agenda are very important. Those are the three major trade issues we're dealing with.

I was very surprised that many in the academic community suggested the people prosperity problem was getting worse rather than better. I was very surprised that many interest groups came forward and suggested we had major problems as well, and those problems needed to be dealt with very seriously by this committee. So that is something we will have to struggle with.

I would suggest that the business community really get whatever facts and information forward to us that you can with regard to those issues—how you are doing the positive effects in our communities. That's really important. That would be my advice to you.

Secondly, I'm hearing that U.S. domestic law is really dominant, and in some cases, as Alcan pointed out, European domestic law is dominant. The larger the structure it seems the better opportunity organizations are having at thwarting Canadian business and Canadian interests. That's the message I'm hearing from government. We heard it on the MMT-Ethyl issue, with the Canadian government losing its sovereignty. But at the same time I've heard this morning that U.S. domestic law dealing with rebar and other issues is causing us a major problem.

Secondly, I would look at your community and say, these are problems. I guess you should specify all these problems down the line and make very specific recommendations as to how the Canadian government can deal with these issues. Quite frankly, I am not an expert in the steel industry, and you have to bring recommendations forward as to how the rebar industry affecting government contracts on highways also goes into the building industry, so they're not double-stockpiling, as was suggested earlier. How can we handle it?

There's the European question you brought up on Alcan. Certainly that goes to the very specific generic industry too and the longer-range rules we have in protecting patents. What can we do, because those patent rules were put in to be consistent with the WTO? They were pushed generally by the whole business community in the negotiations. So how do we resolve those specific problems?

• 1050

I'll throw it back to you and ask you to point out the problems. But you'll also have to go a step further and point out what the solutions to those problems are and how we can deal with them as a Canadian government. We're not a superpower. We're dealing with a hundred and some other countries, and we can't just walk in, tell them what our problem is, and ask them to correct it. How do we do that?

Maybe I'll throw that back to you. Those are very generalized questions, but I think that's where I see answers are required.

Ms. Nancy Hughes Anthony: Maybe I'll just ask a little question. Did you say people productivity?

Mr. Jerry Pickard: No. I mentioned sustainability. There were three issues I pointed out. One was sustainability and the environment; the second was people prosperity—jobs, what people are earning out of it, the agricultural community, labour, and so on; and third was the economic advantages the country gains through trade relations. Those are the three areas I thought were very critical that were pointed out yesterday by many people.

Ms. Nancy Hughes Anthony: I think you're absolutely right. I think an organization like the Canadian Chamber of Commerce, for example, is in an ideal position to point out those benefits. I would say, apropos of my remarks this morning, though, that the trade agenda and the domestic fiscal agenda the government has considered all end up on the bottom line or in the pockets of the Canadian taxpayer at home in the community. Our membership is extremely concerned about Canada's overall level of personal taxation.

So when you are talking about the benefits of trade, etc., you also need to go into some of these domestic issues. You need to address and talk about the specifics of issues like domestic taxation. I would just point out that that is the issue conversation very often heads to with members of the Chamber of Commerce.

It's a very penetrating issue with them now, the fact that Canadians are having difficulty keeping the money in their pockets. The level of taxation, they feel, is uncompetitive, particularly vis-à-vis opportunities people can have in the United States. The comparison is very often given about the opportunities for young people who may choose to leave our country, having been well educated by our good education system, and go south of the border.

Mr. Jerry Pickard: The Canadian government would dearly love not to be in a $600 billion debt situation too. That has to be taken into account.

Ms. Nancy Hughes Anthony: Exactly.

Mr. Jerry Pickard: We're talking about where we're at because we've overspent and spent huge amounts of money, which in many cases has supported labour and business over the years.

Ms. Nancy Hughes Anthony: We would say it's certainly time to bring that fiscal house in order, with respect to debt reduction and taxation levels. But I'm getting ahead of myself. I know another committee will be looking at issues related to productivity. We'll be talking to that committee as well. Some of you may be members of that committee.

The Chairman: I think there is a concern, as Mr. Pickard said. We've heard a great deal about growing wage gaps, prosperity gaps, gaps of wealth and wealth distribution, and all these are important issues we have to look at as well. But we appreciate your coming this morning very much.

I really have to draw this to a close because we're running into the time of the next panel very badly. So thank you very much for coming. We appreciate your help with this, and good luck to you.

[Translation]

I would like to wish our visitors a good return trip to the beautiful city of Montreal. Stay in Toronto and spend a little money here.

• 1055

[English]

Our next panel is the Canadian Council for International Business. Sorry, IBM Canada will go first

Ms. Shirley-Ann George (Government Programs Executive, IBM Canada): Good morning.

On behalf of IBM Canada and our over 18,000 Canadian employees, I'd like to thank you for your interest in IBM's views on electronic commerce and trade.

Our expertise in this area is established by our estimated 1999 global e-commerce revenues of $20 billion and our extensive use of electronic commerce to reduce our internal cost structures.

In an effort to use our limited time well, my comments will be short and concentrate on the environment for electronic commerce, and my colleagues will speak on the technical aspects of trade liberalization at the WTO.

The term“electronic commerce” may be fairly new, but we've all been doing electronic commerce for years. I think it's fair to say that we have each established our expertise every time we have successfully taken money out of a bank machine. The systems for things like ATMs are very expensive to build and maintain and require dedicated equipment and communications.

Today we have an ubiquitous communications that anyone with any type of PC and a telephone line can use to connect to any one of the other 111 million Internet users. Almost overnight the World Wide Web has connected millions of isolated computer networks and changed the world as we know it.

Our children have stopped using outdated encyclopedias for homework and started surfing the web and getting more information from more sources than our teachers would have ever dreamed of asking for. But what is often lost in the Internet hype is that most of the traffic is actually business to business, not young kids searching the web for the latest information on their favourite rap star.

When you combine business to business and business to consumer transactions, you'll find an amazing electronic commerce growth of almost zero dollars in 1995 to a forecasted $1 trillion by the year 2002, just around the corner.

The often unspoken reality is that much of this revenue will come from e-commerce-enabled companies that are taking business away from traditional businesses. The other reality is that it is impacting every industry at the same time: retail, banking, education, travel, radio, TV, postal, distribution, manufacturing—the list goes on and on. I believe the economists' term for this is the creative destruction of capitalism.

With electronic commerce, a company can reach thousands of new customers without leaving home. At the same time they can increase their profitability by reducing their cost structure. This is not “pie in the sky, maybe someday” hype. Last year IBM had five million paper invoices. This year we'll have zero; a savings of $240 million.

We'll save over $100 million by conducting one third of our training through distance education. Fourteen million customer inquiries will be answered by self-service websites giving 24-hour-a-day, 365-day-a-year service, saving IBM $300 million. We'll buy $12 billion worth of goods and services from our suppliers while selling close to $10 billion worth of products to our business partners and customers—and I could go on in this list.

• 1100

IBM knows that if we do not re-engineer our systems and squeeze out these kinds of savings, our competitors will crush us. The same holds true for every business, no matter how large or how small. The third largest bookstore in Canada is Amazon.com, a company that does not have a single building housed with Canadian employees. Record stores are their next target. Travelocity.com allows you to buy cheap airline tickets without visiting your local travel agent. Again, it's a foreign-based company reaching into Canada through local advertising on the Internet.

What does this mean to the businesses of your riding? It means one of two things. Either they're selling to thousands of new customers with a lower cost structure or they are struggling against hundreds of new competitors, both Canadian and foreign, which are targeting their loyal customers with 24-7 service and due to their lower cost structures they can even offer lower prices.

We must move quickly to bring Canadian companies through the e-commerce evolution stages if we are going to compete successfully. I draw your attention to the slide that talks about the U.S. entering hypergrowth. In Canada, where almost every business is an SME, we need to be consumed in finding ways of closing the 12- to 18-month gap that exists between Canada and the U.S. in building electronic commerce adoption. I have attempted to paint this picture because as members of the Standing Committee on Foreign Affairs and International Trade you are dedicated to finding ways to ensure that Canada, a country in which one in three jobs is trade dependent, has access to a rules-based, open, global marketplace. The next round of WTO negotiations will include many detailed technical discussions on items that my colleagues from CCIB and AT&T will discuss in more detail and I would be happy to address in the discussion period.

We encourage you to take the electronic portion of the WTO very seriously, for electronic commerce will literally change our world. We also believe that Canada must be vigilant in looking at our internal structures to ensure that we have an attractive location for setting up electronic commerce businesses in Canada for both Canadians and multinational corporations. I think we can agree that we should all be very proud of the job Canada has done in connecting Canadians to the Internet. It is indeed a great accomplishment. Now we must collectively take the next step in making sure that Canadian businesses can and are actively participating in a truly global marketplace.

Thank you.

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

Next we have Mr. Hecnar for the Canadian Council for International Business.

Mr. David Hecnar (Director, International Policy, Canadian Chamber of Commerce, Canadian Council for International Business): Thank you, Mr. Chair and committee members, for the opportunity to talk to you today about the important and growing area of electronic commerce. My name is Dave Hecnar and I'm the director of international policy at the Canadian chamber and CCIB. With me is Eric Iankelevic, our policy consultant on e-commerce issues. I'll turn the floor over to him momentarily, but I would like to speak briefly about our work and e-commerce.

Both the chamber and CCIB have been making considerable efforts in terms of developing business policies towards e-commerce, and as the enormous potential for e-commerce becomes increasingly apparent, both government and business need to recognize that an appropriate framework needs to be developed to govern its conduct. A focus has been placed on the need to promote the use of electronic commerce in a responsible manner while ensuring that further development of it occurs in a competitive and market-based manner, and one, I'd add, that fosters innovation and technological development.

As some of you may know, the issue of electronic commerce has already transcended several important policy realms. We've been working directly with some of our international partners, such as the ICC and BIAC, and also some of the multilateral organizations like the OECD, to help set clear objectives for the evolution of the regulatory and legal framework that will govern and support a growing electronic commerce realm.

We're here today to talk mainly about the WTO workplan on electronic commerce. As some of you may know, last year in September the WTO ministers adopted a WTO declaration on global electronic commerce. In this declaration the general council urged the WT members to establish a comprehensive work program to examine all of the trade-related aspects that could come up in terms of electronic commerce. So our presentation this morning will focus on those elements of the WTO work program. In terms of specifics, Eric will touch upon telecom liberalization, intellectual property, custom duties, and classification issues.

• 1105

I would also like to add that we have submitted a formal document, the discussion paper, dealing with some of these issues in a more detailed manner. I would now turn the floor over to Mr. Iankelevic to give a little bit more on that.

The Chairman: I'm relieved to hear you have four or five minutes and he's going to do all those in five minutes. We're all going to have colossal headaches. We're getting used to this now.

Mr. Eric Iankelevic (Senior Policy Consultant, Canadian Council for International Business): Thank you, Mr. Chairman.

Telecommunication services are critical to the development of global information infrastructure. Like traditional commerce, e-commerce requires a substantial infrastructure. Telecommunication liberalization creates the necessary conditions to attract capital, technology, and the expertise needed to build the appropriate infrastructure for electronic commerce. Because of this, we believe it is critical that the Canadian government encourage the WTO and FTAA member governments to fully implement respective scheduled commitments as stipulated in the agreement on basic telecoms and reference paper. We also encourage the governments that have not yet scheduled commitments to do so. Finally, we recommend that the Canadian government consider further liberalization of foreign ownership restrictions.

The adequate protection of intellectual property rights in cyberspace should be a top priority for the Government of Canada. The protection of intellectual property for e-commerce should be built upon the existing regime of copyright and other intellectual property rights. Great care is needed in such developments so as not to inadvertently jeopardize carefully tailored balances under the current intellectual property rights system. We believe that further protection of intellectual property rights at the international level will be enhanced upon the prompt ratification and implementation of two international treaties adopted by the World Intellectual Property Organization, WIPO, in December 1996. These treaties are the WIPO treaties on copyright and the performance and phonograms treaty.

The further development of copyright protection issues within an emerging digital age is critical. We encourage the Government of Canada and WTO member governments to promptly adopt, ratify, and implement these treaties. This will ensure that Canadian trademarks are afforded appropriate protection at both domestic and international levels. In addition, we encourage the Canadian government to recognize database protection as central to the global information society and to continue to work through WIPO and the WTO toward the adequate protection of intellectual property rights and investment associated with databases.

The reduction or elimination of excessive and duplicative import tariffs and taxes on goods and services associated with e-commerce remains an important goal of the business community. We strongly support the decision by WTO member governments to continue their current practice of not imposing customs duties on electronic transactions. We encourage the Canadian government to support efforts in the WTO to make this practice permanent. Because of the capability of electronic transmissions, certain digital products may not fall clearly within traditional classification systems of tangible or intangible goods and services.

While it is tempting to draw clear distinctions on classification, such an exercise at this point may be unwise. Many fear the consequences associated with premature classification may unnecessarily distort the mode of distribution chosen by an industry still in its infancy stages. The preferred mode of distribution should by determined by technical and market forces and not be regulation. Subsequently, we encourage the Government of Canada to further study these matters with business' input before arriving at any conclusions. It is important that the WTO member governments and FTAA member governments determine the appropriate classification of certain digital products delivered both electronically and physically.

Technological developments have, and will continue to have, a profound effect on Canadian culture. We recognize the need for continued development of unique Canadian content and acknowledge the challenges before the Government of Canada as they pertain to the development of Canadian cultural content on the Internet. However, an appropriate balance between our cultural objectives, our international trade objectives, and emerging technology innovations must be achieved.

• 1110

We believe Canadian culture expression is being well served on the Internet. Driven by Canadian consumer demand, Canadian content is featured prominently on Canadian websites.

Therefore, we encourage the Canadian government to recognize the desirability of ensuring diversity of content on the Internet, but caution that this principle should not be used as the basis for measures that will unduly restrict international trade and the development of global e-commerce.

• 1115

At this time I'd like to briefly touch upon the issue of electronic commerce in the negotiations of the free trade area of the Americas, the FTAA. According to the Computer Industry Almanac, 148 million Internet users reside in the Americas, comprising over 60% of all Internet usage. Canada and the United States currently lead the region in Internet usage; however, Latin American economies are quickly building Internet infrastructures to meet the growing demand. By the year 2000, it is expected that Internet use in Latin America will have increased by over 35%, branding the western hemisphere the most connected region in the world.

We continue to actively participate alongside the Canadian government and the FTAA committee of experts on electronic commerce. This expert committee has the task of studying the implications of electronic commerce on the economies of the Americas. The committee will formulate a set of recommendations on e-commerce and will present its findings to trade ministers at the next meeting of FTAA ministers in Toronto on November 3 and 4 of this year.

As active participants in this forum, and as founding organizations of the Americas Business Alliance on Electronic Commerce, we encourage the Canadian government to continue working with the Canadian private sector in order to allow the Americas to secure the benefits of e-commerce. We appreciate this opportunity to appear before this committee and provide the views of our two organizations on the WTO work program and trade-related aspects of electronic commerce.

Thank you.

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

Mr. Barnes.

Mr. Peter Barnes (Vice-President, Public affairs, AT&T Canada Enterprises Inc.): Thank you, Mr. Chairman, good morning.

Honourable members, honorables membres du comité, thank you for your invitation today. I'd like to commend you and the minister for engaging in this series of consultations for informed public policy discussion on a very important range of issues.

My name is Peter Barnes, and I am vice-president of public affairs with AT&T Canada. With me today is Brian Kelly, who is a public policy consultant.

AT&T Canada provides long-distance services for residential and business customers; wireless service and paging through our partner, Rogers Cantel; Internet services; and, pending approval by shareholders of a proposed merger with MetroNet Communications, we will provide local telephone service in competition with the established local telephone companies. When that happens we will be the only—and I underline only—national facilities-based telecommunications provider offering a full menu of services. At that time, AT&T Canada shares will be publicly traded on the Montreal and Toronto stock exchanges.

Since the expertise of AT&T Canada resides in the telecommunications sector, we'll address our remarks primarily to that area. We will present arguments to show that the present rules restricting foreign investment in telecommunications services are ill-suited to Canada's current and future needs, and that they risk causing Canadians to forego substantial benefits of the global information-based economy.

[Translation]

We hope not only that the Government of Canada will agree there is a pressing need to liberalize the rules restricting investment by the telecommunications industry, but that it will commit to remedying the disadvantage imposed on it as soon as possible rather than according to a multiple-year timeframe, as is generally the case with international agreements.

A round of multi-lateral trade negotiations typically lasts seven years. This is a long period of time, particularly in a digital economy that is evolving quickly. Waiting that long to act could give Canada a serious disadvantage in comparison to its international competitors. AT&T Canada strongly recommends speedy findings in such fields as e-commerce and information technologies, to bring the country the fruits of liberalization as early as possible in these fields with a strong drive for liberalization.

[English]

If necessary, the Government of Canada should undertake the autonomous liberalization of foreign ownership restrictions in the telecommunications sector, because of the benefits that will flow to Canadians from such action. Competing nations made major concessions on foreign ownership in the last negotiating round of the WTO, while Canada's offer was modest in this area, at best.

• 1120

A quid pro quo negotiating position for changes to foreign investment rules may make for impressive headlines; however, the economic case for making the shift is such that Canada would be primarily penalizing itself by failing to take advantage of this opportunity. In light of these facts, AT&T Canada recommends that Canada drop restrictions on foreign investment and telecommunications services in order to meet its own public policy objective of leadership in information technology and creation of a fully competitive domestic telecommunications industry.

[Translation]

The Minister of Industry, Mr. John Manley, has spoken on the advantages of direct foreign investment in a recent Industry Canada document:

Foreign investment is vital for Canada's future. It links Canadian firms, consumers and workers to the new global knowledge-based economy. It improves Canada's competitiveness by revitalizing industry and increasing the flow of goods and services between Canada and its trade partners. Foreign investment doesn't only create employment, it kick-starts new technologies, new management techniques and new access to markets.

[English]

One hundred and nineteen years ago, the National Telephone Company of Boston bought the patent rights for the telephone from the family of Alexander Graham Bell, and later that same year, in 1880, incorporated through an act of Parliament the Bell Telephone Company of Canada. The National Telephone Company still exists today and is known as AT&T. This is one of the earliest examples of foreign investment delivering advanced technology to Canada. AT&T retained its holdings in Bell Canada well into the latter half of this century.

More than 100 years after this patent development, the Information Highway Advisory Council, or IHAC, studied the issue of Canadian control and limits on foreign ownership, and in its initial report in 1995, four years ago, recommended that:

National ownership of globally dispersed operations is becoming more difficult to determine and less relevant in a global economy. The behaviour of capital becomes more critical a policy issue than its source. The Council recommends that foreign investment policies be reviewed.

[Translation]

In addition to the previously mentioned role AT&T Canada has in building up Canada's telecommunications capacity, there are a number of cases of notorious foreign ownership in modern times. Like the former BCTel, which is now part of BCT.TELUS, and whose majority shareholder until recently was a regional American GTE telecommunications firm that still has a minority role. QuébecTel, based in Rimouski, is another firm whose majority shareholder is GTE. Both arrangements have been in place for several decades under an acquired rights clause that, all things considered, has been greatly beneficial for British Columbia, Quebec and Canada.

[English]

Obviously, globalization will be a recurring theme of this and other presentations. Whether one agrees with it or not, globalization of the economy is occurring and Canada needs to recognize the trends and position itself to reap the maximum benefits from it.

Against the backdrop of many international mergers and acquisitions, global telecommunications deals in 1997 totalled $11.6 billion U.S., an increase of 186% over the previous year. In fact, the largest merger in corporate history is now unfolding in Europe, and it happens to be in the telecommunications sector. Should it be approved, Deutsche Telekom and Telecom Italia will merge in a transaction valued at $81.5 billion U.S. This same trend has manifested itself domestically in Canada in AT&T Canada's proposed merger with MetroNet Communications, as well as consolidations amongst former members of the Stentor alliance of telephone companies.

With two thirds of its GDP based on trade and services, one of three jobs dependent on trade, and 39% of its GDP relying on exports, Canada clearly requires investment rules that reflect its need for growth in the high value-added, knowledge-based industries and services that now drive its economy.

Opponents of such transactions should also keep in mind that tens of thousands of Canadians depend on foreign investment for their livelihood, and that according to DFAIT, each $1 billion in foreign direct investment is estimated to create as many as 45,000 jobs in Canada over a five-year period.

However, a disturbing trend for Canada has begun to show. Industry Canada figures tell us that between 1986 and 1995, our share of global investment stock fell by half. We lost 6% of our share of North American-bound investment, while the U.S. and Mexico increased theirs. Canada has invested a great deal of time and energy into enhancing its international trade relationships; however, the full benefits of these efforts will not be obtained unless the domestic investment climate is made more attractive relative to those of international competitors, specifically investment restrictions and the regulatory environment.

• 1125

Of the Canadian dilemma between restricting investments and attracting investments, Bell Canada's CEO, Jean Monty, recently remarked:

It is irresponsible of us to think that we can close our minds to having others invest in Canada. Some people unfortunately think it should only go one way. It's got to go both ways.

[Translation]

The last round of WTO negotiations on basic telecommunications resulted in a major breakthrough that saw 69 countries make specific commitments concerning market access. Not all deadlines are created equal.

[English]

I would invite you, in that regard, to look at the table that is annexed to our paper, where you'll see Canada's position amongst competing partners.

Government officials have certainly been saying all the right things in the last few years about the strategic importance of telecommunications to Canada's economic development. However, when it comes to the regulatory environment, the restrictions on investments, in our view, still unduly favour the established carriers, making the investment climate much less hospitable to new competitors than some are willing to acknowledge. In fact, the CRTC's landmark decision opening up local competition expresses a strong preference for facilities-based competition, which is obviously heavily capital intensive. Enabling the further entry of foreign capital would stimulate investment in local service and enhance competition in telecommunications services.

A Canadian brokerage house recently gave this assessment:

While the digital revolution should significantly affect the economy of Canada going forward, we believe that foreign ownership restrictions will limit the opportunity to be leaders. Canada cannot lead as long as strategic foreign capital is kept from investing in its potential...

Lack of strategic foreign investment in this sector will increasingly make Canada a secondary player in the on-line world, as opposed to the leader that it aspires to be.

And, in my view, that it should be.

Liberalization of the investment rules for telecommunications in Canada takes on an even greater air of urgency as the industry makes the massive switch to Internet-based networks. This transformation will require enormous amounts of capital, which is available to Canada should it be allowed entry.

[Translation]

Thus, we have tried to demonstrate that there is a major gap between Canada's ambitions in terms of information technologies and the measures put in place to achieve them. Canada must do more than tell the world its telecommunication sector is open for business.

[English]

In the last round of the WTO negotiations, Canada was both fortunate and unfortunate, in a manner of speaking. It resisted pressure to allow greater access to its own market, while Canadian corporations in the telecom sector, such as Teleglobe, Nortel Networks, and Bell Canada, made major advances into the markets of other signatory countries.

However, the news for Canada is not all good; far from it. As a result of its relatively closed market, Canada is receiving a diminishing share of international foreign investment, while countries with more open rules—and you'll see those in the attachment—are benefiting from Canada's conservatism.

We respectfully submit that the Government of Canada needs to take a hard look at the effect of its investment policy on the achievement of its public policy goals in information technology. Given that it is already playing catch-up with several other countries, it needs to do so quickly.

Thank you very much for your attention, and we look forward to your questions.

The Chairman: Thank you very much.

Mr. Obhrai.

Mr. Deepak Obhrai: Thank you for coming. That was an interesting submission, especially on e-commerce. You gave us a discussion paper, which we'll have to read before getting into this. You talk about the agreements and so forth. What kinds of problems is e-commerce facing in international trade? You haven't laid out your position on the WTO, so you might want to elaborate on that.

Mr. Eric Iankelevic: I can begin. There are some problems pertaining to e-commerce that are definitely not easily reconcilable. The first one probably would be the issue of jurisdiction, whose jurisdiction would be afforded consumer protection, as an example, and who would collect the taxes. So the first one would be jurisdictional issues.

• 1130

The second one is classification issues: what is a good and what is service. With regard to electronic transmission over networks, at what point does it become a good and subsequently subject to the GATT? If it's a service, it will be subject to the GATT. That has posed a huge problem. Based on our recommendations, we're interested in having the Government of Canada and WTO member governments work with the private sector to come up with a scheme for measuring a product and defining a good or a service, depending on the means of transmission over the Internet.

It's simple for a book. If you order a book over the Internet, the book comes over and goes through customs. But what happens if you download an artist's latest song that is not on a CD? It would be a song that is not available on a compact disk. Is that a good or a service? It's not available on a CD, but once it's downloaded you could make a good out of it.

So those are some of the issues we in the international business community are actually toying with and trying to deal with. It will take time to work those things out, but those are some issues in terms of e-commerce.

I don't know if Shirley-Ann or Peter have anything to add.

Ms. Shirley-Ann George: Much of this is new, and we're learning as we go forward. There are some issues, such as foreign ownership for telecommunications, which are being dealt with in many parts of the world. It's what's commonly known as the last mile problem. In order for electronic commerce to work effectively, we need very high band width to every home and business. So video, audio, and very high definition graphics need to be able to move extremely quickly through the Internet. Without significant investment in telecommunications, it's just not possible to do what's called the build out to the last mile. In Canada many companies are moving their servers to the United States because the cost of band width is less expensive there.

Some of these issues are WTO issues, and some of them are domestic issues. For example, in Canada if you're a small business and you want to set up an electronic commerce-enabled website, you might be asked by your local bank to put a $50,000 deposit upfront if you're going to take credit card transactions over the web. Now, for most businesses $50,000, $50 million, it doesn't matter, they don't have that extra cash in the bank. So there are issues like that that need to be dealt with.

Mr. Deepak Obhrai: As this e-commerce increases, as you said it will, do you see challenges coming from nations saying that this is transcending the sovereignty issue because there's free flow now? Is that an issue that is coming up, nations now saying this infringes on their sovereignty jurisdiction? Is that one of the concerns you have?

Ms. Shirley-Ann George: I'm not aware of a country that has formally tabled that, but it is something that every country needs to grapple with. Probably the best example of that is the area of taxation. It's hard to protect your country's rights if you're not able to collect taxes. If you're buying from a company that is located in Europe but whose website is located in the Bahamas and that has one of their servers in Chicago, who gets to collect the taxes on that transaction?

So those are some of the things, and Canada is very much leading some of these discussions. The Minister of National Revenue has issued a very significant publication, which I believe has been translated into 10 or 15 different languages, that discusses those kinds of issues.

• 1135

The Chairman: Thank you.

[Translation]

Mrs. Debien, do you have any questions? We absolutely must finish about 11:35.

Mrs. Maud Debien: I have two short questions.

Most countries are currently reflecting on the regulatory structure of the Internet in particular, especially in terms of content. I am thinking for example of issues related to protecting personal information and so-called unacceptable content. Yesterday we met with an organization that monitors violence in the media. In your opinion, should there be regulations and, if yes, what form should they take?

I have another question for Mr. Barnes and Ms. George, given that they represent large multi-national companies. How can we ensure that developing countries benefit from the advantages of electronic commerce? Do you have any examples of what your companies are doing to facilitate developing countries' access to electronic commerce?

Mr. Peter Barnes: Thank you, Ms. Debien.

In terms of the need for what we might call social regulation concerning content and violence, you probably already know that the CRTC held hearings last year on regulating what it calls new medias, which is primarily the Internet. The Council's decision is expected shortly and we'll hear about it constantly.

Our position was and is that it is probably not necessary to have new regulations specific to the Internet but there must be regulations attached to the Criminal Code or any other legislation to apply to measures or electronic content. In many cases, that is what happens. Adaptation will probably be necessary, but we believe that regulatory or legislative measures must be technology-neutral. If we try to set up a series of regulations or laws adapted to a technology, there will be a new technology in 6 or 18 months and it will be obsolete.

That is why the foundations of generic legislation and regulations related to the substance of an act or non-act are preferable to more specific approaches to a technology.

In terms of the developing countries, I do not have any examples to give you. Unfortunately, my experience is rather domestic. Ms. George might have something to say about this subject.

[English]

Ms. Shirley-Ann George: On the issue of content and things like privacy and illegal content, these are very important issues and very worthy of the public debate they've had to date, and will continue to have. Should there be regulations that don't allow illegal content? Of course. We already have them. It's very important that we give the resources needed to the RCMP and other legal bodies to be able to enforce those regulations.

There are also very active discussions under way within the G-8, so different countries can trade information and be able to enact things like search warrants very quickly.

One of the things that's often forgotten is that if you use the Internet, in almost all cases you will leave what's called an electronic fingerprint. So it's actually easier to track somebody engaged in some illegal activities like pornography on the Internet than it can be going through the mail.

We encourage the Government of Canada to continue to actively pursue all of those who are engaged in these kinds of activities.

• 1140

Privacy Canada is in the process of enacting privacy legislation now that includes the Internet and other activities. Again, that was a very worthy discussion that came about after a lot of interaction between NGOs, business and government.

On how the Internet is helping less developed countries, I'm not an expert in this area, but I know there is significant activity under way. Just to give you one example of technology—not current technology—the fax was very instrumental in a lot of the discussions in China several years ago, when there was a movement for more democracy in that country.

The Internet is widely used by many parts of the country for discussions like that, and it is something the less developed countries are very interested in. Ironically, because we are already so well developed in telecommunications, we have huge infrastructures in land-based systems, while newly developing countries are able to install wireless, which has many advantages over land lines. So some of these developing countries may be able to leap-frog some of our abilities here.

Mr. Eric Iankelevic: If I may just—

The Chairman: You have about 20 seconds. I'm sorry to be abrupt, but—

Mr. Eric Iankelevic: As an active participant in the FTA committee of experts, there are only three developed countries participating in that forum. For developing countries, it's more of an educational forum. We have essentially sent the message that telecom liberalization is key and the rest will follow after that.

The Chairman: Thank you. That's helpful.

Mr. Pickard.

Mr. Jerry Pickard: Looking at the effect Internet commerce is having on small Canadian business in our smaller communities, it would move that commerce to other countries as well. I come from a rural area, and I see small stores being pushed out by larger stores in larger communities. I see the population moving their patterns of purchasing—their patterns of sales vary very greatly. I see e-commerce as a major threat to the existence of business in our rural communities and our smaller communities.

What are you considering to aid or support those smaller communities and their survival? I realize a huge number of people are moving to e-commerce, but there are many who aren't and many who won't. I'm talking about the senior population. I look at this table. We have younger people here than in many of the other groups that have come in. As a result, it is a younger-dominated society that's moving very rapidly.

But that balance of society is required in our rural communities for survival. I'm seeing a concern here that's much like when fibre optics came in. It's a fabulous thing, but have you thought about the loss of those who installed the wires and did the basic work previously? I'm worried about what will happen to the dynamics of the population in general.

I know some businesses will very much profit and very much survive. We have to sort out a lot of things, as you point out, but domestically what's happening? What are you doing to help our domestic markets in small communities, small businesses?

The Chairman: Coming from rural.... Actually, having just become computer literate, I'm feeling like Jerry—left out by all these youngsters.

Mr. Eric Iankelevic: In defence of a younger generation.... On that note, it's interesting, because it's a phenomenon that is taking place for larger corporations as well—trying to reconcile the physical and the virtual. I think that's the key in strategizing.

• 1145

An example would be something I saw on CNN about a week and a half ago about eBay, an on-line auction site. It gave the example of an antiques shop, and I thought it was a brilliant idea. The antiques shop was only successful in moving 400 books over the span of two years, but with eBay it was able to post its entire selection of antique books or collectables on-line. The entrepreneur from a small town in the United States was able to move 900 books in about a month. He was able to attract the traffic and move the books.

I think the key is government assistance. With the government using programs to promote the SME community and a little bit of creativity, e-commerce will really be able to take off in rural parts of Canada. I share the same view you've expressed, but I really think that with education and help from corporations as well on how to do business on the Internet, it could take off. The rural parts of Canada will probably have tremendous benefits, with assistance from corporations, governments, and NGOs.

• 1150

The Chairman: Our job is to make sure people can get access to it. In fact rural areas may get broader markets by virtue of being on it, but we have to make sure they get it.

Mr. Peter Barnes: If I may—

The Chairman: Are you going to train us old fogeys then? What about us?

Mr. Peter Barnes: Frankly, I'm flattered at being grouped with the young. It hasn't happened for a while, so thank you for that.

Hopefully without being accused of wearing rose-coloured glasses, as Eric has pointed out, there's also an opportunity for communities that have been handicapped, maybe because of road systems and traditional distances, in their ability to compete. Now they have a different opportunity, to the extent that state-of-the-art telecommunications facilities are there.

The more the regulatory and investment regimes are liberal and allow companies to go in, compete in your riding, and have the ability to invest, build services and hopefully make a return on that investment, people will begin to see the opportunities. They will acquire services that allow them to put their services on the marketplace. They will probably have a number of distinct and sustainable competitive advantages they wouldn't get out to the marketplace otherwise. It could be marketing a particular brand of mustard.

There was something in the Globe and Mail this morning about a mustard I hadn't heard about until this morning, but it sounded pretty interesting. I'm sure there are things like that in many of your ridings, where people have local products—call them craft products—and if they were known and on the web.... It's easy to find something on the web. You click on mustard and get all the websites that deal with mustard, if that's the example.

So I think there are opportunities as well. Clearly there are threats. We have to make sure we deal with things in a balanced way, but we also have to look at the glass being half full and allowing for new opportunities. There's a need to do some work there. We have to do some work. We have to do some investment and plan to do that, but I also think there are opportunities.

The Chairman: Ms. Augustine.

Ms. Jean Augustine: Thank you. My question, Mr. Chairman, is to Mr. Barnes.

I've been sitting here, in light of Madam Debien's question, trying to figure out page 8—that listing at the back. I wonder if you could just take a minute and go through this in terms of why the country's a group. Is there something historic there? Is it the wire-line facilities or the wireless versus whatever? Could you give us a little bit of an explanation?

Mr. Peter Barnes: I'd be pleased to. The far left column obviously needs little explanation. It's basically no restrictions. You could decide you wanted to invest in a telephone company in Chile. You could buy the wire-line or wireless company there, 20% of it or 40% of it. We just saw, for example, Bell BCI in a consortium in Brazil, purchasing or getting a licence in Brazil. As you move across the spectrum to the right, there are historical reasons and some technology reasons. Some of the historical reasons have to do with government ownership of telecommunications companies.

• 1155

In Europe, for example, most of the telecommunications companies for the longest time had been PTTs, post and telecommunications and telephone companies. That's changed. They are being more and more privatized. In some cases what governments have decided to do is to maintain a share—in the case of New Zealand, for example, what they call a kiwi share—where the government holds a particular share in the company, which gives it a form of control.

Other countries, for example Germany and most of the European nations, have said have it wide open. And the Deutsche Telekom Telecom Italia merger is a signal of that, because you'll have those two countries if the merger goes through investing in each other's country. France is a bit different because of the privatization debate there. In the case of Canada, the restrictions are that non-Canadians can own 20% of a telecommunications company, wireless or wire-line, at the operating company and 33 1/3% at the holding company level. So that's the indirect ownership, and there is a prohibition against control by non-Canadians.

So there's the spectrum. Frankly, in our view, unfortunately Canada is at the wrong end of the spectrum. I think we all know that capital is fleet of foot and will go where it is most welcome, and I think Canada is missing out on some opportunities.

Ms. Jean Augustine: Thank you, Mr. Chairman.

The Chairman: Thank you.

I have a question on e-mail. Why is it that the most unsolicited e-mail one gets is pornography solicitation, and they dump it in there at a great rate? And why are there other unsolicited solicitations? Is there some effort in the industry to control unsolicited e-mail and other forms of electronic commerce solicitations, which in my view are going to break the system?

I can barely use my e-mail now to get through to my legitimate messages because I'm totally clogged by a brunch of crap that somebody fires off by some magic machine that you guys have invented. They've managed to turn what was a useful tool into a totally unusable thing because it's being drowned by people trying to make money out of it, and unreasonably so. What are you going to do about that, the pollution of your system? What should we do about it? Can we legislate it? We obviously have to have international legislation, but how can we deal with it?

Ms. Shirley-Ann George: Part of what you're talking about is called spamming, where somebody sends an e-mail out to 100,000 or 100 million e-mail addresses all at once. There are discussions about this at the WIPO to try to build some international policies around that. It's also something that is being taken to court in the U.S. There have been successful pursuits against some individuals who engage in this kind of activity.

It is a problem, a growing problem, and something about which the industry is actively working toward some resolution.

The Chairman: Because it will destroy it if it doesn't.

Ms. Shirley-Ann George: It's a problem.

The Chairman: Yes.

Ms. Shirley-Ann George: There are also systems you can put in place that will take some of this stuff out so it never shows up.

The Chairman: Send me the list of those.

Thank you very much. We appreciate your coming. I'm sorry to be so brief, but we have another important presentation from the environmental association.

Mr. Peter Barnes: Thank you.

The Chairman: I'd like to ask Ms. Elwell and Mr. Swenarchuk to come up.

Thank you very much for coming, everyone. It was very interesting and helpful.

• 1200

We have to get going on our fourth panel. We have the Canadian Environmental Law Association and the Sierra Club of Canada with us. I understand both of you will be presenting again in Ottawa on the FTAA. You'll be presenting on the FTAA as well. So that's good.

I'll ask if the Canadian Environment Law Association would go first, and then we'll go to the Sierra Club. Thank you for coming.

Ms. Michelle Swenarchuk (Director of International Programs and Counsel, Canadian Environmental Law Association): Thank you, Mr. Chairman.

I've provided you with two briefs. I don't know that I'm going to have a significant amount of time to talk about either, actually, but perhaps you can refer to them later. The first one has to do with an overview of what Canadian trade policy has consisted of on the environmental front at the WTO, and I'll speak to that. The second one has to do with liberalized investment.

The reason we're bringing this to you is of course because of the various proposals around the world to move an investment discussion to the WTO, it having failed at the OECD. This brief on investment is one I prepared last week and presented in Miami to the FTAA investment negotiators, who were all meeting in Miami at that time. I would like to draw to your attention what it consists of, because I do think the possibility of an investment chapter issue is one that is also in front of you with regard to WTO.

What I did in the brief was summarize at the beginning the various chapter 11 expropriation claims that have been filed against Canada and Mexico to demonstrate to the negotiators that the expropriation wording in chapter 11 of NAFTA, which would have been essentially replicated in the MAI, is actually very dangerous for governments, and Canada leads the world now in seeing how dangerous that wording is with regard to the cases that have been filed against Canada. So the first part of that paper is a review of some of those most significant cases.

The second part of the paper is a summary of assessments now made by governments in different parts of the world about the proposed MAI, particularly the investor state suit issue. I summarized it to demonstrate to the negotiators coming from FTAA countries that various governments in the world have demonstrated concern about the possible impact of investor state suits. Of course my fundamental message to them is don't negotiate this kind of clause. Let's not make it broader. And I would repeat that plea with regard to WTO.

That part of the paper quotes from the European Parliament in its MAI resolution; the Government of France and the Prime Minister of France; then Jan Huner, a Dutch diplomat and public servant who was the secretary to the chairman of the OECD negotiating group; then the Government of British Columbia, its special MAI committee, which commented also and made recommendations in relation to investor state suits; and finally, our government, the Canadian federal government, which as you know is currently attempting to limit the scope of the investor state lawsuits by negotiating an interpretive note with the U.S. and Mexico. Those negotiations appear not to be heading toward success. By the way, I'm a member of an advisory committee to DFAIT with regard to that process.

If in fact, as looks likely, Ottawa cannot curtail the impact of the investor state suit, that becomes another cautionary note for future negotiators. Let's not sign this kind of flawed agreement, because it's very hard to get rid of later.

• 1205

I'm lurching through thousands of pages of agreements and dispute settlement panels and ten years of history.

The Chairman: You're doing a good job.

Ms. Michelle Swenarchuk: With regard to the World Trade Organization and Canadian environmental policy, I've called the brief “Only Dollars Matter”, because I think that does summarize DFAIT's approach to the environment at the WTO.

As some of us have been saying for ten years now, one of the essential elements of free trade agreements is putting barriers up to regulation, and this has included barriers to environmental and health regulation. I've provided you with details of where those barriers are in the WTO agreement, which is the technical barriers to trade chapter and the sanitary and phytosanitary standards chapter, and also in the intellectual property chapter. I then reviewed how the WTO has treated the environment, which is to say, in brief, that no dispute panel adjudicating a challenge to any country's domestic environmental legislation has upheld the legislation. In every case, legislation has been found incompatible with the GATT.

I then review how Canadian diplomats have been active at Geneva in the WTO committees with regard to the environment. My conclusion is that since the WTO was established, Canadian trade policy at Geneva has been aggressively anti-environmental in the sense of constantly pursuing in the WTO committee increased economic benefit at the expense of strong environmental regulation in every country of the world. Perhaps worse, that policy was played out very publicly around the world, and I write about this on page six of this brief, with regard to the bio-safety protocol.

Again, I was a member of an advisory committee to DFAIT and Environment Canada with regard to that protocol and I was a member of the Canadian delegation negotiating it at several of the negotiating sessions. To make a very long story short, this was a most important international trade and environment treaty. It dealt explicitly with both issues, because it was to regulate trade in genetically modified organisms for the purpose of protecting biodiversity internationally. At the final session of negotiations in Colombia in February, Canada and five other agricultural countries, in the face of 164 countries that wanted a strong protocol, took such a rigid stance in order to eliminate Canadian commodities from the protocol that no protocol was achieved. This, in my view, was one of our worst international performances. It is very demonstrative of the Canadian government attitude to environment and trade relationships, which is economics dominates.

In conclusion, I've commended the government for this opening of trade policy review to parliamentarians. I think that's long overdue. I must say it's a bit comical sometimes dealing with DFAIT officials on consultation processes, because they're so new to it, but I'm sure you'll help educate them on that. I do hope this is the beginning of what will be a real opening of the window on trade policy in Canada, because it is largely devised in private with industry. Essentially, I think it's important to remember that industry has full access, constantly, to trade policy, including in negotiations that are secret to the rest of us, including in dispute panel processes that are secret to the rest of us. So essentially we are here as citizens saying we want the same access that business has.

• 1210

The last thing I've provided for you is a statement from members of international civil society opposing a millennium round, or a new round of comprehensive trade negotiations. This statement, which is the last part of the brief, is updated to April 23, which was five days ago. It has now been endorsed by over 450 organizations around the world that are involved in human rights, social justice, environment, and international development. It represents, I think, a consensus of how civil society critics consider the prospect of a new round of negotiations. I have with me a list of all the groups that have signed that statement, which I'll leave with the clerk. It includes groups on all continents from all parts of the world.

Thank you.

The Chairman: Thank you very much. Thank you for helping us by sort of overflying your presentations. We will have a chance to read them.

Ms. Elwell.

Ms. Christine Elwell (Senior Policy Analyst, Sierra Club of Canada): Thank you very much.

Good morning, and thank you for the opportunity to present to the committee. Elizabeth May, the Sierra Club's executive director, will be making a presentation in Ottawa next week, focusing mainly on FTAA.

My task today is to outline in the short time we have together a number of the issues the Sierra Club of Canada will be taking to Canadians in our work related to the WTO, which have relevance to the NAFTA and the FTAA as well.

To summarize, we are making three main points to the Canadian public. Firstly, no new agreements ought to be negotiated at the upcoming millennium round given the experience in the past five years. This position holds for new rounds on agriculture and services as well as for the built-in agendas, such as intellectual property rights. If decisions are taken otherwise, an independent and comprehensive environmental and social impact assessment, including on culture and rural communities, ought to be undertaken in Canada and at appropriate international institutions well in advance of any draft text of any agreement or other interpretation. Also, I note the members' concerns with regard to rural communities.

Secondly, instead of negotiating new trade commitments, Canadians ought to be engaged in a process that would review the impacts related to trade liberalization since the last round, the Uruguay Round. Before you go off and do new things, let's review what happened in the past.

Most Canadians—and I share the concerns of my colleague, Michelle Swenarchuk—would be shocked to know that the WTO claims to rule that the United States must import shrimp products that unnecessarily kill endangered sea turtles. I note, by the way, that the United States Court of International Trade has ruled that it won't implement that WTO ruling holus-bolus. They're going to have to go back to the U.S. Congress and say stop requiring sea turtle gear on shrimp before the United States is going to implement that decision. So we're really heading into a collision course over that sea turtle decision.

Canadians would be shocked to know that United States and Canadian governments can force-feed Europeans beef products with growth hormones or other genetically modified organisms, such as cooking oils and potatoes. The idea that democratically arrived at legislation could be knocked out by a trade agreement is just shocking to most people. They would also be shocked to know that the Canadian government can bring a complaint against the Government of France for its recent ban on asbestos, a known health hazard.

Canadians would also be shocked to know that its trade delegations are in fact, as Michelle indicated, leading the charge to avoid meaningful labelling so that consumers could choose products based on the process and production methods used to produce that product.

A review of WTO practice over the past five years would indicate the need to ensure environmental protection, as promised in the WTO preamble, at every facet of the WTO's work. Just to highlight a couple of areas, the sanitary and phytosanitary agreement and the technical barriers to trade agreement are particularly in need of assistance with regard to the precautionary approach of risk assessment and labelling.

The practice of tariff escalation is a known barrier to adding local value added to natural resources. It's stacked against them. The tariffs escalate as there is more value added, so for developing countries, Canada included, the natural resources are knocked up because of built-in tariff escalation practice.

• 1215

There's also a need for extra tariff reductions for environmentally friendly goods and services, perhaps as an incentive for compliance with multilateral or other environmental agreements.

There is also the dispute settlement process. Despite the promises of improvements made at Rio and at the Uruguay Round, the WTO continues to rule in secret against every trade restriction ever found in any environmental or public health legislation ever subject to GATT or WTO complaints. Not one, sirs and madams, has survived.

The general exceptions in article XX of the GATT and the level of environmental sensitivity when balancing the public interest in these disputes are clearly inadequate. Current offers by the WTO with regard to better notice of complaints and the earlier release of documents are just not enough to ensure adequate expertise. International intergovernmental organizations, such as UNEP or the WHO, as well as interested parliamentarians and NGOs, ought to be able to intervene in significant environment-related trade disputes.

We'll be telling Canadians that a review of the Uruguay Round before embarking upon any new commitments would also reveal the unfinished business at the WTO of linking trade liberalization with environmental protection, respect for workers, and other fundamental human rights. This committee endorsed and the Canadian government agreed with other WTO members that a committee on labour standards be struck. No progress has been made despite the 1996 world social summit observation that unsustainable production and consumption practices aggravate world poverty.

In terms of prescriptions, the Sierra Club of Canada, together with other individuals and groups, is actively campaigning that the WTO practice and negotiating process be opened up to public scrutiny and debate. Unlike the position taken yesterday by the Centre for International Studies at the University of Toronto, which was represented by John Kirton and Julie Soloway, the solution is not to just model the NAFTA environmental and labour side agreements for global or regional application. We're still developing views on the benefits of say a world environmental organization or a parliamentary assembly to the WTO or the OAS in order to counterbalance and better inform trade delegations of their environmental and social responsibilities.

But we know what we don't want. That's often easier, isn't it? We know we don't want a NAFTA-style investor regime imposed on members of the WTO.

The Sierra Club and three other national organizations in Canada were required to ask the CEC, the Commission for Environmental Cooperation, to hold a public inquiry, under article 10(6) of the environmental side agreement, into these recent investor disputes concerning S.D. Myers, Sun Belt Water, and now Pope & Talbot, which purport to claim gazillions of dollars to protect and ensure Canadian legislation regarding hazardous waste, water export bans, and quotas for softwood lumber products.

To conclude, we acknowledge the challenge this committee has in developing its recommendations for the Canadian government position at the upcoming ministerial in Seattle. We look forward to working with you and your staff to provide you with additional information about the Canadian government's role in the trade and environment disputes and how parliamentarians can play a much needed role in ensuring a type of global governance regime that will strike a better balance between trade liberalization and environmental protection. The urgency of our work is quite apparent.

Thank you.

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

We'll go quickly to questions.

• 1220

Mr. Deepak Obhrai: Thank you very much for your presentation and for coming here.

In the brief you presented it is quite clear that we do have some problems, and it is a good research document. But I would like to go to your last paragraph, where you said that you are looking forward to working with the Canadian government, which to me is the right approach. You have identified problems on one side, but you're calling for a stop of this negotiation. I would think that you would probably call for the balanced approach. On one side these are the problems they need to tackle. We just heard about the advent of e-commerce coming up into the world, that it needs to addressed. By the year 2000 it will be, they said, $1 trillion. So you have things moving ahead on one side. So why would you not say at this given time, yes, we have these negotiations going on, and according to your point of view there are deficits, which you've stated, so we should address the deficits but carry on?

• 1225

Ms. Christine Elwell: Thank you. I would indicate that you should use the moment of the leverage that you have in terms of giving industry what it wants at the WTO to strike that better balance. If you're going to enter into negotiations on e-commerce, maybe that's the time to raise the issue about other sorts of ways, meaning that you have to use the levers you have.

Mr. Deepak Obhrai: In your group, is anybody really opposed to the WTO—they don't want it?

Ms. Michelle Swenarchuk: Who are you asking?

Mr. Deepak Obhrai: Both of you.

Ms. Michelle Swenarchuk: The WTO is not the issue. The trade rules are the issue. The WTO is simply the institution in which the trade rules are played out, negotiated and adjudicated. Does my organization support the trade rules as they currently exist? No.

With regard to your earlier question, what the NGO statement is saying is no further negotiations until the full impact of the last round of negotiations has been assessed for its full social, economic, and environmental impact. Once we know what the advantages and disadvantages are that have flowed through those agreements, we'll be in a better position to think about what changes might be necessary in trade rules in the future.

No one pretends that the trade regime is going to be static and nothing is ever going to change in it. But what happened in 1994 was a very large comprehensive expansion of the trade regime rules that had existed before, and five years later it seems quite appropriate to assess those impacts before simply rolling ahead in the same fashion.

Ms. Christine Elwell: That summarizes our view as well.

The Chairman: Stand still for the moment.

Ms. Michelle Swenarchuk: Stand still.

Ms. Christine Elwell: Assess where you are first.

[Translation]

The Chairman: Mrs. Debien, do you have any questions?

Mrs. Maud Debien: Thank you very much for your presentation. We have met with many organizations from civil life that share most of your concerns and your line of questioning about the World Trade Organization and its effects in our communities. I do not have any specific questions. I would just like to give you some information.

In Quebec, the Parti québécois, which formed the government, and the Bloc Québécois joined forces in January to conduct a broad consultation of Quebeckers through conferences, forums and Internet chartrooms to find out what Quebeckers think of the Work Trade Organization and globalization in general, as well as its effects and impacts on Quebec's communities. I invite you to follow these debates. We hope, like you, to be able to contribute positive reflections, solutions and positions on globalization.

[English]

Mr. Bill Blaikie: I'll make a comment or two, and then a question.

I think, Michelle, you were welcoming the hearings, and certainly some hearings are better than no hearings. But I think it would be a mistake, and I'm not suggesting you said this, to think this is something new. I can remember 12 years ago being on this very committee travelling the country hearing from people about the Canada-U.S. Free Trade Agreement, or at that time the elements of the proposed agreement.

• 1230

What's depressing about it is that then there was a lapse where we almost had the MAI without any hearings at all. So I think the lapse in the hearings actually came with the current regime, and they have now picked up on the need for hearings in the middle of the MAI debate when we then got the subcommittee that looked at the MAI.

I would certainly want to agree with your point that there's a great argument to be made for a standstill on assessment. We've been on a steamroller, I think, and I've been here for the whole thing, the FTA and the NAFTA. And we almost had the MAI without any public debate, which would have replicated chapter 11 of the NAFTA with only three or four years experience of chapter 11.

One of the benefits of stopping the MAI is that if in fact there is an investment round, or an investment component of the millennial round, as we say, if your advice isn't taken, we will at least then have had five or six or seven or eight, depending on how long it takes, years' experience with chapter 11. This only makes sense. I think it was madness in the highest degree to come in and say we really don't have a clue how this chapter 11 works, we've only had one or two case studies, but we're going to go ahead and we're going to enshrine it in our relationship with 29 other countries. So I think there is merit in this argument that this is true of elements of the Uruguay Round.

I realize that chapter 11 isn't part of the Uruguay Round, but there's merit in all these things to give these new arrangements some time so that we can look back on them and say that this worked out, this had unintended consequences, etc. I just wanted to reinforce that argument.

Can I ask you a direct question? One of the things I'm being asked as the NDP trade critic is what is the NDP position on the creation of a WEO, a world environmental organization. If you've already pronounced on this and I've missed it, I apologize, but do you have a formal position on the creation of a world environmental organization, presumably something that would have more teeth than the ILO, something that would have some genuine power? I wonder if you've given any thought to that question and what your thoughts have been.

Ms. Michelle Swenarchuk: This is not a simple question. Actually, it is for me a simple question, but it's actually complex.

What my paper argues is that the Canadian government, for example, is aggressively single-minded in trade policy. It pursues economic interests virtually exclusively in trade policy, and what the WTO enshrines is that kind of approach to trade policy.

Mr. Bill Blaikie: That mentality, yes.

Ms. Michelle Swenarchuk: So the fundamental question about a world environmental organization is a political question. What reason is there to think that the same governments around the world that have created this very powerful economic trade institution, the WTO, have the political will to set up a powerful alternative to it, whether environmental or labour?

I see absolutely no possibility that a world environmental organization could be of sufficient strength to make an appreciable difference in economic relations globally. We have a number of important international environmental treaties and secretariats, most of them affiliated with the United Nations—we have the United Nations Environment Programme—and somehow they aren't very strong. We have the NAFTA side agreement and commission, which in my view is not strong at all, and never was designed to be. And by the way, some of the promoters of the so-called world environmental organization were also the promoters of the NAFTA side agreement and commission. So I simply don't think this is a political reality.

• 1235

I think also it's important to recall that to establish a new international organization of any variety is a very major undertaking of negotiation and resource allocation and all of that.

If governments now are more interested in environmental protection than international relations would suggest, I think there are other strategies for making it effective. The first and most important thing in my mind would be to put some teeth into action on climate change. The change to the climate is something I fear tremendously. I think it is a legacy we're leaving for our children that is unconscionable and extremely destructive to the planet. So let's see some real action on the international instruments that are there.

Another one is the convention for the protection of biological diversity. There has been very little action on that extremely urgent problem. There's fisheries depletion, forest depletion—a tremendous array of environmental crises on which there's very little efficient government action.

I think if we could see a turnaround in the international global community, starting with our own government, in relation to these important environmental issues, then I might think that perhaps we're on our way to an environmental organization globally that will actually have some power and be able to deliver. I don't think we're anywhere down that road at this time.

Mr. Bill Blaikie: In other words, this might just be a diversion of resources, as well as....

Ms. Michelle Swenarchuk: Yes.

Ms. Christine Elwell: May I just comment? I had the pleasure of attending the WTO trade and environment symposium at Geneva last month, where a number of environmental NGO groups met with people from UNEP and other international intergovernmental agencies. There's discussion—I wouldn't say there's a consensus—on what people's views are on the merits of a WEO.

What's apparent to everyone, however, is the need to at least consolidate the expertise that's scattered all over the place, either in UNEP secretariats, in FAO, or in WHO. They're all over the place, and they're not plugging in their expertise well enough to be able to focus it to a trade complaint. So there's a disconnect. At minimum, we need better coordination.

The Chairman: Mr. Pickard.

Mr. Jerry Pickard: I find your presentation and your goals quite admirable. There's no question that we have to digest what's happened before we can move on. I think that's what you're suggesting, clearly, without equivocation.

One of the difficulties I see is that we have competing interests, as you say, and we have been focusing very much on our trade, our ability to trade with other nations. You're not the only group, there have been many, to come forth in the last couple of days suggesting that possibly the results that have been suggested aren't as positive as one might think. At this point in time, I guess I'm having a little difficulty myself thinking about where we should go as the Canadian government when it's not just a domestic problem for Canada; it's a world problem, and there's a track that most of the countries of the world are following.

Now, how do we negate the fact that this path is being followed by most countries, our major trading partners, and how do we put the brakes on, do the examination that's required, and stay abreast with other countries and competitors? I'm trying to get some grasp of how that can be done.

Ms. Michelle Swenarchuk: First of all, with regard to the idea of assessing the Uruguay Round results before proceeding, I also attended the World Trade Organization symposium on trade and environment. There is discussion in Europe, for sure, about the possibility of assessing impacts of trade agreements. There's even some willingness in the United States, and I think in Ottawa, to assess a projected millennium round afterward. So the idea of saying no, let's assess where we are now before we start the next round, isn't really very radical. I think there are openings around the world to allow that to happen.

• 1240

Secondly, I think trade of course happens, and it's going to continue to go on, whether or not we immediately enter into amendments to the current trade rules. So I think if we consider too the number of economists—prominent ones, and I can provide you with materials on this if you're interested—who take the Asian and Brazilian crises very seriously as an indication that in fact, yes, perhaps liberalization has gone too far, too fast, and we need to be looking at new strategies with regard to investment and trade to prevent these kinds of collapses, which in fact have had devastating impact on tens of millions of people around the world, I think there are openings there to simply slow down and assess, with full public participation, before going on. I think it would be a tremendous contribution to world international relations if Canada added its voice as an advocate of that kind of assessment before simply moving on to the next round.

Mr. Jerry Pickard: Can I just ask one further question? With regard to article 11—

Ms. Michelle Swenarchuk: Chapter 11 of NAFTA, yes.

Mr. Jerry Pickard: —we have heard a raft of criticism, and particularly focused on the MMT issue, but there are others, where governments in fact—and you have presented several cases in your brief—are losing sovereignty over issues they feel are very important, in particular the environment. How do we handle that type of arrangement? What's your suggestion?

Ms. Michelle Swenarchuk: Don't put an investor state right in any future agreements. Don't put it at the WTO. Do whatever is possible to curtail it in NAFTA. Don't put it in the FTAA, and stop signing bilateral agreements with countries in which Canada imposes its wording on other countries.

Mr. Jerry Pickard: Since we have chapter 11 in existence, do you think we can remove it?

Ms. Michelle Swenarchuk: I think we're getting a good hard lesson in U.S. trade policy with regard to negotiations on chapter 11 with them. I think the U.S. is not going to budge. But we have other fora in which Canada has been promoting chapter 11 type of wording, such as in the MAI, in moving an MAI discussion to the WTO, in the FTAA and in bilateral agreements. In all of those areas we have the room to say no, we're not going to do this. And let's keep trying to do what we can with the U.S. and Mexico. Let's just not repeat the mistake.

If you look at the quotes I've taken from other governments in the paper, it's clear that other governments learn from our mistakes. Let's take the lesson to heart ourselves.

Mr. Jerry Pickard: Thank you.

Ms. Christine Elwell: I have a quick response to that.

The Chairman: Very quick.

Ms. Christine Elwell: In terms of assessing the results, I think we know what the issues are. I don't think it would be a mammoth task to sit down with a short list and really get at the busy work of trying to come up with solutions.

I think you should know, sir, that the whole WTO community is not moving to—as Michelle said—an anti-environment stand. You should know what the Canadian trade delegation's like at these forums. Maybe if there were a parliamentary assembly you would become more aware of the positions we take internationally, and maybe you'd be able to modify that.

Finally, with respect to chapter 11, I think you'll find it's not possible to carve it out. If you were to have a clause that narrowed the definition of expropriation so that it doesn't include general government regulations, I think you'd find that won't work. We've tried to carve out culture. We've tried to carve out lots of different things, and it just somehow doesn't work.

So I endorse what Michelle says: let's at least stop repeating the problem and then try to get rid of these cases, the few that have cropped up, and not entertain any more of them.

The Chairman: Ms. Augustine.

• 1245

Ms. Jean Augustine: Mr. Chairman, I remember a story that was told to us when I was in about standard one. There was a cat that was eating up all of the mice in the neighbourhood. The mice had a great big meeting, and they said we have to get rid of the cat. So they strategized and strategized, and eventually someone came up with this great idea that the best thing to do is put a bell around the neck of the cat, so whenever the cat is going to come around all of the mice will hear and scamper away. And then one wise old mouse asked the question: “And who will bell the cat?”

So I want to ask, who will do that review? I liked the proposal that 450 groups have signed on to, but where is this going to be done? Where is this assessment? Who assesses? Would it be within national borders? Would it be some kind of international...? Who would do the assessment, and how do you see this happening?

Ms. Michelle Swenarchuk: It's really an interesting prospect. The Canadian government has done what it described as assessment of both NAFTA and I think the FTAA. Most of us didn't agree that they were very profound assessments. Within Europe for some time now people at the commission have been working on a methodology for assessing the impacts of trade agreements. Actually, various institutions around the world have been working on such methodologies.

So I think it would be a matter of engaging, perhaps through the UN, an organization that would take a kind of overall supervisory role. But I also think that countries, including Canada, should be doing frank assessments, including not just economic interests but all the rest of us who have something to contribute to such assessments. That's fundamental to the way we do environmental assessment here. We provide the right to all parties, all individuals and interests affected by a proposed project to be heard on the subject. And I think that's what we need to do with regard to trade assessment as well.

The Chairman: Thank you very much, both of you. That was very helpful. And we will read the briefs, because we agree they're very important. As I say, for the FTAA I gather you'll be looking at this in more detail as it respects them. We appreciate that too.

We're adjourned until one o'clock, members. We'll have a quick lunch and then be back.

• 1248

• 1344

The Chairman: Order.

Thank you very much for coming, everyone. I won't give you the spiel on what we're doing. I think everyone around this table knows the purpose of the committee hearings.

Although a couple of our members are absent, I'm going to start. They'll be in shortly.

As the clerk put it to me, this panel just grew like Topsy. We don't normally try to squeeze nine presenters into one hour-and-a-half session. If you can perhaps keep your presentations to five minutes each, well, you can figure it out; it will leave us some time for questions. We always slip a bit over, but we may not have much time for questions.

• 1345

I'm going to take presenters in the order in which they're on our agenda, and would ask the Canadian Publishers' Council to please proceed.

Ms. Jacqueline Hushion (Executive Director, Canadian Publishers' Council): Good afternoon, and thank you very much for inviting our council to share members' views on the priorities of the Canadian agenda in the upcoming WTO round and in other trade negotiations. It is in our mutual interest to collaborate on policy objectives that will truly boost Canadian culture and publishing within Canada and internationally.

We were founded as an association in 1910. Our members are owned in both Canada and internationally. They all publish here for Canadians.

In 1998 our members published 1,502 new Canadian titles. They were fairly evenly distributed across fiction, non-fiction, works of reference, and textbooks.

In 1998 our members spent $48 million in Canada to manufacture their books, and they paid in royalties to Canadian writers $23.6 million. That's indicative of their contribution, and certainly of their sales.

The success story of Canadian publishing and Canadian authorship is, as we all know, now legendary. One of every two consumers will choose or favour Canadian authorship. In educational publishing, original Canadian textbooks account for more than 85% of all school textbook purchases, and more than 30% of all purchases at colleges and universities.

The better we do, the more attention we are paid, and the more attractive a piece of our market becomes. We will therefore need to manage our international trading relationships very carefully. We have no intention of hiding our light under a bushel to avoid the watchful eyes of our trading partners. Our export success has made huge news, and we need to continue to reach into foreign markets and to be welcomed in them.

At the same time, we must be vigilant about the integrity of this market, our market. Its intactness is challenged by myriad forces today, many of which are backed by new technologies.

Copyright, once the poor cousin of patents and trademarks, is today king of the hill, and information is the most precious commodity in this knowledge-based economy. Considerations about intellectual property regimes and trade agreements in 1999 are inextricably connected, and we submit that they will ever be so.

Split-run editions and Bill C-55; the negative decision on the entry of Borders bookstores and recent stirrings by Borders in the U.S. trade representative's office; the increasing incursion into Canada by foreign-based lease operators of campus stores; the risks to our industry when international on-line book retailers sell competitive and in fact illegal editions into this discrete market—all those and more tell us why we must be diligent. They tell us why the time has come, perhaps, for a separate and discrete instrument of trade that deals only with culture within the context of trade obligations. That concept really began to find its level during the debate on the multilateral agreement on investment.

A few years ago, this committee's esteemed chair, Bill Graham, spoke to our membership's annual meeting. He cautioned us that where we were outside international treaties as a result of exceptions, we had no recourse under the same treaties should we want to dispute our treatment in a member country. It couldn't have been more clear. Exceptions for culture also make us subject to retaliation in other areas, and subject to capriciousness.

• 1350

Copyright is the bedrock of our industry. Those who once thought it to be an arcane legal exercise, replete with incomprehensible contracts, today find it to be the practical core of their business. No amount of subsidy, no amount of benevolent taxation, and no amount of investment policy will, in and of themselves, successfully underpin publishing unless our domestic copyright statutes are current and we are party to modern, international treaties.

Canada played a key role in building and shaping the global consensus regarding intellectual property standards and provisions for enforcement during negotiations that preceded the WTO agreement, known as TRIPS, or trade-related aspects of intellectual property rights. Canada has lot its stride. The European Union has adopted a database directive on sui generis protection. That protection is available only to those who provide a reciprocal level of protection. We do not.

Database bill HR 354 is currently making its way through the U.S. Congress. We are nowhere near a database bill. The World Intellectual Property Organization's digital copyright treaty passed 18 months ago. The U.S. passed the Digital Millennium Copyright Act in 1998 to implement the treaty. The EC is moving to harmonize its statutes.

Canada must regain its lead. Whatever the format of the publication—book or database—and whatever the medium of distribution—satellite or cardboard carton—Canada must ensure compensation for the use of Canadians' intellectual property in a global, knowledge-based, trading world. We need to devise and secure strategies that safeguard intellectual property and cultural industries and that are consistent with international treaties while allowing us to promote our diversity and our identity.

Thank you.

The Chairman: Thank you very much. You're absolutely right on the mark in terms of time and right on the mark in terms of the remarks.

Ms. Jacqueline Hushion: Thank you.

The Chairman: We now would like to go to Mr. McCabe.

Mr. Michael McCabe (President and Chief Executive Officer, Canadian Association of Broadcasters): I'm here.

The Chairman: You're experienced at appearing before parliamentary committees.

Mr. Michael McCabe: It doesn't mean I'll do any better than anybody else.

The Chairman: Well, we're watching you.

Mr. Michael McCabe: Thank you very much, Mr. Chair and members of the committee.

As the chair has said, my name is Michael McCabe. I'm president and CEO of the Canadian Association of Broadcasters. I'm joined today by Glenn O'Farrell, vice-president of legal and regulatory affairs for the Global Television Network and member of the CAB trade issues committee.

The CAB represents the majority of Canadian programming services, including private television and radio stations, networks, and specialty television services. Canada's private broadcasting industry represents a $2.8-billion-a-year sector, one that supports more than 30,000 direct and indirect knowledge-based jobs in the Canadian economy.

We'd like to begin by thanking the standing committee for the opportunity to participate in this consultation process. In our short time before the committee this afternoon, we hope to provide you with some insight into the following three areas: one, raising the awareness of what Canada's private broadcasters are doing on the international stage; two, the challenges and opportunities our industry faces in the WTO and the FTAA; and three, the need for a new cultural instrument for trade.

Glenn.

[Translation]

Mr. Glenn O'Farrell (Vice-President, Canadian Association of Broadcasters): Canada's private broadcasters are making their presence felt throughout the world. At first glance, many will undoubtedly think that it is our personal interest that has prompted us to look at the issues of foreign trade. Cultural industries are too often seen as being a strictly national sector. In reality, the radio and television sector will not in any way be able to maintain a national presence unless it adopts an international perspective.

Canada's private broadcasters have taken strong measures to get a foot in the door internationally in three distinct fields: first, exports of Canadian programming, second, foreign investment, and finally transfers of information and expertise.

Canadian producers, distributors and broadcasters have built up a solid reputation around the world for quality programming for children, news, documentaries and dramas. Despite certain domestic restrictions that prevent broadcasters from fully pursuing production and distribution, broadcasters like CHUM Limited have found ways to supply shows like Fashion Television and Movie Television to dozens of countries around the world. Similarly, firms like TVA International are participating in several international co-productions with broadcasters from Europe and the United States, among others.

• 1355

[English]

With the proper trade promotional support and the necessary access to foreign markets, this is a sector in which there is significant potential for growth, as the world demand for television programming continues to expand at an unprecedented pace.

The second area, direct foreign investment, has been led by companies like CanWest Global. What began as a local independent station 30 years ago in Winnipeg is now an international broadcasting and programming network stretching from Australia to the U.K. For many broadcasters like ourselves at CanWest, issues of foreign investment weigh heavily on expansion opportunities.

The third area, information transfer, has been pioneered by CHUM International. They have formed alliances internationally with other broadcasters and cable operators to deliver the concept and branding for local television stations like City TV.

While these three approaches to international expansion are quite different, they are part of the strategies of many of Canada's leading broadcasters to leverage domestic success into success in other markets. This enables them to strengthen their corporate position and reinforce their contribution to domestic cultural goals.

In short, Canada's broadcasters are not afraid of international competition. However, we submit that there is an important difference between creating an environment for success and trade liberalization that does not allow nations the ability to build and sustain their domestic cultural industries.

Ultimately, broadcasters have four main objectives for the upcoming negotiations. First is that broadcasting be considered a significant growth sector that cannot be a potential trade-off against safeguards for more traditional industries. Second is that we move toward a more equitable trade environment that ensures market access and investment opportunities. Third is that Canada maintain its ability to direct its own cultural policies. Fourth is that the results will provide for a stable business environment that clearly defines cultural mechanisms.

Our domestic broadcasting sector has been built on a delicate balance of key public policy initiatives that include regulatory policy, tax policy, copyright and intellectual property policy. Any trade negotiation that deals with the services sector will inevitably lead to discussions on telecommunications, e-commerce and broadcasting.

Canada's private broadcasters see both opportunities and concerns in these discussions. Potential concerns include a definition of broadcasting that would focus narrowly on conventional broadcasters; an erosion of domestic control on taxation and other policies; the need to ensure the continued protection of rights holders through a mechanism like simultaneous substitution; and the provision for the means to defend against grey-market satellite services.

Potential opportunities for broadcasters include a review of the foreign investment rules, resulting in reciprocal levels of acceptable foreign investment in other countries; a better balance between the European model and the more appropriate market-based North American model of copyright and intellectual property policy; and more open-market policies for products and services.

The CAB recommends a comprehensive review of the entire cultural sector, with the objective of producing an industrial policy for cultural industries. In this context, we endorse the broad principles behind the recommendation of SAGIT to develop a new cultural instrument for trade. We believe that cultural and trade policies need not operate at cross-purposes. We believe there should be active exploration of the idea of a new international cultural instrument, which was the strongest recommendation coming out of the SAGIT.

The SAGIT report states that this instrument would lay out the ground rules for cultural policies and trade, and allow Canada and other countries to maintain policies that promote their cultural industries. The report goes on to say that this instrument would seek to develop an international consensus on the responsibility, to encourage indigenous cultural expression, and on a need for regulatory and other measures, to promote cultural and linguistic diversity.

The platform of this instrument remains an important issue. We believe the WTO may be the forum that is preferable to the UN. The development of such an instrument should take place in the context of the WTO because ultimately the results of the WTO negotiations will impact on Canadian cultural industries.

While activity in other fora may result in constructive discussions about the need to preserve national identities, we are concerned that these discussions may not lead to an effective means to address the challenges that face Canada's cultural industries.

In conclusion, Canada must play a leadership role to encourage other countries to sustain and strengthen the support systems for indigenous programming. We believe the idea of a new cultural instrument, different from the broad cultural exemption we currently have in the NAFTA, needs further urgent exploration and refinement. We also believe such a new cultural instrument must be lodged in the international organization where it can most effectively deal with our cultural interests.

• 1400

Ultimately, this instrument must include: one, a clear, inclusive definition of broadcasting that does not jeopardize our domestic regulatory model; two, equitable access to foreign markets; three, an ability to set domestic content requirements; four, flexibility of the Government of Canada to provide incentive programs to the cultural sector; five, a provision for equitable copyright and intellectual property legislation; and six, provisions for taking into account the impact and the effectiveness of cultural incentive programs and content regulations on the decisions made at the international and/or regional level about convergence, new media, and electronic commerce. As the government prepares for negotiations, we look forward to ongoing participation in the consultation.

We thank you for the opportunity to appear before you.

The Chairman: Thank you very much for a very helpful brief.

We'll now turn to Mr. Peter Grant, who must know something about the SAGIT report.

Mr. Peter S. Grant (Senior Partner, McCarthy Tétreault, Barristers and Solicitors): Good afternoon, Mr. Chairman and members of the committee.

I very much appreciate your invitation to appear. I head up the communications and entertainment group at McCarthy Tétreault. In that capacity, over the years, I've acted in one way or another for most of the Canadian-owned cultural industries, including the Canadian magazine sector, the Canadian music industry, Canadian broadcasters and distribution undertakings, Canadian book publishers, and Canadian producers and creators of film and television programs. In the course of my work, I've also chaired or co-chaired a number of task forces and studies of cultural policy.

I am a member of the cultural industry's SAGIT and had a hand in drafting the report, which was issued in February 1999. Of course, I fully endorse the recommendations set out in the report. In particular, I'm very supportive of the idea of a new international instrument on cultural diversity. I think this is an idea whose time has come in international circles and one that has the potential to allow the discussion of issues of culture and trade to involve a wider political community and not be determined entirely by trade principles developed for conventional goods and services.

We need to involve a wider community in addressing cultural issues because these issues go far beyond conventional trade questions. By developing and promoting a separate instrument on these matters, Canada can involve culture ministers and the cultural industries worldwide to get a consensus behind the notion that cultural goods and services are significantly different from other products and that structural measures to support cultural and linguistic diversity should be permitted under our trading arrangements.

The new international instrument could be, and in my view should be, pursued outside the WTO process, but at the same time, and as a second track, it would make sense for Canada to seek to create a negotiating group on culture within WTO to ensure that the issues are properly taken into account in future trade negotiations. We are well aware that Canada is under pressure from our friends to the south to freeze, or even roll back, the cultural industry's exemption it obtained in NAFTA. In the Uruguay Round, however, Canada found common cause with the members of the European community and successfully resisted any rollback of protection measures for domestic content in the audiovisual field.

There is an increasing recognition among most of our major trading partners, other than the U.S., that particularly in the audiovisual field there must be special regulatory and support measures for indigenous programming or that programming will tend to be displaced by programming created for and amortized over the U.S. market, not because the U.S. programming is necessarily more popular, but simply because it is cheaper to acquire.

As more of the world's broadcasting systems become privately owned, rather than publicly financed, and as satellite broadcasting increasingly spills over international boundaries, the economic pressures to focus on programming from the U.S. will increase. It will be the task and the challenge for national broadcasting systems like Canada's to continue to ensure, in the name of cultural diversity and autonomy, that the ideas and stories of the people to whom broadcasting is transmitted will be given pride of place on their own broadcasting systems.

As a country, Canada shares these concerns with many other countries. We are not alone. But what we need is the galvanizing force of a new international initiative to bring groups together from around the world to talk about these issues and focus on the importance of maintaining and enhancing cultural diversity. Thank you very much.

The Chairman: Thank you very much, Mr. Grant. I didn't know a lawyer could be that succinct. I won't ask what client is paying for this. Thank you.

• 1410

Mr. Stoddart.

Mr. Jack Stoddart (President, Association of Canadian Publishers): Mr. Chair and committee, we thank you for inviting us today.

I'm Jack Stoddart, the president of the Association of Canadian Publishers, and in my spare time, I guess, a publisher, but the association seems to be dominating these days with all the issues on the table.

The presentation has been distributed to you. Rather than go through it in detail, I would rather talk about some issues, if I might, and ask that you do read the presentation at your leisure. I think perhaps we could get to more specific points.

Intellectual property and the industries that go with it are in essence an awful lot of what the 21st century is going to be about. If this country and other countries around the world believe the control, and in a sense the homogenization, of intellectual properties and culture are what's good for the world, then I would beg to differ. I think the thing that distinguishes Canada as Canada is what our culture is. By culture, I don't mean the arts, I don't mean the opera, the ballet, etc. Those are the arts. The culture is what we are, what we represent, what we think. The vehicles we use to exchange that culture are the communications and some cultural industries such as magazine and book publishing, newspapers, etc., and there is a cross-over.

If we take the position that all these issues are strictly trade and that trade is the bottom line, I think there is no future for an awful lot of the jobs and an awful lot of the ability in this country to stay in this country. If we decide that this country is going to be unique, as is Britain, as is France, as is Germany, and not just let a common language unite us in one big culture of North America, or around the world in a bigger sense, then we've got to find the vehicles to address that question.

I think it's very timely that this discussion is going on. Clearly the WTO can have a role in this. As others have said well before me and I'm sure will say afterwards, there may be a vehicle within the WTO that is very cultural and communications-based to help in the development of the policies and the vehicles for ensuring that the countries stay as countries and not as part of one large whole that loses its shape. If we don't do that, if we don't find some vehicle within our own government and our government policies to protect and to encourage the uniqueness of this country, I don't think there will be a uniqueness in this country. That is what this is all about.

Sure, there are people on both sides of the ledger. There are battlegrounds; there's a real war going on. You look at Bill C-55 and see all the high-powered help that's going into it, the money that's being spent. The battle is on, there's no question about it, and in a battle it's very nice for us Canadians to be very polite and say, well, we'll do it our way and whatever. I think Canada and the trade negotiators have to understand that if we don't fight just as hard as everybody else and get it focused in such a way that we've got a vehicle for taking this battle forward, I really suspect we are not going to come out on the right side of the ledger.

Book publishing is a small industry in some ways. It's only $2 billion a year, and in the context of the whole country that's not a whole lot. Magazines aren't that big, etc. But when you look at how the artists, writers, and producers of this country have gone out and not only filled our shelves with books and magazines across the country, but in many cases have exported them very successfully...we've built a literature out there that people want to read. That doesn't happen externally; that happens internally. There's been a huge building job in the last 25 to 50 years.

• 1415

It can happen with international companies and it can happen with Canadian-owned companies, but at the end of the day the policies and structures that have to be developed surely have to come from within Canada, with a strong position of protectionism. I know it's an out-of-fashion word. It's something people don't want to talk about; they don't feel it's correct. But if we don't protect our culture, who will?

I don't have the answers, and I don't think anybody at this table does. I think they will develop over the next one to five years. But if we go into the WTO round as a trade debate from the culture and communications industry, I really feel we will lose.

I hope the sense of direction out of these meetings and the ones in the future will be for a strong focus on an international scale; not just Canada against the rest of the world, the United States or anybody, but a group of countries that comes together to try to get a focus we can live with, as cultural people and industries. Thank you.

The Chairman: Thank you very much, Mr. Stoddart. I appreciate that.

We'll now quickly go to the Canadian Magazine Publishers Association. Mr. Thomson.

Mr. John Thomson (Chief Executive Officer, Canadian Geographic Society, and Publisher, Canadian Geographic Magazine; Canadian Magazine Publishers Association): Good afternoon. We have submitted a joint written presentation together with the Canadian Business Press. Michael Atkins represents that organization. I will review that presentation with you, and then Michael will have some additional remarks at its conclusion.

First of all, I'd like to say we very much appreciate the opportunity to appear before this committee today, and we'd like to thank the committee for its initiative in conducting these hearings, especially since the implications of the next round of negotiations in the WTO will be even more significant than they ever have been for all Canadians. This is because the next round will reach further than any previous trade negotiations into sensitive areas of domestic policy that have always been the sole domain of national governments. One of these areas is culture.

Ensuring that culture is dealt with in a way that preserves Canada's sovereign right to pursue policies that protect our identity should be a priority goal. On behalf of the Canadian Magazine Publishers, we would like to focus today on the key question of how culture should be positioned in order to achieve that goal.

Culture could be treated in the next round in one of two ways. It could be pursued on a sector-by-sector basis in individual areas of negotiation, for example, services with GATS, and intellectual property with TRIPS and investment, or it could be treated as a cross-cutting agenda item in its own right. We believe strongly that Canada should advocate the second approach, and we'll explain why.

First we want to emphasize that this alone will not be sufficient. Discussions in the WTO should be supported by parallel international consultations, led by culture ministers, on the underlying cultural policy issues. These consultations should ultimately be aimed at the conclusion of a new instrument on cultural diversity, as recommended in the recent SAGIT report.

The reason for this is that culture is not in the first instance a trade matter. Whether, and if so how, trade rules should apply are in fact secondary questions. Before they can be addressed successfully, consensus must be reached on the primary cultural policy questions involved. The international community must clearly define the cultural policy issues at stake, reach agreement on shared objectives, and decide what measures are necessary and justifiable to achieve those objectives.

Although the WTO has a mandate to address the interface between cultural policy and trade rules, it is not in a position to deal effectively with the underlying cultural policy issues. The WTO is not an appropriate forum for making cultural policy. If attempts are made to resolve trade-related issues before consensus is reached on a framework for cultural policy, the issue will at best be divisive and place undue and inappropriate pressure on the WTO. At worst, it will lead to deadlock on culture in the WTO, which will not be constructive in terms of the next round overall.

As mentioned, culture could emerge on the agenda for the next round in one of two ways. The first would be to deal with culture piecemeal, in the context of discrete negotiations under GATT, TRIPS, and on investment. This approach is likely to be favoured by the United States. The U.S. will wish to seek specific concessions and disciplines in each of these areas, in order to curtail or eliminate cultural policies, such as those maintained by Canada, the European Union, and developing countries. This is what the U.S. sought to do in the Uruguay Round of negotiations and in the OECD effort to conclude a multilateral agreement on investment.

• 1420

However, U.S. negotiators made little headway in this regard. Many countries, including Canada, did not assume General Agreement on Trade in Services obligations in key cultural service sectors such as broadcast, audio-visual distribution, and advertising. This was expressly to avoid any undermining of domestic cultural policies and programs in these areas. A similar approach was taken in TRIPS, particularly with the exclusion of a national treatment rule on copyright.

In the MAI negotiations, Canada and others sought to ensure that cultural policies and programs would be excluded from coverage of the agreement. As a result, culture has been kept off the table in trade and economic negotiations. Canada accomplished the same result in the FTA and NAFTA by virtue of cultural exemption.

Allowing the issue of culture to be pressed again by the U.S. on a sectoral basis would make it very difficult to defend our cultural interests and likely would lead to a further deadlock, as experienced in the MAI. Dealing with the issue in a fragmented way would prevent a broader view being taken of the full discussions and policy implications of the issue. Culture would become a bargaining chip in a process of making trade-offs in trade negotiations, where a range of other issues is on the table.

The alternative of addressing culture as a horizontal issue is not only more appropriate but also offers a greater chance to resolve trade-related questions effectively. A critical element will be to find a means to seek consensus on cultural policy issues that underlie the trade debate.

Minister Copps and the SAGIT have already pointed the way. In June 1988, Minister Copps initiated a process at the culture ministers' summit, which has been gaining momentum ever since. Another meeting of culture ministers is scheduled for September of this year in Mexico. The network of culture ministers that has been established and this next meeting provide an opportunity for focused discussion on cultural policy issues at the national and international levels. This network should be developed as a forum for addressing questions that underlie debate on trade and culture that will become part of the next round of negotiations in the WTO.

At the same time, in its recent report the SAGIT provided detailed analysis of the issues and included in its recommendations the development of a new international instrument on cultural diversity. This is an important recommendation that should be endorsed and pursued by the Canadian government.

These initiatives are essential if the international community is to reach consensus on cultural policy issues at stake in order to provide the necessary framework for deciding how the international trade rules should apply.

As members of this committee are aware, the future of Canadian publishers is at stake in the current dispute with the United States over Canada's cultural policy. Following a successful WTO challenge by the U.S. of our previous measures to support Canadian magazines, the government introduced Bill C-55 in order to sustain our magazine policy in a way that is effective and also consistent with Canada's trade obligations.

The new legislation directly regulates access to our advertising services market in the magazine sector in order to prevent unfair trade practices that, if allowed, would threaten the viability of Canadian publishers and the future availability of stories for Canadian readers. This is exactly parallel to the issue we just heard from broadcasting, where much cheaper programming costs that have already been amortized undercut the opportunity for original Canadian content to be created.

The new Bill C-55 approach is possible and consistent with our trade agreements because Canada has never assumed obligations in those agreements to provide access to the advertising services market in question. This was done precisely to preserve our cultural policies, not only in the magazine sector but in broadcast as well.

Canadian magazine publishers trust that Bill C-55 will be enacted. It therefore goes without saying that Canada should not agree to new concessions in the next round of negotiations in the WTO that would undo what's been accomplished with this legislation. This includes not providing access to our advertising services market or assuming new obligations in TRIPS, such as a national treatment rule on copyright.

In conclusion, I would note that the existence of any country is based on a social contract between citizens and government. This contract is based on a community of ideas and values—a distinct community of values. These values are the essence of national self-determination. These values that define our country and our self-determination are reflected and sustained by our cultural media.

Thank you very much.

The Chairman: Thank you, Mr. Thomson.

Mr. Atkins is next.

Mr. Michael Atkins (Chair, Legislative Affairs Committee, Canadian Business Press): Mr. Chairman, the good news is I'll be brief. Our official brief encompasses many of the ideas we've given some thought to. We come to these conclusions after being in a guerrilla warfare pattern for nearly two years, in terms of the magazine legislation.

• 1425

The Chairman: Has it been a civil war? Has it been a guerrilla war with the American gorilla, or has it been an internal war?

Mr. Michael Atkins: That's a very good point, because in fact it's both, isn't it? That's our weakness. I think, Mr. Chair, any country that relies on 40% of its gross national product for export and then exports 80% of that to one country is at risk, regardless.

I would point to this morning's Globe and Mail for today's example of how fragile life can be. With these negotiations that are going on, if you believe what is in the newspaper—and I have no reason to believe or disbelieve what is currently quoted—we're essentially negotiating against ourselves because we're afraid of our own shadow. It's an unfortunate position to be in, when you're talking about the essential infrastructure of this country, to be able to know itself.

It will always be difficult to be where we are on this continent and try to have some manner of communicating with ourselves in this new universe we all face. But if I am to take my experience of the last few years as a publisher who is new to these committees and the sort of general.... Everybody seems to know one another; I don't know anyone, so I assume there's a lot going on I never knew about, but I've learned a lot—

The Chairman: The other people have scars you don't have. Don't worry, you'll get them.

Mr. Michael Atkins: Precisely. I come from the nickel capital of the world, in terms of where I started my publishing adventure. We have a singer from there, but that's about it.

The key thing is to also understand how we develop policy. It's been one of the most painful experiences I've ever had. It's because of this tension between people who are concerned about trade issues—and understandably so, as we have a lot of wood to sell—and people who are concerned about other issues, and trying to mix the two. It does not seem to be working as powerfully as it should. You need to look at not only your negotiations in the WTO and how we might recommend trade and culture be separated, but how we develop our policies and how they get to the table.

I would simply say my experience in this regard leads me to believe there's an awful lot of work that needs to be done to truly understand it and communicate it to the balance of the country, which finds itself disbelieving.

The magazine issue is difficult to explain. When the Americans decide to scare us by saying “We're going to give you a billion dollars of this and a billion dollars of that if you're not careful”, we get completely off topic. We forget we have rights and have already negotiated our positions, and we start trying to accommodate. I invite you to read the Globe and Mail to review how we try to accommodate first, instead of stating what our traditional polices have been, why they're successful, and why they need to be pursued.

I hope this committee leads to a serious support of the ideas that have been expressed around the table. But I hope it goes further, to the point where the government might consider how it develops its policy and communicates it, because there's a divide. You made reference to civil war. There is a divide, and I think if people came to understand the issues better, there would be more support for the kinds of cultural polices that are being advocated here.

The Canadian Business Press is new to this. We work very closely now with the Canadian Magazine Publishers Association, and we look forward to your success.

Thank you.

The Chairman: Thank you, Mr. Atkins.

We'll go to the Canadian Independent Record Production Association, Mr. Chater.

Mr. Brian Chater (President, Canadian Independent Record Production Association): Thank you very much. My colleague, Mr. Mair, suggested I should just say we agree with everything and sit down, but I will say a few more things than that. Thank you very much for inviting us to make a presentation before you on this important subject.

• 1430

My name is Brian Chater. I am the president of CIRPA, the Canadian Independent Record Production Association. With me is Alexander Mair, the chair of CIRPA's government affairs committee, and president of Attic Records, a very successful Canadian-owned company based in Toronto.

I'll begin by giving you a little background on what CIRPA is and what it does. CIRPA represents over 150 Canadian-owned companies from coast to coast in the recording industry, our primary focus being, as the name suggests, on recording and production companies.

Our mission is to represent the interests of our members in dealing with government issues, such as our appearance today; in the marketing of Canadian companies around the world through initiatives such as organizing the Canada stand at major music industry trade fairs; and in business development and education, by organizing seminars and workshops, both in person and in the near future through the Internet.

We have followed with interest the process begun by the minister on February 9, and during the course of the presentation we'll be commenting on points that have been raised at various sessions of the committee.

Our comments today will deal with culture, intellectual property issues, and electronic commerce.

We are in complete agreement with the background document issued by the department that Canada benefits from clear and predictable trading rules, that the preservation and promotion of cultural identity is a core objective for Canada in any international trade negotiations, and that Canada should pursue policies that maximize opportunities and reduce uncertainties.

In the 21st century, intellectual property rights and ideas and services based upon them will place an increasingly important role in the economics of countries, and effective and uniform laws are extremely important to Canada's future prosperity.

We fully understand the minister's concerns about the process and how to go about it, and in general would support his middle-ground approach of clusters. Clearly, there is a necessity for action in these negotiations, but equally clearly, to move the entire package forward on the fast track will prove inordinately difficult, if not impossible. At the same time, going issue by issue will also not solve the problem, as often groups of issues are heavily interrelated.

We agree with the minister's comments that there is a growing number of countries that are concerned about the cultural issue, and we agree with his desire to discuss this matter now rather than in later rounds, even though this may be a new “exotic dish” on the menu, and Canada has every intention of putting forward strongly its views on this matter.

It should be remembered that entertainment products, as the Americans refer to them, are now the number one U.S. export, surpassing even aerospace products.

It has often been said the United States is fully in favour of free trade until it actually gets it. Examples of this reality are commonplace. Indeed, in a recent article in The Economist on American trade policy, it is pointed out that the steel industry is actively pursuing protection with giant rallies in steel-belt states and advertisements urging Americans to “stand up for steel”, and is lobbying Congress to make it easier to get protection for imports.

The White House, which has already offered a subsidy package, including $300 million of tax breaks, is under great pressure to go further. According to The Economist, politicians are unlikely to put up much of a fight for free trade either. Republicans are divided and see few votes by taking a stand for free trade, and most Democrats sympathize with protectionist arguments.

Whatever is said by the American government about free trade, when push comes to shove, in the American market reality is often very different from the ideal world of free competition that is espoused by the United States.

An example in the field of music and television is that of MuchMusic and its experience in trying to get on the New York City cable systems so as to attract the interest of national media buyers in the U.S. The reality of the U.S. media market is that it is controlled by a few major companies who often control cable outlets as well. The cable systems in New York city are owned by Time Warner, coincidentally the owners of MTV and VH1.

The business reality of this is that MuchMusic is competing for rare cable access with U.S. producers such as MTV and VH1, who are doing the same thing and who, as stated above, are owned by the local cable company and are part of a bigger company that can offer a variety of channels to the cable operator and can therefore log-roll in negotiations by saying that to get this, you have to carry that, for example. To date, MuchMusic has not been successful in getting carriage on New York City cable.

The reality of the so-called level playing field in cultural products and the efficacy of free trade and open markets is generally just not true in the real world.

As everyone knows, we are going through enormous structural changes in society that will radically change the way industries and countries relate to each other in the next century. To survive as a country, both culturally and economically, we have to protect our interests in a variety of different areas, of which culture is one.

“Canada is the vanguard”, said Christopher Sands, director of the Canada Project at the Washington-based Centre for Strategic and International Studies:

The United States is saying, `we've got to draw a line in the sand with Canada.' We saw this spreading, that this problem was becoming more than bilateral. Canada is where we deal with issues first. If we don't resolve them here, we will see barriers cropping up globally.

• 1435

But more crucial than trade flows are the policy implications for the federal government. A defeat over magazines could expose the embarrassing but common Canadian misconception about NAFTA and the Canada-U.S. free trade agreement that preceded it that they fully protect culture.

If Canada caves in, it would only spell the probable demise of the Canadian magazine industry. It would whet the appetite of the United States for more concessions. Whatever the result, no one should expect it to end there. Experience in other sectors suggests the Americans will continue to press their agenda in an attempt to achieve their ends.

It is the view of CIRPA that the NAFTA-WTO status quo is clearly inadequate. We can no longer pretend that cultural industries are protected under these agreements when events and actions clearly show they are not, as a result of either unclear or apparently contradictory rules.

Annex 2106 of NAFTA refers to article 2005 of the FTA, sections 1 and 2. While there have been no formal disputes since the FTA came into force, it is quite clear that Canada's cultural industries have little protection in reality, given section 2 of article 2005 of the FTA, contrary to opinions expressed at the time—and indeed Canada's former Minister of Foreign Affairs and International Trade, Mr. Art Eggleton, admitted as much in statements made to the press in January 1997.

As the committee is aware, the cultural industries SAGIT recently issued a detailed report that the Minister of Foreign Affairs and International Trade, Mr. Marchi, stated in a press release would provide the basis for informed discussion at the standing committee. We agree with the minister and welcome the document's conclusions, in particular its conclusion that a new international instrument that would protect and promote cultural diversity is needed, and we'll proceed from there.

CIRPA supports the principles and objectives expressed by the SAGIT and recommends the content therein as a clear elucidation of the many complex issues involved in this discussion. It fully supports the SAGIT recommendation that a new international instrument be pursued as a matter of Canadian government policy.

We thank the committee for its time. We look forward to answering your questions.

The Chairman: Thank you, Mr. Chater.

You might want to recall the wise words of George Will. When you're dealing with the Americans, he said, free trade is something that ranks somewhere between Christianity and jogging. It's something much talked about but little practised.

We're going to move to WIC Premium Television, Mr. Buchanan.

Mr. Grant Buchanan (Vice-President, Corporate Affairs, WIC Premium Television): Mr. Chairman, members of the committee, my name is Grant Buchanan and I'm the vice-president, corporate affairs, of WIC Premium Television Ltd. Our company is the pay television licensee in western Canada for Superchannel, MovieMax!, and Viewer's Choice, a pay-per-view service. Through Superchannel, we have an interest in the Family Channel and Teletoon. We also hold a video-on-demand licence. So in general, you could say we're in the feature film business.

The pay and pay-per-view industry's contribution to the Canadian film production sector has been and continues to be that sector's single most important source of private financial support. Since the launch of pay TV, our industry has spent over a quarter of a billion dollars on Canadian feature films. Each year we contribute more than 20% of our gross revenues—more than $22 million—to independently produced Canadian movies through licence fees, equity investments, and script concept development funds.

Since inception, our networks have licensed virtually every Canadian theatrical feature film, in addition to Canadian made-for-pay-TV movies. On the air, 30% of our prime time is devoted to Canadian content, and we use our pay-per-view preview channels, our pay-TV barker channels, and our monthly premium programming guides to spotlight Canadian movies. The consistent promotion and subsequent viewing of these Canadian feature films on our networks helps to build an audience for our home-grown talent.

Notwithstanding all this good news, some folks would argue that the current regime should be jettisoned and replaced with a totally free market. Of course, we respectively disagree.

The committee will immediately appreciate that it is not the creators or distributors of foreign films or programs, especially American, that complain the loudest about Canadian broadcasting policy. Indeed, one would be hard pressed to find even a single producer or distributor that's been unable to license or sell programming in Canada on terms acceptable to both parties.

It should come as no surprise that the U.S. interests that are complaining the loudest about Canada's restrictive legislation are the U.S. middlemen or packagers of program content for the U.S. domestic market. Of course, that means the programming services.

• 1440

It's easy to see why these companies would like to annex the Canadian market; it would be so easy for them to serve with little or no incremental cost. While U.S. companies may describe this activity as subjecting the Canadian services to market conditions, there can be little doubt about the outcome. Given the integrated nature of these U.S. giants, there would certainly be no reciprocal access to the U.S. domestic market, and we heard moments ago about the MuchMusic example. Over time the Canadian services would undoubtedly lose both program content and market share to companies many times their size, who would carry no similar obligation to showcase Canadian programming. And of course without access to these popular U.S. blockbusters, it's highly doubtful that we'd be able to continue supporting the Canadian feature film production industry.

One of the reasons most commonly advanced for scrapping this regime, the current situation, is that new technologies are making it impossible to regulate anyway. Well, there is no doubt that these new technologies do make it more difficult. They present challenges to law makers, to regulators, and to enforcement authorities. However, geographical limitations on the distribution of programming always have been and always will be part of the copyright holders' plan to maximize the return on the investment that created this asset. It's no different from franchising.

• 1445

Even within the U.S., domestic law prevents subscribers in certain areas from accessing certain satellite-delivered program content. U.S. DBS operators are barred from providing distant U.S. network feeds to residents living within the coverage areas of local network affiliates. Similarly, various teams and leagues constrict, by contractual agreement, the ability of U.S. DBS services to provide access to certain sporting events to subscribers living either inside or outside of defined areas. So geographic limitations still can and will continue to work.

We also have an unfortunate chapter to our story. Over the past dozen years we have had to contend with poaching in our territory by U.S. services in the illegal grey market. I'm not sure, Mr. Chairman, if this is a guerrilla war or a civil war, but ultimately, one way or the other, we found it necessary to file civil claims against a number of defendants that we allege have aided and abetted in the interference in our agreements with our program suppliers. Under these agreements we've paid for the exclusive right to exhibit this content in our territory during our window, just like those services in the U.S. have acquired, in their agreements, the right to show their programs to Americans.

This illegal decoding on Canadian soil of U.S. services that have only acquired U.S. rights enriches U.S. entities to the tune of millions of tax-free dollars every month. As representatives of U.S. cultural industries regularly advise the world about the need to respect intellectual property laws and contracts, highly integrated U.S. companies reap the benefits of selling programs for which they do not hold Canadian rights, to Canadians.

In conclusion, Mr. Chairman, the thoughts we'd like to leave with you and your members are the following: the pay and pay-per-view services provide a valuable addition to the Canadian cultural mosaic. The Broadcasting Act's regulatory scheme can and should survive the new technologies. Our company endorses the notion of a new cultural instrument, as recommended by the SAGIT and many other speakers before us.

Finally, it's clear that trade and culture will be a key issue at the next WTO round. Ensuring that it is dealt with in a way that preserves our sovereign right to pursue policies that protect our cultural identity should be a priority goal.

Thank you very much.

The Chairman: Thank you very much, sir.

• 1450

Next, we turn to the Cahoots Theatre Projects, Hamal Docter. How did a nice theatre get mixed up with this crowd? How did you sneak in here?

Mr. Hamal Docter (General Manager, Cahoots Theatre Projects): I feel like the small guy around here.

Thank you, Mr. Chair and members of the committee, for giving me this opportunity to present my views today.

I'm here as a representative of Cahoots Theatre Projects. It's a professional company dedicated to developing, producing, promoting, and presenting theatre reflective and representative of Canada's diverse cultural mosaic. In essence, it's a multicultural theatre company.

[Translation]

I'm sorry to have to tell you I did not have the opportunity to have the documents I am presenting translated. I hope the committee can have them translated in the coming weeks so you can all have the opportunity to read them before submitting your recommendations to the House of Commons in June.

[English]

The strength of a nation cannot be measured in its GDP because it is the people, as reflected in its culture, that will in essence represent us historically and, inevitably, in the future, will represent us. We don't remember how the Greeks, the Romans, and the Egyptians fared economically or how they conducted their trade, but we do have many, many artifacts of their art. It is this that I would like to see Canada preserve.

As one of the small guys, you sort of question yourself: “So what are you worried about? You're not in a trade war with the States, yet.” My big concern here is that if we don't make sure that cultural exemption happens, one trade policy comes down leading to the downfall of the next; it's a domino effect. So it definitely affects the small guy.

It's equally important to us, as a multicultural organization—that's why I really feel I have to have my say today—to note that cultural diversity and cultural exchange is the driving force in Canada's multicultural community and, in particular, in its diasporic communities that are developing theatre representative of Canada's many diverse backgrounds.

I would like to bring up the fact that Canada can serve as a model to the world on the cultural level. Canada's culture is that which expresses who we are as a people. It is intangible. It is a pluralistic culture and it reflects and represents anything and any one part of our diverse cultural mosaic. This diversity is the strength of the Canadian people. The Canadian multicultural model works. In fact, it is envied the world over, and other nations have come to adopt some of our policies and programs, namely and most recently, South Africa.

Canadian culture does not dominate the world. However, we must ensure that multiculturalism, our cultural pluralism, can exist in a global environment even when it comes to trade. All cultures cannot exist on equal terms. We must nonetheless allow for self-determination, self-expression, and freedom to manifest themselves. The Canadian model of multiculturalism can and could be adopted by our global society to ensure that cultural pluralism continues to exist throughout the world.

Cultural exchange is something I brought up earlier and is key in the development of Canada's multicultural policy and basically the evolution of our society, as it is key to the international implications of cultural pluralism. Cultural exchange promotes understanding, appreciation, innovation and choice. Within Canada we find examples of aboriginal, French, English, Ukrainian, Dutch, West Indian, African, Chinese, and East Indian art, just to name a few.

Can all the nations of the world come to understand the cultures of other nations? Can we finally develop an appreciation for individuality and self-expression, or do the rules of trade require a winner in the fight for cultural dominance?

When we come to the WTO, I think this is where we really have to make our stand. We're approaching this kind of funny...and I have to sort of pull away from my brief as much as I can. I recommend that you read my brief later. It has detailed recommendations in there. But I would definitely say that the biggest problem we're facing, not only in our own cultural policy development but within the WTO negotiations, is in dealing with this in a problem-by-problem scenario.

• 1455

Unless we take a look at the global manifestation of culture and how it affects different areas and address it that way—as a whole—we will never get down to the details that are effective safeguards to protect the cultures of different nations. It has to be done as a whole, and I really think that's the key element, which will have to happen at the third ministerial conference this fall.

Culture is part of daily Canadian and global life. It needs to be discussed in the FTAA and in the WTO as well as in other international trade agreements. If culture is not on the agenda at this important conference, we risk having every cultural policy mechanism that has been developed in Canada during the last 50 years compromised and questioned by the WTO.

To allow for the cultural expression of a nation or a people to manifest itself, we must ensure that there is room for multiculturalism and cultural pluralism in the global trade environment. This can be best achieved at the WTO. If not, the consequences may include a rise in nationalism and the potentially devastating consequences of a people aggressively defending their culture.

I will highlight some of my recommendations. My first recommendation is a cultural exemption clause within all present and future international trade agreements without the possibility of retaliatory action by other parties. As an option to this, or in addition to this, creating an international instrument or covenant to protect the cultures of all nations, as was suggested in the SAGIT report, would be excellent, but I think it has to be done as well as cultural exemptions within trade agreements.

I'll come to the WTO conference. It's really what matters. If we take a look at it, every trade dispute that has happened or is going to happen from here on in goes to the WTO. There have been eight cases on culture. Three have been resolved. All have resulted in the downplaying of a cultural policy of a nation. The WTO is the mechanism that will regulate and basically judge disputes, so unless we create the mechanism at the WTO level, we've lost every other fight. It's that simple.

The Chairman: I'm going to have to ask you to sum it up.

Mr. Hamal Docter: To sort of move along?

The Chairman: Yes. We're pretty well running out of time.

Mr. Hamal Docter: Okay. I'll just make one final point here. We can go out there and we can fight for our culture abroad, but we have to fight for it at home as well. Canada has developed some wonderful policies over the last 50 years, but they need to be re-addressed, in my opinion.

Since the Massey commission of 1949—although it put some wonderful institutions in place—demographics have changed drastically, as has our education system, as has how we approach trade, etc. I'm basically recommending that we immediately initiate a study of culture and its broadest implications, taking, again, a global approach to culture within Canada. How does immigration impact? What are the changing demographics? The fact that we won't be such a Eurocentric nation in 20 years will have a major impact on culture, and we need to prepare for these things.

I applaud the Standing Committee on Canadian Heritage for holding hearings on developing cultural policy for the 21st century. I applaud the CCA's working group on cultural policy for the 21st century. I applaud the SAGIT report. They're wonderful documents. However, they're not encompassing enough to truly address the issues of culture over the next 20 to 30 years, and I think we have to start looking in that direction as we approach these international trade agreements.

The Chairman: Thank you very much.

Very quickly, before I turn to the other questioners, do you endorse the SAGIT recommendation, however, that there be a cultural instrument to overarch the...?

Mr. Hamal Docter: I endorse it.

The Chairman: Okay.

Mr. Hamal Docter: I only recently got to read about it.

The Chairman: You feel that it might not go far enough, but that at least it's a start.

Mr. Hamal Docter: It's a great start.

The Chairman: Mr. Obhrai.

Mr. Deepak Obhrai: Thank you.

I want to thank you very much for coming. This is indeed a very heavy delegation here. Look at all that we have to read here. I guess it's information overload. We need some IBM experts here.

I'm just going take a go at this from what I understand, from my party's point of view, and from what I've heard from my constituents, and I'll address those issues to you. You have made some very good statements about the objectives in this thing, and I think nobody disputes that. Where the problem seems to be originating is within Canada itself, with regard to achieving those goals, as you are saying.

• 1500

I can understand your cultural industry's big fear of U.S.A. dominance. That's an understandable thing. It threatens the industry under the free trade.... But the problem we have, in my party's view, is that the way this culture is defended today is heavy-handed. Bill C-55, for us, is very heavy-handed legislation that is impacting other factors, rights, and it is coming through in what you're trying to say about the WTO, when you say let's take the exemptions out.

But I'm going to read to you something that has been said. You need trade, and it says right here, as one of the goals, “export of Canadian programming”. We want to use that facility, but how do we protect our own here and not open it up?

By the way, here's how I see this debate: we are trying to protect a domestic market, but a lot of Canadians within the domestic market are questioning that. The broadcasting people who did the presentations all had representations made by the broadcasting industry to say that their business is affected because the Canadian customer is not willing to listen to many of the programs, because the CRTC has said it's going to go 30% and then 45%, forcing things on to us....

As well, as the gentleman here said, Canadian culture is evolving, right?

A voice: Yes.

Mr. Deepak Obhrai: It's evolving as well. There are a lot of things.... So I think when we're coming along here and asking your industry...what I would suggest is new approaches, new challenges, not the old traditional heavy-handedness. I think that seems to be where it leads. So the issue coming in the WTO is on that basis. The challenge is with your industry coming in. How do we address that?

The Chairman: Mr. Stoddart.

Mr. Jack Stoddart: May I just make a comment? Not being a magazine publisher, I'd like to just touch on Bill C-55. Heavy-handed? Well, the mechanism might be hard-handed, yes, because there is a battle. However, is there an American magazine that is not readily available in Canada? Is there an American magazine that has a presence in the United States that doesn't have a presence in Canada? There may be a few that American publishers don't wish to put into this country. How many Canadian magazines are readily available or available in any way in the United States?

The bottom line on Bill C-55 is that we're not excluding anything. We're not excluding product. We're not excluding writing. We're not excluding anything. What the government is trying to do is to ensure that there is in fact an industry that brings forward Canadian writing and Canadian thought for Canadians. I would agree with you 100% if we were excluding anything. All we're saying is that if it's an absolutely open competition in a business sense or in a trade sense, a market or an industry that is no larger than 7% or 6%—because when you put the French component with the English, in fact the English language is probably not more than 6% or 7%—you can't compete on Canadian material.

Mr. Deepak Obhrai: So the challenge that will come out is, do we take the whole cultural thing as an exemption and put it on one side and say it's not to be touched? Then all these rules and regulations that come along start stifling it, as this gentleman said. Or do you look at it and ask, what is the best method for our industry and for the objectives that you have stated, which is getting our own stories out, to get out there and do it? This is the challenge; this is for us to think about. But do we take it outside and say we close it off?

Mr. Jack Stoddart: I agree with that, but I would put forward that the study that was done...that the replacement for Bill C-55 or the earlier legislation that was in fact in place.... Taking it out of that question and just giving grants to make sure Canadian voices were heard was in the neighbourhood of between $400 million and $600 million a year. I don't know of any government in the world for this size of nation that's prepared to put in $400 million a year to make sure Canadians can be heard in their country when we in fact have a vehicle that works very well and doesn't exclude a single American piece of material.

• 1505

Mr. Deepak Obhrai: No, so it's still under WTO that we say cultural exemption, or do we look at it...? You see, if we put it ourselves as a cultural exemption, my fear is you're going to get pressures coming in, as Bill C-55 indicated, and you'll get more, and then you're going to say, no, no, and no, impacting the global...those things.

So I'm asking you, is it the time to think? I'm not saying not to meet the objectives you've set—yes, meet those objectives—but which is the best way to do it? Is it time to think?

Mr. John Thomson: As the representative for the Canadian Magazine Publishers Association, I must respond here. This issue is not about free trade. We support free trade. Certainly I do. This issue is about dumping, and it doesn't just affect magazines. As we've heard today, the issue is exactly the same with broadcasting. I think all of us in Canadian cultural industries, whether it's books, magazines or broadcasting recorded music, compete successfully for audience. We all have a strong following among viewers, readers, listeners, and theatre-goers. That's not the issue. It's not whether we can do a good job.

It's not whether we can attract an audience and maintain an audience, and do it probably for significantly less than what our friends to the south can do it for. The issue is that they want to export into our country content that's already paid for, essentially for free. Basically what we're talking about in the magazine industry is editorial content being imported into Canada at no charge, and then selling advertising around that.

If Wal-Mart got all of their goods for free from the United States, could anybody in Canada compete? I submit no.

I come back to a very good point that Mr. Docter made. If they have these economies of scale, or if they have fully amortized content, and then are willing to export it at way below market value in order to seize market share in the advertising market or in the pay market, does there have to be a cultural winner? If we have a world trade system and a world cultural system where there's going to be one winner, you know who it's going to be. It's the biggest guy, the guy with the biggest home market, who can amortize all the costs, create the dominant amount of content for whatever medium, and then export it to the world at the cheapest rate.

I submit that every country is entitled to its own cultural space, and we need a policy environment to do that. I think every country in the world, with the possible exception of the United States, which doesn't really recognize that culture exists—they call it entertainment; they don't have a culture minister—has a national interest, and it's really an essential national interest, in creating this new instrument on culture that recognizes, first, what culture is, that it's important, that it needs its own policy environment. Then that can drive technical details of sector-specific trade agreements. But we need a world consensus that we have a right to our own cultures in our own countries.

Mr. Deepak Obhrai: Thank you.

The Chairman: Thank you.

[Translation]

Mrs. Debien.

Mrs. Maud Debien: Welcome everybody. During our hearings in Ottawa, a speaker told us that Canada was in a state of siege culturally. Obviously, the problem is less serious in Quebec given the language factor, but American culture is also very visible there.

I would like to return to an issue raised by my colleague concerning the cultural exemption and the measures proposed by the Taskforce on Culture regarding the creation of a new international instrument to protect cultural diversity.

Mr. Grant, if I understood correctly, you said that this instrument would be negotiated outside the WTO. Is that what you said? I would like to hear what you have to say about this.

Also, we have heard many speakers from many environments who came to speak to us about the weight and length of the negotiations. Just think, for example, of the Uruguay Round of the GATT. It takes years to reach agreements. I would also like to hear what you have to say about that, and I would like you to be very clear. We will have to wait ages to create a new international instrument. Until then, are you asking Canada to maintain the cultural exemption even though it is not perfect? Until there is a new instrument, should Canada maintain the cultural exemption as is to avoid missing the boat completely?

• 1510

[English]

Mr. Peter Grant: Thank you.

To the first question, as to whether the new cultural instruments should be negotiated outside the WTO, I do take the view that it would be preferable to have it done outside the WTO, and my thinking is that we would actually have a two-track process. We would work outside the WTO to gain, hopefully, a political consensus driven by culture ministers and other politicians from a wider range of experience for the necessity of effectively creating an instrument that deals with issues far beyond trade. I put this at the same level as biodiversity and the environment, or land mines or things that go to the level of the protection of human society and two-way communication between people. At that level I think as a minimum we should be able to get a pretty broad consensus about the importance of those issues and how they transcend the narrow issues of trade.

That being said, it will take some years for that to play through. We have to get drafting; we have to have a committee of experts from around the world meet to come up with some draft language. So it will take time to get that process going.

We can't ignore the WTO, because it's on a fast-track itself, which will start near Christmas in San Diego. My thinking on that is that while we are working the larger framework, the forest, we keep an eye on the trees. We suggest, for example, that the WTO itself create a negotiating group on culture to again take account of these cultural issues in the context of what they will be negotiating, which is an expanded General Agreement on Trade in Services, the TRIPS negotiations, and any investment discussions. It's to Canada's benefit to try to take all the cultural issues and put them together in one form so that you can see the forest and not be misled by the trees.

To give an interesting example, a couple of years ago in Europe it was required after ten years to review what is known as the European Convention on Transfrontier Television, which is the central international treaty that governs audiovisual transborder in Europe. Included in that treaty, as initially negotiated, there was an obligation for all broadcasters, where possible, to have a majority of European content in fiction programming. That was then renegotiated a few years ago, and at the European Commission, which I will say here out loud is largely driven at the bureaucracy level and not at the political level, many of the people working within the commission were of a free trade bent and would just as soon have got rid of a lot of this stuff and deep-sixed these cultural commitments. The European Parliament, on the other hand, which is an elected body representing people elected by the population of the European countries, was far more sensitive to the cultural issues and virtually directed the European Commission to go back and reconsider the issue of cultural diversity and harden their language.

To me this was an interesting lesson. If you talk to trade people and people who are working on the elaboration of globalization and the agenda of multinational companies, they come at this with a certain sense of it that frankly ignores the cultural industries, the cultural diversity, the plurality of people out there who want to be heard. Their voice is heard through the elected representatives.

Our thinking on this idea of a new instrument is to try to get beyond the trade bureaucrats and get this into a forum in which we can tap the sense of importance of cultural sovereignty around the world. It's not to have a one-way flow, of course—we're not suggesting that in Canada or anywhere else—but to have multi-flows so that every country welcomes the best the world has to offer but has shelf space for its own products.

Mr. Michael McCabe: I know we're not supposed to be cross-questioning here, but I'm wondering, since you, Peter, are somewhat of an expert at this, whether you see the necessity of that having—agreeing with what you say about the nature of the discussions that should take place—a formal way to impact within the WTO. Otherwise, we'll hit there all the time a piece at a time.

• 1515

Mr. Peter Grant: Yes. I think in the end, if there were to come about an international instrument that stood on its own as a document, it would then be able to be referred to and incorporated in by reference in any of the WTO negotiations that ensued. An even better approach, politically, would be that when the WTO comes to those issues, it would be able to say, we're not going to deal with those, because those are being handled in a different forum. Either way, it is absolutely the case that we do have to keep track of what the WTO is doing, to make sure they take into account properly—

[Translation]

Mrs. Maud Debien: I ask you what Canada should do until we reach an agreement on creating a new international instrument. What should Canada do in January? Should it ask for the cultural exemption or do nothing? That's my question.

• 1520

[English]

Mr. Peter Grant: I think the initial question is how to handle the procedures, not the actual substance of our position. I agree that the substance of our position will be to at least maintain what we have, which is that we have taken a cultural exemption in NAFTA and we have refrained from taking obligations for national treatment in certain sectors that are cultural in their nature. As a minimum, we want to make sure those protections are maintained.

However, I'm suggesting that in order to propel this negotiation in the next round in the best way possible, we should in fact argue for a whole negotiating group on the issue of culture and trade, which itself could focus on these issues. Remember, we're talking about a multi-year process. But if you manage to put those issues, from the WTO's perspective, into a single committee, we have then a better chance, it seems to me, to take the big picture into account.

The Chairman: Thank you.

Mr. Blaikie.

Mr. Bill Blaikie: I have just a few comments, and I invite reply from anybody who feels like responding.

There is a disturbing pattern here. Earlier we heard from witnesses who were concerned about environment, and they were able to say that in every case where an environmental concern has been dealt with by the WTO, the environment is always lost. You say the same thing about culture. So we've obviously got a kind of conceptual or consciousness problem at the WTO, the way things are seen there. It's certainly one of the concerns I have about the WTO itself and the way it understands itself, and why I think the SAGIT recommendation is something I hope the committee will consider very seriously when it makes its report.

I can't help, given the report in the Globe and Mail today about what may be the compromise on Bill C-55...it seems to me, just at a first reading over breakfast, that the compromise might be worse—

A witness: It's not a compromise.

Mr. Bill Blaikie: The cure might be worse than the disease, that it actually creates new inroads, in terms of bringing your bargaining content now and various other things.

• 1525

Mr. John Thomson: It's an issue of principle, with vast implications for other cultural sectors. It's also this classic example, as Peter was saying, of trade people's solution to a trade issue. It's being examined by the wrong people under the wrong lens, getting the wrong answer.

Mr. Bill Blaikie: I just wanted to see if you had a similar feeling. I'm not surprised you do, but I just thought this is hardly—-

Mr. Michael Atkins: Well, it is worse. What it suggests is such a melange of goofiness—it's just goofy. If what is here bears any resemblance to the truth, and I'm led to believe that some of it is true, it's just goofy. It does not work. We're negotiating with ourself is what it amounts to.

Mr. Bill Blaikie: Just further to this whole thing about the WTO, yesterday Silvia Ostry was here, and I put the question to her. Dr. Ostry put the rationale for having NAFTA and the FTA and the WTO as being a guard against American unilateralism. I suggested to her at the time that it seems that the price for not having American unilateralism is to have institutions that over time impose American values on us in any event—an American view of the economy, an American view of agriculture, an American view of culture, which is that there is no culture, that it's all just business and entertainment, and the list goes on.

It just seems to me that, to use a biological analogy, there's not going to be any room for any sort of biodiversity, or cultural diversity. It will be one monoculture imposed on the whole world here. Every once in a while you get a little glimpse. It's like negotiating with somebody in the room—you know he's got a gun, but nobody can admit he's got a gun. Everybody's got to maintain this veneer of civilization.

That's what trade negotiations are when we're talking with the United States, because you know that in the end if you can't...they'll bargain; you'll give up 90% without a gun, but you know that the 10%...it's just—-

Mr. Michael Atkins: I think something you need to keep in mind is that regardless of what we think or what we do, the major media companies are buying up the world anyway. In the same sense that 60% of the newspapers in this country are owned by one person, a high percentage of media is being centralized around the world. If you want to get on the satellite in Hong Kong, it's the same guy who owns it in Europe, and they're all buying the same sports things, and on down the line.

The truth is you're better served by rules if you can find some way to find rules, because outside of those rules—-

Mr. Bill Blaikie: I agree.

Mr. Michael Atkins: —international capitalism is amalgamating the companies very quickly. Their power is becoming disproportionate to any nation, except perhaps the United States, and perhaps even dwarfing that; it's huge.

The Chairman: Mr. Docter, you just wanted to quickly add something? Maybe the moment got passed.

Mr. Hamal Docter: Actually, Mr. Blaikie was addressing the environmental issues and cultural issues and so on that are not properly addressed at the WTO. I've often heard quoted, and I find it quite bothersome, that the WTO is the closest thing we have to a world government. I must seriously protest such a statement, which has been passed around. The WTO regulates trade and investment. The role of a government is to protect civil society. I think this is going to be the difficult thing that our government will have to face as it heads into the next round of WTO negotiations, and not just our government, as I understand, but the European government, Asian government, and third world governments are quite concerned on issues of environmental protection and the protection of culture as well, as we head into this.

It does seem that the United States is the one with the unique opinion on this. I think we can lobby our friends in the European Union, in the Asian Pacific, in Latin America, and so on, to come on line with us, and ensure that there are environmental protection clauses and cultural protection clauses that are negotiated into the WTO. This is but one step toward global governance.

The example of the European Union was given, where they actually have an elected Parliament. Well, perhaps this will be the next step after this round of negotiations.

• 1530

To be frank, without having an accountable government that's elected by the population to regulate the WTO and make sure there is some aspect of civil society maintained as we face transnationals and so on, I'm sorry, but the whole concept will be lost. We might face some of the same problems we faced before the Second World War, when trade liberalization fell right through, and look at the devastating results. It's something we're facing now.

The Chairman: Thank you. I think when you hear the phrase that the WTO is the closest thing we've got to world government, people don't really mean that. What they mean is that in all the instruments of world governance we have, the WTO is the one that comes closest to having some regulatory and enforceable framework, which makes it a workable instrument of global governance, whereas the others are the rather more amorphous and hortatory instruments that we were more used to in the old nation-state days when government really was just a bunch of guys sitting around and making decisions.

Mr. Bill Blaikie: It's looking better all the time.

The Chairman: We're going to have to go to Ms. Augustine, and then we're going to have to wrap up this panel.

Ms. Jean Augustine: I'll be quick, Mr. Chairman, and ask one question that I've been trying to get my head around most of yesterday and also most of today. Some of the presenters have said to us that maybe what we should be doing right now is just going into the next round saying, let's do a review, an assessment, no negotiations. I wondered how you would respond to that. It's almost like, stop the clock, let's assess where we've been and let's look at where we're heading. What would be your initial reaction to that?

Mr. Peter Grant: Maybe I can speak to that. I think the problem we face is that the WTO—the agenda and the train that is leaving from the station next December is going to leave with or without Canada aboard. So it's a process of managing that to have the least consequences for the policy issues we're concerned with around the table.

It'll be a difficult task because there's a lot of pressure brought to bear on these processes. They have a rhythm of their own, and it's very hard to stop these trains once they get going. So we're trying at this point to think of ways to keep culture separate from those negotiations to the largest extent possible, to maintain our ability to keep what we have and enhance it.

We hope that by sharing these thoughts around the world with like-minded countries, many of whom, frankly, are not as far advanced in this thinking as Canada is...Canada has been on the receiving end of a lot of the cutting-edge cultural issues and it may be simply because we have a very modern, complex, active, vibrant cultural sector. But it's also one that the Americans are right next door to and would prefer that our model not be adopted anywhere else. So we do have an uphill battle to educate other like-minded countries to come with us on this.

I sense from discussing it with my counterparts in other countries, other lawyers that are involved in cultural policy in Australia, France, the United Kingdom, Germany.... I was out in Sri Lanka in January, on a mission to draft their new broadcasting legislation. They have a similar problem about the importance of cultural diversity as compared with the Indian subcontinent, where their Tamil-language programming is dominated from Madras. You just see writ large in all of these countries very similar issues but very little understanding of how we could work together to have a common consensus to bring to the WTO and say, look, this is a train that's also going and has a momentum all its own.

The Chairman: Mr. Grant, if the train leaves the station without Mr. Clinton having got fast-track, does it mean it doesn't have an engineer in the cab?

Mr. Peter Grant: I've been amazed that actually the Americans seem to think that anybody will treat them seriously without having fast-track authority, because you're quite right, Mr. Chairman, they don't have it at present, and I don't see any prospects in the next Congress of getting it quickly. I would like to think that would be a reason in itself to slow it all down, but I'm told by trade people that's the Americans. People will take what they can get.

• 1535

The Chairman: We'll give the last word to Mr. Stoddart, and then we're going to have to wrap up.

Mr. Jack Stoddart: Bill Blaikie made a comment, which has come up several times, that the problem is the WTO. With due respect to everybody, I don't think it's the WTO's problem. It's the negotiators that are at the WTO. You look at how far the MAI got before the House of Commons had knowledge of where it was. I think we have a civil service or bureaucratic group within that group that is way out of control. Maybe other countries do. But I think once that process starts, as Peter said, it takes form and goes in a different way. I think there has to be some way of recapturing control of that negotiation process. Maybe one of the ways to deal with the culture issue is not to try to stop it from leaving the station but to make sure that the negotiators are representing culture on the culture issue and not trade. Maybe we can find a vehicle in there until the WTO can be structured in such a way that it can address the issue of culture and communications.

The Chairman: Thank you very much. There's one way you can do that. While you can't get into the negotiating room, you certainly can come to the hearings, which we did. Mr. Blaikie, myself, and some other parliamentarians went to the WTO. Some industries were represented, including Mr. Belch from the steel industry. Attend those briefing sessions every morning and keep the pressure on, because there's an opportunity for members to do that.

I'm sorry to wrap up this panel now, but I do want to remind the cultural industry and the cultural representatives here that we did have a very extensive panel on culture in Ottawa. We got the SAGIT report at that time. Most of the committee members, including ourselves and those doing the western half of the trip, are very much familiar with and concerned about this very, very important issue. So we thank you for taking the time to be with us. If you have any other ideas between now and June and want to forward them to us, we'd be more than pleased to receive them from you. Thank you very much for coming today.

Because we're running behind, we'll move quickly to our next panel.

• 1537

• 1543

The Chairman: We're going to start. Mr. Blaikie is here, and he gives us a quorum. He's in the room and that's enough.

We have a big panel here again. I apologize to everyone for having such large panels, but it's the only way we can get this much evidence in when we're in Toronto. It's wonderful because we actually have the restaurant, the agricultural producers, and sugar all around the same table. We can see where it starts, where it ends, and how it gets digested. This is wonderful, not that anyone in this group has had any time to eat anything since we have been running the panels.

We'll start with the Canadian Restaurant and Foodservices Association Are you Mr. Léger?

Mr. Jean-Pierre Léger (President and Chief Executive Officer, Les Rôtisseries St-Hubert Ltée): Yes, and with me is Kathleen.

Ms. Kathleen Sullivan (Director, Food Service Supply, Canadian Restaurant and Foodservices Association): Hi.

The Chairman: Hi. I understand you're a constituent, so I must be very nice to you.

Ms. Kathleen Sullivan: Well, actually, I'm not one of yours now.

The Chairman: Oh, in that case I don't have to be nice to you. But somebody has to be nice to you, so I'll keep that role.

Ms. Kathleen Sullivan: Thank you very much. I appreciate that.

Shall I lead off?

The Chairman: If you're the one, yes, by all means.

Ms. Kathleen Sullivan: Thank you, Mr. Chairman. On behalf of the Canadian Restaurant and Foodservices Association, we'd like to thank you for this opportunity to appear before the committee and to discuss the World Trade Organization negotiations. My name is Kathleen Sullivan, and I'm CRFA's director of food service supply. Today I'm joined by Mr. Jean-Pierre Léger, who is president of a well-known chicken restaurant, St-Hubert Bar-B-Q.

We have tabled with you 20 English copies of our submission, and we will be sending the French version shortly. During the next few minutes I'd like to provide some background information on our organization and industry and summarize some of the key points contained in our submission. Mr. Léger will then conclude our remarks by raising some key questions that we believe your report should address to ensure that Canada is prepared for the upcoming WTO negotiations.

• 1545

By way of background, the CRFA is the largest hospitality trade association in Canada. We currently represent over 14,500 members who operate 42,000 establishments across the country.

The food service industry plays a key role in Canada's agrifood sector, and a particularly important role—one we're very proud of—in growing the market and developing new products in the Canadian dairy and poultry industries, which are currently subject to supply management.

Our members are major purchasers of the products sold by Canadian dairy and poultry producers, processors, and further processors. Clearly, as in any buyer-seller relationship, the price, quality, and availability of these products are important to our members. Since the purpose of your hearings is to discuss the upcoming WTO negotiations, we're not going to be focusing on domestic issues today. What we really want to do is focus on a key WTO issue that we think could affect our members' future supply of Canadian dairy and poultry products—namely, Canada's supply management market access barriers.

From the outset, we think it's very important to remember that the WTO agriculture negotiations are not an isolated event. They're merely the next step in the ongoing agricultural reform process started in the Uruguay Round negotiations. We strongly believe the lessons learned during and after the Uruguay Round cannot be ignored as Canada prepares for the upcoming WTO talks. We'd like to look at some of the key lessons we've learned.

These are outlined further in our formal submission.

The first lesson we learned in the Uruguay Round is that Canada does not have the leverage to maintain supply management market access barriers forever. As paragraph 16 of our submission shows, during the first seven years of the Uruguay Round talks Canada tried to maintain supply management market access barriers, which at the time consisted of fixed import quotas. During the last few weeks of the negotiations, however, Canada was forced to abandon that status quo.

As one of more than 120 countries, Canada alone simply did not have the negotiating power to prevail in the Uruguay talks. In addition, Canada's major trading partners, the United States and the European Union, refused to support the supply management status quo at that time.

The second lesson we must keep in mind is that during the last few weeks of the Uruguay Round talks, Canada agreed to accept tariffication and the current system of supply management market access barriers based on tariff rate quotas, or TRQs.

Although tariffication was supposed to provide the same degree of border protection as import quotas, the recent dairy product blends case, sometimes referred to as the “butter oil” decision, revealed that there are holes in this dike.

As Canadian consumers continue to buy more and more processed and further processed food products, which are not subject to tariffication and in some cases not subject to tariffs at all, imports containing foreign dairy and poultry products will continue to grow, and these products will continue to come into Canada.

The result is that Canadian food manufacturers, dairy and poultry processors, and our farmers will continue to lose sales, and there is nothing supply management border barriers can do to stop this trend.

The last lesson we learned in the Uruguay Round was that Canada's current supply management market access barriers will be on the table in the upcoming WTO negotiations. Paragraphs 6, 20, and 24 of our submission contain statements from Canada's senior trade negotiator that point to this reality.

Mr. Chairman, the bottom line is that supply management market access barriers will be on the table in the upcoming talks, and the Uruguay Round demonstrated the limits of Canada's ability to maintain these barriers forever.

As paragraph 33 of our submission shows, your colleagues on the Standing Committee on Agriculture and Agri-Food, which held the so-called Take Note hearings last fall, have they themselves concluded that the issue is not whether supply management market access barriers will be reduced in the upcoming WTO negotiations but when and how the transition to more open markets will occur.

Our industry does not want a short-sighted negotiating position to expose Canadian producers to last-minute compromises that could threaten our domestic supply source. To ensure this doesn't happen, we submit that Canada's negotiators should adopt a two-pronged strategy. This is outlined in paragraph 34 of our submission.

• 1550

Our negotiators should attempt to secure better access for Canadian dairy and poultry products in foreign markets, and we should negotiate a transition period that will enable the Canadian dairy and poultry industries to adjust to open markets.

To provide for an orderly transition process, we submit that Canada's negotiators should adopt the following strategy.

First, the current TRQ import access levels should be increased by 10 percentage points a year. For example, a 5% TRQ should be increased to 15% in the first year, 25% in the second year, and so on.

The Chairman: I just want to understand that. If the TRQ kicks in at 5%—so you're saying, then, it goes up—it would only kick in at 15%, and kick in at 25%. Is that correct?

Ms. Kathleen Sullivan: Yes. It would go up 5% the first year, so it would be 15% the second year—

The Chairman: So the quota will go up before the tariff gets applied.

Ms. Kathleen Sullivan: Absolutely. That's right.

Second, in the Uruguay Round, the 5% import access guidelines enable some countries to provide inadequate access to their WTO schedules. This time, guidelines must be avoided, and access commitments must be clear and binding on all countries.

• 1555

Third, to make sure that TRQs do provide clean market access, the current practice of TRQ country allocations and other restrictions should be eliminated.

Fourth, custom tariffs on TRQ in-quota tariffs, TRQ over-quota tariffs, and non-TRQ tariffs should be eliminated over a 10-year transition period through equal annual reductions of 10%. For example, a 200% tariff would fall to 180% in the first year, 160% in the second year, and so on, until the 10 years were over.

Canada's objective for the dairy and poultry industries should be the same as it is for the oilseeds industry—zero for zero reciprocal access.

Finally, and importantly, in addition to securing better foreign market access for Canadian dairy, poultry, and other products, Canada must ensure that foreign export and domestic subsidies do not distort our international trade competitiveness. Export subsidies and trade-distorting domestic subsidies must be eliminated.

Monsieur Léger will now conclude our remarks by raising some key questions that we think the committee's report should address to ensure that Canada is prepared for the upcoming negotiations.

[Translation]

Mr. Jean-Pierre Léger: Thank you, Kathleen.

Mr. Chairman, as a major purchaser of Canadian poultry products—St-Hubert buys more than $25 million worth each year—, I want to be certain that my supply in Canada will not be up for grabs in the upcoming negotiations of the World Trade Organization.

In paragraph 30 of our presentation, we note that during the Uruguay Round, Canada's position on import quotas to manage supply not only isolated us but also led to our exclusion from the negotiations.

If Canada is excluded from the transition negotiations because Ottawa does not want to discuss it, the transition process risks being of greater benefit to American and European producers than to Canadian producers. We are asking you then to answer the following three questions in your report.

First, if Canada manages to maintain the obstacles to market access and supply management, what are the risks that it will again be isolated and excluded?

Secondly, if Canada is isolated and excluded, what impact will this have on its ability to negotiate a transition process aimed at meeting the needs of Canadian producers rather than those of American and European producers?

Thirdly, during negotiation of the Canada-U.S. Free Trade Agreement, Canada obtained effective transition measures in such agricultural sectors as grape growing and wine making. What is the best means of accomplishing the same thing for the dairy and poultry industries in the WTO negotiations?

Mr. Chairman, I would like to thank you for the opportunity to discuss this important issue with you.

The Chairman: Thank you very much, Mr. Léger. We appreciate it that you came from Montreal. This morning we had two other visitors from Montreal. Finally, Toronto's economy is benefiting from visits by Montrealers who have long disdained the Queen City for cultural reasons, isn't that right Ms. Debien?

Mrs. Maud Debien: Quebec is an open country.

[English]

Voices: Oh, oh!

The Chairman: Mr. Core.

Mr. John Core (Representative, Supply Management Commodities of Ontario): Thank you, Mr. Chairman.

• 1600

I'm speaking on behalf of the five supply management groups here in the province of Ontario. Mr. Henry Koop is with me from the egg group, Cor Kapteyn from the Hatching Egg and Chick Commission, Mike Scheuring from the Chicken Farmers of Ontario, and John Stolp from the Turkey Producers' Marketing Board.

What we want to share with you very briefly today is a document we've put together that reflects the Canadian position on behalf of supply management. You've heard parts of it in the past, Mr. Chairman and members, when we've visited you in Ottawa in different capacities. We're going to refer to this small booklet in a very brief presentation this morning.

I think we've circulated to all the members of the committee our reference manual—at least you should have received it at your Ottawa offices—with the full background on this position. But I'll stick to the short one today; I think you'll appreciate that.

We want to come back to Ms. Sullivan. In talking about the view of the Canadian Restaurant and Foodservices Association here, she has, I think, demonstrated one of our concerns in this whole trade negotiation. There's a misunderstanding that the TRQs that Canada has in place for supply management are somehow unique to supply management.

What we want to point out is that this document is entitled “First Things First”. We call it “First Things First” because we want to say, let's accomplish what the last WTO agreement was supposed to accomplish before we start worrying about some grandiose schemes that take it far beyond what it currently is. In our document we indicate three areas of major concern to us that have to be addressed first.

The restaurant people have returned to the supply management access barriers. Yes, there are access barriers around the world on agriculture. There is something like 1,200 or 1,300 TRQs. Canada has something in the neighbourhood of 25 or 26 of those TRQs. It would be foolish for Canada to enter into this trade negotiation saying we're all prepared to do away with our minimum access in TRQs because we're going to be good people and we're going to lead the way.

This whole essence of trying to negotiate a WTO agreement is to come up with rules that apply to all countries, on all issues, on all access, so that we get access to other countries' markets and they get access to ours under the same rules and conditions. The goal of doing away with export subsidies is throughout the marketplace. On the issue of domestic support, you cannot look at TRQs in isolation from those other issues. That's the message we want to bring to you.

We want to bring to you the issue that this document refers to, that export subsidies are the most distortive process there is vis-à-vis trade in agricultural products around the world. There's a real simple solution. Do away with export subsidies. We fully support that position. Do away with them, because we know Canada has eliminated almost all export subsidies in agricultural products. We know other countries have reduced theirs to 36% or 21%, but when you already have huge levels of export subsidies, the only solution is to eliminate them. We think that should be one of the Canadian positions.

When we come to market access or TRQs, let's do a real simple one. Let's get 5% market access for all commodities and all products in agriculture around the world. The document we have demonstrates that Canada in dairy, for instance, is giving almost double the market access as the Americans. Let's not worry about going to 5%, 10% or 15%. Let's get everybody up to 5%. Once that's achieved, then maybe in the future you can talk about other issues. We have no sense that the Europeans are interested in 10% or 15% market access in dairy, for instance. We have no indication the Americans are interested in doubling their market access. They talk about it, but their industry certainly doesn't support it.

Over-quota tariffs. Those tariffs were put in place for two reasons. The first is to give predictability to an industry. That's right in the agreement. Secondly, those over-quota tariffs recognize that the playing field wasn't level in those areas I'm talking about. We'll talk about TRQs some time in the future. For now, they should stay as they are while we deal with these other issues—over-quota tariffs, excuse me, not TRQs.

The third point that's extremely important is the question of domestic support. This document again indicates the level of domestic support in Europe, the United States, and Canada across all of agriculture. Again, it is almost three times as much in Europe as in Canada, almost double in the United States as there is in Canada. Let's quit worrying about whether it's green, red, blue, or whatever colour it is. Let's just cap domestic support. It doesn't matter what colour it is. No country can put more than x%, 25%, 30%. Whatever it's going to be, let's get an agreement that we're going to cap it. The Americans are wonderful at converting everything in the amber category to green. The Europeans just flip everything out of amber into blue.

• 1605

If anybody has seen the recent discussion about the cap reforms in Europe, you'll see there's a huge transfer of dollars potentially into blue box, and they're hoping in the next WTO round to simply be able to maintain the blue box ad infinitum. That doesn't solve the problems in trade around the world.

The last point this document refers to indirectly is phytosanitary standards. We simply say that any barriers at the border that are non-tariff should be science-based. There shouldn't be barriers put in place at the border based on emotion or individual views of countries and so on. They should all be science-based.

We'll be quite happy to answer any questions at the end of the presentations, Mr. Chairman. We think this is an excellent brief document of pulling together the elements in our position, and I know some of my other colleagues around the table will build on that later as they make presentations to you. We simply want you to know that this is supported by the poultry and dairy producers in Ontario. We represent between 30% and 35% of gross farm income here in the province of Ontario.

What we're particularly pleased about is that last week in the national meetings in Ottawa, where we were working toward a consensus in agriculture, almost every one of these elements was part of the consensus position. I think it's fair to say there's still dialogue around the question of over-quota tariffs, as to what should be done in that area. There was not a consensus, but I think it simply needs some more discussion as people start to understand that these access issues are extremely important and remember what the over-quota tariffs were put in place for. It was done to give the same kind of protection we'd had previously while the issues of levelling the playing field were addressed.

Thank you, Mr. Chairman, and we'll answer questions later.

The Chairman: Thank you, Mr. Core.

All my other colleagues here are experts in agriculture, but I always have a big problem getting it straight in my mind about the difference between the green box, the blue.... I thought I had it understood between the green box and the blue box, but now you've thrown in the amber box. So can you, for all of us, just remind us?

Mr. John Core: If we go back to the traffic-light concept—

The Chairman: We're not talking boxed lunches with the restaurant association here, anyway.

Mr. John Core: —the red subsidies were supposed to be absolutely trade distorting. They were to be done away with. The amber one—

The Chairman: Is that the blue box?

Mr. John Core: No, those are the red ones.

The Chairman: Did you say red?

Mr. John Core: There was no question about them. They had to go. That was domestic support that was directly linked to exports and so on.

The amber ones were ones that we were to reduce to the aggregate measure of support reduction over time. So they were to be gradually reduced on domestic support. The green ones were fine because they were non trade distorting—research, general farm income support, education, those kinds of things.

Now, the blue ones.... The Europeans were going to have a great deal of difficulty reducing their amber, so they got special permission to put them into blue box, which just set them aside until the next negotiation. Eventually they were to be dealt with, but they were set aside and they would be able to continue to use them. They're hopeful that they'll be able to renegotiate a further extension to the blue box. The Americans switched amber into green.

Those are the four categories, Mr. Chairman.

The Chairman: That's helpful. In fact, the existence of the blue box, if you like, is one reason why we're constantly told that agriculture is up to be renegotiated starting in November, whether there's a round about anything else or not.

Mr. John Core: It was part of the original agreement that agriculture would be back on the table to deal with some of these issues further.

The Chairman: That's part of it. I appreciate that. I'm sorry to interrupt.

Ms. Jean Augustine: Get your boxes straight.

The Chairman: We'll now go to the Canadian Sugar Institute. Is it going to be Ms. Marsden or Mr. Ferrier?

Mr. Andrew Ferrier (Chairman, Canadian Sugar Institute): Thank you, Mr. Chairman. I'm here with Sandra Marsden, who is the president of the Canadian Sugar Institute. Should there be any questions she and I can't answer, there's also Dennis Hurl, who is senior vice-president, sales and marketing and logistics, of Lantic Sugar, and he's in the audience.

My name is Andrew Ferrier. I'm here in my capacity as the current chairman of the Canadian Sugar Institute, the trade association representing refined sugar manufacturers in Canada. I'm the president of Redpath Sugars, one of CSI's member companies. It's been refining sugar in Canada for 145 years. I'm also the chief executive officer of Tate & Lyle North American Sugars Inc., which is Redpath's immediate parent company, with operations in all three NAFTA countries. Our ultimate parent company, Tate & Lyle PLC, based in the U.K., has affiliations in 40 countries around the world.

• 1610

In our presentation today, we'd like to provide a brief overview of the value of the sugar industry to Canada and the restructuring that's taking place, with an outlook to a future freer trade environment. We'll cover the impact of past trade policy decisions, as well as the implication of future policy options on the sugar producing and processing sector, as well as the further processing of sugar-containing food products in Canada.

[Translation]

The Canadian sugar industry is firmly anchored in Canada and offers added value to the Canadian economy. The first refinery was created in Canada in 1818, a half-century before Confederation. Producers and manufacturers of Canadian sugar are among the most rare in the world in operating according to free-market principles. Our industry is not protected by any sugar program whatsoever, by restrictive quotas or other commercial barriers. Five plants are currently in operation to produce refined sugar in Canada, i.e. four port refineries in Vancouver, Toronto, Montreal and Saint John, and a single sugar beet plant in Taber, Alberta.

[English]

Canada's free market sugar policy and competitive sugar prices have attracted substantial investment in Canada's food and beverage industry, providing tens of thousands of jobs in a wide range of sectors, including confectionery, bakery, biscuits, dairy, cereal, etc. In fact, over 80% of Canada's 1.1 million tonnes of refined sugar production is now sold to the food and beverage industry for further processing. Understanding this linkage is important because our industry's growth and competitiveness is increasingly linked to our customers' North American and global decision-making.

Unfortunately, export markets for both refined sugar and many value-added sugar-containing food products continue to be restricted by U.S. and other foreign trade barriers. While we are one of the lowest cost producers of refined sugar in the world, we are incapable of expanding beyond our borders.

[Translation]

Given the constraints typical of an industry evolving in a free and narrow market in a highly disturbed world market for sugar, our industry was forced to rationalize its activities to respond to very strong competitive pressures. In the early 1980s, five plants closed their doors, reducing the number of plants by half. The most recent example is the 1997 closing of the sugar beet plant in Manitoba. This plant had been in operation since 1940 and exported 60% of its production. The plant was no longer viable given the impact of constraints on access to the American market since the implementation of the Uruguay Round in 1995. Another plant closing, the Saint John sugar cane refining plant, is planned for 1999.

[English]

While Canada's exports of sugar and sugar-containing products continue to be constrained by the protective sugar policies of our trading partners, our border is open and we face unfair competition from surplus production from the same markets. In 1995, we had no choice but to invoke Canada's SIMA legislation to seek the imposition of anti-dumping and countervailing duties on unfairly traded imports of U.S. and European Union refined sugar. Since that time we've entered into a new phase of rationalization and restructuring, with an outlook to a future freer trade environment.

My company, Redpath Sugars, recently completed a $40-million expansion and modernization of our Toronto sugar refinery. Rogers Sugar is completing a similar investment to upgrade and expand its sugar beet facility in Taber, Alberta. Lantic Sugar recently announced a $65-million expansion program in its Montreal sugar refinery in view of the planned closure of its refining operation in Saint John.

• 1615

These are critical considerations, Mr. Chairman, for the next round of WTO agricultural negotiations, because even a restructured and globally efficient refined sugar industry in Canada cannot compete with limited export market access and the prospect of ongoing market distortions. We've reached the limit to which the industry can absorb the impact of trade distortions through restructuring. Significant export market expansion and meaningful progress towards agricultural reform, including sugar, is therefore the outcome that we are seeking through the upcoming WTO negotiations. If this is not achieved, Canada's sugar industry will continue to shrink, threatening an essential competitive underpinning to Canada's food and beverage industry.

I'd like to ask Sandra Marsden to outline a little more specifically what some of our proposals will be, Mr. Chairman.

Thank you.

Ms. Sandra Marsden (President, Canadian Sugar Institute): Thank you, Andrew. Thank you, Mr. Chairman.

What I'd like to do is explain briefly how our industry has fared in previous trade negotiations as a context for describing more specifically what our goals are in the upcoming WTO negotiations.

Contrary to the spirit of trade liberalization, our industry has fared worse, not better, under all recent trade agreements. In your booklets you have a chart that shows historically what the impact has been, with the NAFTA and the WTO you'll see progressive decreases in our access to the U.S. sugar market. So the U.S. has used both the NAFTA and the Uruguay Round to successively impose additional restrictions on our exports, and that's both refined sugar and sugar-containing food products.

The NAFTA provided for reciprocal trade between the United States and Mexico and essentially left us out. The Uruguay Round, as a result of aggregating access commitments, and that means countries were not obliged to apply access to specific products but rather could aggregate them across the whole sector, and for that matter, across a range of sectors, so that they could effectively protect more sensitive interests.... So for us that meant the United States effectively blocked our access for refined sugar while continuing to provide access to countries for raw sugar, and Canada does not produce raw sugar. They also reclassified products that were previously freely traded into restrictive quotas. So it also affected value-added sugar-containing products exports.

In October 1997 Canada and the United States reached a bilateral understanding to effectively prevent this situation from getting any worse. So today we now have a Canadian-specific share of existing restrictive quotas so that our access isn't further undermined.

Obviously, this isn't a long-term solution. Today we have access to 0.1% of the U.S. refined sugar market, far below any 3% to 5% guideline, and our exports of sugar-containing products such as crystal drink mixes, ice tea, sweetened cocoa, mixes, and doughs are far below historical levels. In fact, the Uruguay Round alone added an additional loss of about $100 million per year in export earnings.

What we're appealing to negotiators for in this round is to ensure that this pattern is not repeated. We believe that a comprehensive multisectoral approach to these negotiations is essential if these mistakes don't reoccur in the next round, but more importantly that we achieve some meaningful gains in market access.

We are members, as you may be aware, of the Canadian Alliance of Agri-food Exporters, who are advocating that Canada take a leadership role in this regard, engage other partners, such as the Cairns Group, and seek significant market expansion.

We support the goal of achieving equity in market access, as some of the others around the table are proposing, but we believe that while it's certainly a useful starting point, we must have a vision that goes beyond it.

What specifically are the issues for our industry? The main impediments to our access are very small or in fact zero in-quota access for sugar-containing products—we have a small quota, as I mentioned, on refined sugar—and the corresponding prohibitive over-quota tariffs. So the issue is these tariff rate quotas, which specify a specific in-quota amount and an over-quota tariff.

• 1620

Our access is far below any 3% to 5% guideline. Obviously, we would like to see a substantial increase in that in-quota access. A useful starting point would be 5%, and there should be a plan to phase in an increase in that in-quota level over a defined number of years. It's important to our industry that both refined cane and beet sugar would have access to any meaningful increase in exports given the larger share of production in Canada that refined cane sugar provides. At this stage, we have a very small quota, so that continues to benefit refined beet sugar producers.

In terms of tariff reductions, we believe that all tariff reductions should be approached in a principled manner, whether that be over-quota tariffs or simple tariffs, which in some cases can be prohibitive. To make it illustrative, in Canada we have no tariffs on imported raw sugar and a very modest tariff on refined sugar—$30 per tonne. We certainly would not like to see a situation where there were equal percentage tariff cuts, which would mean we would have to reduce our $30-per-tonne tariff and the U.S. would reduce their $570-per-tonne over-quota tariff by a comparable amount. Obviously that would not be equitable. So we certainly support a levelling of the playing field before any tariff cuts take place.

We support the goal, and I think there's a large degree of consensus on this, of the elimination of export subsidies. The European Union is a substantial user of export subsidies for sugar and other products. We support the phase-down of domestic support. We agree there are linkages between all of these and you can't look at any one element without considering the reform of others.

Finally, we would seek the elimination of unfair border practices, which continue to undermine our already limited access.

Thank you.

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

Members, actually we did hear from the beet sugar producers on Monday in Winnipeg. So you're following hard on their heels. We got that message there too. We certainly learned about the Mexicans stepping in and totally replacing Canadian production.

I'm sorry. I should have asked the Canadian Turkey Marketing Agency and maybe the chicken farmers to have come immediately after the supply management, but anyway it doesn't matter.

Which came first, the turkey or the chicken?

Mr. Richard Ruchkall (Vice-Chairman, Canadian Turkey Marketing Agency): In this case the turkey.

The Chairman: We'll leave that one there.

Mr. Richard Ruchkall: Thank you, Mr. Chairman. Good afternoon to both ladies and gentlemen of the committee. I would like to begin by introducing the Canadian Turkey Marketing Agency's executive director, Phil Boyd. Our chairman, Darrell Reddekopp, sends his regrets. He was unable to attend due to matters that came up on the farm this week.

We've also circulated, both in French and English, our presentation. I make this presentation on behalf of the 600 registered turkey producers in Canada. There are 2,300 full-time employees working throughout the turkey production and processing sector and thousands of other Canadians who directly benefit in spin-off jobs from the $520 million generated annually in sales from turkey products.

The Canadian Turkey Marketing Agency, CTMA, would like to thank the standing committee for this opportunity today to share our views on agricultural trade. The CTMA at its roots is a producer organization with eight provincial members, but it also includes, by proclamation, three members from the primary and further processing industry.

In Canada, farming is more than a business; it is also a way of life. Unlike the integrated or contract growing structures found in the U.S. poultry industry, turkey production in Canada is carried out by a large number of individual family farms, each of which have a direct impact on their local rural economy in terms of job creation and economic and environmental sustainability.

My family are producers from the Acme, Alberta area. In looking at this presentation, I went back and looked in my own file cabinet and found that we purchase all our building supplies from the local lumberyard in Acme; we purchase our bedding, which is shavings from a lumberyard, in Cochrane, Alberta; we purchase our equipment and parts from a local manufacturer in Linden, Alberta; we purchase our poults from two registered hatcheries in Canada;, we purchase our feed from a mill in Calgary, which utilizes western grains, and we also send our product to a processor in Edmonton, who also happens to be a further processor. That's just to give you a flavour of how diverse it is.

• 1625

In February of this year the CTMA, along with other national supply-managed organizations, developed a common SM5 trade position. This trade position is simple and straightforward, as has been said today: one, the tariffs applying to Canada's over-access commitments should be maintained at current levels; two, the next WTO agricultural negotiations must focus primarily on the elimination of export subsidies; three, Canada must achieve a true rules-based system with regard to minimum access levels; four, there must be greater discipline governing domestic support; and five, sanitary and phytosanitary measures must be based on sound science and not used as disguised trade barriers.

• 1630

This position is consistent with that of the Canadian Federation of Agriculture. It also parallels the WTO trade position developed by the poultry, meat, and egg industries, which include all four supply-managed egg and poultry agencies and downstream organizations such as the Canadian Poultry and Egg Processors Council and the Further Poultry Processors Association of Canada.

Although there are five elements embodied in the SM5 trade position, the main issues touched on in this brief are domestic support, market access, and over-quota tariffs.

Domestic support issues: Despite the cuts agreed to during the Uruguay Round, the EU and the U.S. continue to spend massive amounts of money in support of the agriculture and agrifood sectors. Based on 1995 data, the total level of internal support represented 16% of the total value of agricultural production in Canada, compared with 32% for the U.S. and 42% for the EU.

In order to put the above numbers into perspective, we will provide one example for turkey. In 1998 the U.S. government, under its national school lunch program, purchased $177 million Canadian in turkey products to stabilize low commodity prices. This domestic subsidy represents approximately 69% of the total turkey farm cash receipts for that same period.

Canada cannot compete with the treasuries of the U.S. and the EU as a means of balancing supply and demand and to stabilize producer incomes.

Market access: Contrary to statements you may have heard, equivalency of market access levels among WTO members is not inconsequential, as we shall illustrate. As a result of the last round, by the year 2000 Canadian turkey producers will be providing access of 5.6 million kilograms, representing 5% of the 1986-88 domestic consumption. This product enters from the U.S. duty free, and our TRQ fill rate has consistently been 100%.

In the case of the EU, in the year 2000 minimum access for turkey meat products will be 3.5 million kilograms, less than 0.5% of historic consumption, instead of the 45.7 million kilograms that should be provided. These 45.7 million kilograms represent about 30% of the current Canadian production. In addition, the EU applies in-quota tariffs as high as $750 per tonne Canadian on any such imports.

• 1635

If the EU had lived up to the spirit of the last round and offered 5% access for pork, minimum access would have been 600,000 tonnes, versus the 75,000 tonnes that were allowed in. This volume represents 47% of the current Canadian pork production and almost one and a half times the current volume of Canadian pork exports.

It is clear from these examples that the key obstacle limiting market access and potential gains resulting from the last negotiation is the failure of countries to live up to the spirit of the Uruguay Round, and is not a result of over-quota tariffs. During the last trade round, supply management lost one thing it sought: a clarified and strengthened article XI. In our view, and as illustrated by the above figures, this was too high a price. Canada must enter the next set of negotiations from a strong and unwaivering position.

In regard to over-quota tariffs, they have a well-defined purpose, which is to regulate market access. As recently witnessed through the volatility of the international commodity markets, and contrary to the perceptions of some, there is no room to reduce these tariffs. In addition, the variability of exchange rates only amplifies the uncertainty.

As has been mentioned, of the 1,370 tariff rate quotas that were established after the last round, Canada has 21, of which three are poultry. The U.S. and EU have 54 and 85 TRQs respectively. Canada's fill rate is higher than the world average at 85%, while the EU achieved a level of 72%, and the U.S. had a fill rate of 54% in 1997. This clearly illustrates that Canada has been very clean in allowing access to its markets.

In closing, predictability in the levels of import is essential to the maintenance of supply management programs in Canada. The reduction of over-quota tariffs would increase the uncertainty in the administration of domestic supply management and is contrary to both the WTO principles regarding improved protectability and the concept of tariff rate quota.

Canada, in developing its negotiation position, must recognize that for some sectors, the development of WTO-consistent standards and rules with respect to minimum access commitments, sanitary and phytosanitary standards, and other technical barriers to trade require more priority and will do more for trade liberalization and increased access than will the further elimination of over-quota tariffs.

I would like once again to thank you for the opportunity to make my presentation to the committee.

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

Mr. Dungate.

Mr. Mike Dungate (General Manager, Chicken Farmers of Canada): Thank you, Mr. Chair. I'm Mike Dungate, general manager of Chicken Farmers of Canada. I appreciate the opportunity to come before the committee and present our views on the next round of WTO negotiations.

Chicken Farmers of Canada is a national farmer-run organization. We represent Canada's 2,800 chicken farmers. We are governed by a 14-member board of directors, and I think it's important to note we have 10 members who represent the 10 provincial chicken-marketing boards, two representatives from the processing sector, one representative from the further processing sector, and one representative from Mr. Leger's organization, the Canadian Restaurant and Foodservices Association.

I'm going to give you a pared-down version of the submission themes. You've heard a lot of the comments already, and I think we can get to some discussion.

• 1640

The one point I would like to make is that nothing about our industry is status quo. In the last 10 years we've grown 52% in production. We have a market—per capita consumption—in this country that has grown by 19% over that time. We have lots of room still to grow in this country. We have lots of room still to grow in export markets as well. A lot of that has to do with how we've worked together as an industry, from production right through to the restaurant and retail sectors. We have just over 15,000 people who are employed on farms and in processing plants, plus quite a number of jobs—thousands in fact—in other sectors of the industry, such as hatcheries, feed mills, and the food service, transportation, and retail sectors.

I think we are lucky in a certain sense. We have a product that Canadians like, and that has been one of the reasons we've been able to have this success. We've also had exports. Since 1993, we've increased our exports from less than 0.5% to over 7% of production, which was our export last year. In particular, our exports are almost exclusively dark meat. Canadians prefer white meat products in Canada, and it has helped us to better balance our market in Canada for white meat and therefore to better meet the consumer requirements.

As for our goal in a WTO trade position, I think we believe strongly and wholeheartedly that we want a credible, unified, and inclusive trade position that incorporates the fundamental interests of Canadian chicken farmers as well as the fundamental interests of the diversity of Canadian agriculture.

I think one thing this committee can be encouraged by is the amount of work that has been done by the agriculture and agrifood sector over the last year and, to the degree that was mentioned earlier, the amount of consensus that John Core said came out of the WTO conference that Minister Vanclief held last week in Ottawa. It's important, because it's easy for each of us in our own right to come up with our own trade position. We have a lot of commonality amongst chicken farmers about what our trade position should be. Unfortunately, that won't have any influence at the negotiating table. Canada will not have influence at the negotiating table unless all of us are together on a position. That's why we, as chicken farmers, have worked with a lot of our colleagues in the agriculture community to bridge the gulf of not knowing and understanding what the positions of others are, and to come to some common positions.

First of all, we've developed three trade positions that we have signed on to. One is with the 30,000 poultry, egg, and dairy farmers. John Core presented you the first thing, and that's our trade position there. Second, we have concluded a joint trade agreement in the poultry industry, that is, eggs, turkey, chicken, and broiler hatching eggs, with the processing and the further processing sectors. I would argue we're probably one of the only industries that works right through the vertical chain on coming together on a common position.

Finally, we've worked through the Canadian Federation of Agriculture, and I think this one is probably the most important because it represents the diversity of agriculture in Canada. It has taken the better part of two years for people to really sit down and figure out what they need, but there is a solid position on the table. I think it should encourage the government that we've done a lot of our work in the industry that will hopefully facilitate the work of the government in pursuing Canadian interests at the WTO.

As far as the trade position is concerned, we have talked and the points have come out. We fully support that eliminating export subsidies should be high on the list, if not the top priority. In our sector, in poultry, the U.S. and the EU count for 99.4% of all subsidized exports. It's not a question of Canada from a fiscal perspective matching these export subsidies. We didn't notify export subsidies in the Uruguay Round; we are barred from getting into this game. So if we're barred from getting into the game, we have to get others out of the game.

Secondly, we need clear, binding rules that are the same for everyone. I think that has been extremely important around the table and voiced by all. What came out of the Uruguay Round were guidelines. Sandra mentioned in her presentation, as did Andrew, that we need binding commitments next time, and we need binding commitments at 5%. It was clear that we didn't have 5% in the last round. It's not a question of Canada not doing its part. For broiler hatching eggs, as Core can attest to, we're at 21.1% access. For chicken, we're at 7.5%. The other commodities in supply management are in fact at 5%—where they should be.

• 1645

Richard mentioned where the EU is on this. Both pork and poultry are less than 1%. We would definitely agree that you can't continue with just an increase in access that's a percentage basis, just as Sandra had mentioned, on a reduction in tariffs, because in increasing by 20%, if you will, the European access would go from less than 1% to still less than 1%, and our 7.5% would be over 9%. We need everyone at 5%.

The other reality for supply management is that all of us have independent NAFTA obligations that are global access commitments. They're written into the NAFTA, but they're global. That means that our access is based on previous-year or the current-year production and goes up each and every year. So our 7.5% for chicken in 1998 translates into over 15% in the WTO base period. That means that our access is in excess of 20 times higher on a percentage basis than the Europeans'. We're talking about an aggressive position from our point. We don't want to continue the status quo. We want this improved in the next round.

Maintaining over-quota tariffs: This is a critical issue for us. It's not a question of protection. It's a question of control of supply. Supply management systems cannot function unless they can control supply from domestic and international sources.

We're not worried about the level. There have been some who have said that we can get down to a safe level, that there's room to move there. I'll tell you one thing: getting to a safe level is a very tricky thing to do—and I've included two examples here in the presentation—because exchange rates are the big wild card in finding a safe level.

For chicken, for the actual protection that we have had, even though there has been a 15% tariff reduction in the last five years, our effective protection is up 2.5%, and that's because of where the Canadian dollar has gone compared to the U.S. dollar. The U.S. is the number one exporter of chicken in the world. The number two exporter of chicken in the world, with which we are now concluding business facilitation, which the Chicken Farmers of Canada have supported.... The Brazilian real has devaluated over this point. Our effective protection with Brazil has dropped 49% over the same period. We're starting to play Russian roulette here.

The thing that we're certain of is that the tariffs are now at the safest level possible. That's where they need to be maintained. What we need to work on—-

The Chairman: Chicken farmers need to run the IMF.

Voices: Oh, oh!

Mr. Mike Dungate: That's it. You give us exchange rate control and we'll talk about that.

In terms of in-quota access, we would support cleaning it up. We need to clean up in-quota access; we're providing it. It's been mentioned. Our fill rates are at 100%. The WTO average is around 65%. The U.S. is down around 50%. That's one point: in-quota tariffs at zero. Our in-quota tariff with the U.S., as everyone knows, is at zero. With the rest of the world, we're at 5.4%. Most countries have in-quota tariffs in the range of 25% to 50%. There are many that are over 100%. The highest that I have seen so far—and we've done a lot of work to find them—is 425%. This is in-quota at 425%. This is not your over-quota protection; this is your in-quota, and this is zero access.

I guess we would support an overall cap on the domestic support—I'll get through this quickly in this sense. Mainly it's a question of the U.S. and the EU being prepared to support their agriculture. When you look at global support, in Canada we support 16% in terms of value of production, in the U.S. it's 32%, and in the EU it's 42%.

• 1650

To meet their reduction commitments, all that the U.S. and the EU have done is to take their amber box and put it into a green box. They haven't reduced their support to agriculture. They're still spending that money. We don't have the capacity to meet the treasuries of those two countries.

People have talked about how the U.S. and the EU are going in that direction of reducing support. Well, with respect to the last agreement on Agenda 2000 on the cuts that the Europeans were going to make, they drastically curtailed the cuts they were going to make. They extended their farm program past 2006. They couldn't make it. Their farmers protested, to a large degree in Brussels, and they backed off. For its part, the U.S. changed all its blue box programs to green with its 1996 farm bill. It gave a $6 billion bailout package last year, which gave them record farm incomes in the U.S., and that doesn't seem to be enough because they're looking at another $3 billion this year.

To conclude, the trade position that we're recommending is aggressive. It is not the status quo. Other countries will have trouble keeping up. Are they prepared to go to zero in-quota? Are they going to put a cap on their domestic support? Are they going to eliminate their export subsidies? Are they going to restore the access that sugar had previously?

I think, with the position that we have, that Canadian negotiators will be able to table, early in the negotiations, a credible and unified position, a position that's far from the status quo, a position that shows that the Canadian agriculture and agrifood industry is proactive.

Mr. Chairman, chicken farmers and the whole Canadian agriculture and agrifood industry are working hard to put together a credible, unified, and inclusive trade position, with the goal of achieving increased benefits from a better functioning rules-based international trading system. Perpetuating the status quo of inequality tilted against Canadian industry is not tenable.

Thank you.

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

I'm going to run this session 15 minutes longer, but then we really are going to break at 4.15. Try to keep it to five minutes, okay?

Mr. Obhrai.

Mr. Deepak Obhrai: After listening to the chicken farmers, who are different from the egg farmers, I presume, I think I should eat more chicken...and a nod to the turkey producers at the back.

I have a couple of questions. There is a little confusion; there's so much paper here. I want to go to Kathleen first. I have three questions.

Kathleen, you stated that based upon the Uruguay Round, the supply management system will eventually disappear. You came up with the point that it has been going on for seven years and the point on the 5% guideline, right? Basically it's the position of the others in reference to that proposal.... Is that a realistic proposal that will be accepted and are the other countries in the world looking at it? Or is that just your proposal? Have there been any negotiations on that fact?

Ms. Kathleen Sullivan: At this point, as I understand it, we're just at a stage where we're looking at what Canada's negotiating position should be, so the discussions have been within the industries within Canada.

I would like to say, first of all, that when I hear the supply management positions or the trade positions that are put forward by some of my colleagues here, I think we're actually quite aligned in a lot of what we're asking for. Certainly one of the fundamental principles that we think is key is the principle of reciprocity when we look at our trade dealings with other countries.

We differ on two areas, I think; specifically, what will happen with minimum access commitments and what's going to happen in over-quota tariffs? On those two issues, we have tried to take a very realistic view of what's going to happen in the next round of negotiations based on what we know happened the last time and based on where we think our trade partners are.

In the last round of negotiations, when we did try to maintain the then supply management market access barrier status quo.... I do want to specify that we're not talking about domestic supply management here. We're specifically talking about market access barriers. That's the issue that's going to be discussed at the WTO.

• 1655

In the last round of negotiations, the Uruguay Round, we went in trying to maintain what was then the status quo, which was import restrictions. That changed to tariffication, and we think it changed for two reasons. We were only one of 120 countries, so we just didn't have that much negotiating leverage. There will be more countries the next time around. We will have only a limited negotiating leverage next time as well. We didn't have the support from our major trading partners last time, and we don't expect to have it the next time around either.

The whole purpose of the WTO, as we understand it, is to move forward to more liberalized trade. In our submission you'll see quotes from Mike Gifford, one of Canada's lead agriculture negotiators right now, and Gerry Shannon, who was one of our lead negotiators the last time around. They both made it clear that this is the direction in which the WTO is going, and the issues on the table aren't going to be whether access goes up and whether over-quota tariffs go down; it will be a question of degrees.

Mr. Deepak Obhrai: In this submission here by the chicken farmers, it says that in the WTO 5% is not necessarily 5%. What do you mean by that statement?

Mr. Mike Dungate: I think it becomes clearer in how Sandra presented it for sugar. Because we only had guidelines the last time, countries were to implement what was called the modalities document. It told you how you were supposed to get to 5% minimum access. If you provided 7.5%, as in our case, you weren't allowed to reduce it to 5%, for example; you had to maintain what was there.

So the U.S. didn't even follow that and maintain what was there in sugar. Many countries, through various means, didn't even provide the access. The EU was notable for that. They only have access up to 0.5% in many of the commodities, including all the meat commodities—beef, pork and poultry. We want rules this time that say 5% right in the agreement, and that everyone's providing 5%, because we're not getting the access we're providing.

The Chairman: We were told by others that the problem was in aggregation. They'll say 5% but it's an aggregated 5%. They get some other mythical thing and say they've met their quota because they've met it in some other areas. We've heard this from so many. How do you calculate the 5%? Is it on a product-by-product basis?

Mr. Mike Dungate: It's aggregation in one case; it's just not providing it in another.

Mr. Deepak Obhrai: What are you saying?

Mr. Mike Dungate: People used various means. They used aggregation. They just plain didn't offer access in other cases; they just didn't put it in their tariff schedules. They used in-quota tariffs as high as 425% to provide nothing. They used various means to accomplish their goals.

Mr. Deepak Obhrai: So you're trying to say the rules are subject to manipulation. They are not clear rules.

Mr. Mike Dungate: Exactly.

Mr. Deepak Obhrai: The final question is on your over-quota tariffs. They are sanctioned to the functioning of supply management. Kathleen just clarified that you were talking about domestic supply management, but you know supply management will go in due time.

Mr. Mike Dungate: I don't know that at all, and I wouldn't agree with it at all.

Mr. Deepak Obhrai: No.

Mr. Mike Dungate: Kathleen made the point that we can't support supply management into the next round. But you can't get these other countries, the U.S. and the EU, to keep up to where we're going to go on this position. This is an aggressive position that they will not follow. That isn't their main point.

If you want to look at access for our commodities, if you give sugar 5% access to the U.S. market they won't be in business for a long time. That's the point. Let's get real access. Let's not talk about the over-quota tariffs. The point of reducing over-quota tariffs is that you either don't reduce them enough, and therefore you gain no more access at all, or you reduce them past that point and you have 100% access to your market. If you're going to deal with things, deal with them in quota and make them clean. Get people up to where we are, then we'll start talking.

Mr. Deepak Obhrai: That goes back to the first point on 7.5% access you were talking about, right? But you agree that in the final analysis the supply demand system will eventually—

• 1700

Mr. Mike Dungate: I'm not in agreement with that at all. I'm not even close.

The Chairman: Mr. Core.

Mr. John Core: Supply management is a domestic policy decision and has nothing to do with the WTO rules in place. We've made a choice to apply domestic supply management. Access will determine how much product comes into our country that we don't supply domestically. But there's this misconception. Supply management has nothing to do with the WTO. How we manage our supply system in Canada is a domestic policy issue.

The other thing Mike's pointing out is that when you're asking about access it's 5%, but we're saying 5% on all commodities, all products that far down the schedule, so nobody can do aggregation or assign it to a particular country. We're saying it should be 5% clean access to everybody in all product categories. That gets away from this other problem we have in administering the tariff rate quota system.

• 1705

The Chairman: Supply management has nothing to do with the WTO provided you have a hermetically sealed border. But the whole point about the WTO is there are no hermetically sealed borders any more.

Mr. John Core: Yes, there are.

The Chairman: That's why the supply management group got so upset when article XI disappeared, surely. It has a great deal to do with the WTO or you wouldn't have been so upset about article XI.

Mr. John Core: There are 1,300 tariff rate quotas around the world and we have 21 of them. That suggests to me that a whole lot of domestic policies are being made in agriculture that they don't call supply management. But the TRQs are there for reasons of protecting domestic markets because they've made a decision to produce for that domestic market. They call it something else.

The Chairman: I'm not quibbling with you about that. I think there's a relationship. I understand one is a domestic policy, but it needs the support of the international system within the framework it has to offer.

Mr. John Core: Within the TRQ.

The Chairman: Yes. It must have the tariff or—

Mr. John Core: That's the point we're making. If there are no TRQs, there's no predictability of the size of a domestic market. So how do you manage a supply management system? That's the issue.

The Chairman: Yes, we all understand that.

[Translation]

Mrs. Debien.

Mrs. Maud Debien: I agree completely. For once, there is a consensus between Quebec and Canada and I do not see any problem with it.

The Chairman: Let sleeping dogs lie.

[English]

Mr. Jerry Pickard: It's the difference between Toronto and the rest of Ontario. Quebec and Ontario agree.

Mr. Deepak Obhrai: I think she had chickens.

[Translation]

Mrs. Maud Debien: Let's talk about the famous 5%. Tell me if I understand correctly. People have mentioned it to us several times, and there seems to be a bit of confusion. When we speak of 5% market access, what I understand is that many countries have granted access to 5% for all products, which would enable them in certain cases to grant 0% for non-competitive products and 10% for competitive products. Is that right? Canada has given 5% access for each of its products. That's what has caused the distortion. That's what I understand about 5% of access to our markets.

You say that, in future negotiations, Canada will have to firmly insist on 5% for each product and not 5% for all products, which causes distortions. This is how I understand the 5% distortion, which is not equitable for Canada. Canada has played fairly in this field, but other countries have created this distortion. Tell me if I have it right.

Ms. Sullivan, if I understood correctly, you said that during the next round, market access would have to be increased to 10% and eventually 15%. This would be Canada's aggressive position in this field. Have I understood you correctly?

As for supply management, I agree completely with all the speakers. Canada must maintain its position so we can continue to manage supply.

Should the negotiations fail or other countries, particularly the U.S. and Europe, not agree with Canadian positions, what should Canada do? Should it withdraw from negotiations? Should it remain involved. Should it continue the battle?

• 1710

Mr. Mike Dungate: Is that question for me?

Mrs. Maud Debien: It is directed at all the people involved in agriculture.

Mr. Mike Dungate: I think, firstly, in terms of the minimum 5% access, that aggregating products is one way of acting. Another way is to not offer 5% access, even for a single product. There are several ways of blocking minimum access.

As for the negotiations, I think the Americans and the Europeans will not agree to eliminate export subsidies. The Europeans will also not agree to eliminate the blue box. These are measures that cause the most distortions in the export market. It is not the countries with the most open markets that must give but the others.

[English]

The Acting Chairman (Mr. Jerry Pickard): Mr. Blaikie.

Mr. Bill Blaikie: I have just a few comments, Mr. Chairman.

I have to half agree with the chairman on this. I wish supply management was purely a domestic issue, but it seems to me there is this ideological component to the WTO, which comes out of the American mind, so to speak, that regards marketing boards, and particularly supply management, as a form of organized economic activity that is offensive to them. They regard it as crypto-socialism on their northern boundary, and they are determined to stamp this out.

I understand why you put it that way, but I don't have to put it that way. I can call it what it really is—namely, an attempt to impose a certain form of ideological uniformity on the world.

Marketing boards, state trading agencies, the Wheat Board, supply management, liquor boards—all these things are in their sights, so to speak, at the WTO. The sooner Canadians realize this and the sooner our governments begin to name this for what it is, as opposed to playing this polite little trade conversation.... I'll call a rose by some other name if you'll call something else by some other name, and we'll pretend not to have the conversation we're actually having.

Now, maybe this is all necessary in order to prevent further hostilities, but I think we need to face up to the fact that a lot of the ways in which we do things here in Canada are, in fact, found to be philosophically objectionable by our southern neighbours. That's part of what's going on.

I think I detect a little bit of a problem here in the sense that you guys—that is to say, those of you in supply management—have a united front, but your erstwhile allies over here are already, in so many ways, calling your position unrealistic. By saying that their position is the realistic one, which is quite different from your position, they're saying, by implication, that your position is unrealistic.

So I would counsel getting together to see if you can come up with a more united front than what has been put forward here today. If I were the Americans or others, I would see this is an opportunity to say, well, not even your own food services industry regards this as a realistic position.

I happen to support your position, but I'm concerned about what I see here today.

The Acting Chairman (Mr. Jerry Pickard): Mr. Boyd, do you want to respond to that?

Mr. Phil Boyd (Executive Director, Canadian Turkey Marketing Agency): Thank you very much, Mr. Chairman.

I guess my response will be in part to Mr. Blaikie's comments and in part to other comments we've heard today.

• 1715

First of all, yes, there is an ideological difference, by and large, in terms of where CRFA is at, where supply-managed groups are at, where the Canadian Federation of Agriculture is at, and where the poultry industry is at when it comes to the issue of over-quota tariffs. That's very clear.

The focus, though, as Mike Dungate articulated, as John Core articulated, and as our vice-chairman articulated, goes to the heart of the games played in the Uruguay Round. I think madame identified some of those in her comments.

I would like to read a quote from the Minister for International Trade when he opened these hearings with you in, I believe, February. He said:

Quite frankly, it's academic talking about opening up new disciplines if countries are still hiding behind all sorts of barriers in the old disciplines we've opened up. I think people have to be candid...and not be sanctimonious about the new agenda when the old agenda is perhaps still creating areas where we can't sell our products and goods or vice-versa.

In our view, he's hit the nail on the head with that one. Quite frankly, when we go through the data, we don't see a realistic outcome of this round that says Canada should go in with anything other than what the CFA has tabled. What was summarized in the trade meeting last week, with 600 of the minister's closest friends in attendance—

Voices: Oh, oh!

Mr. Phil Boyd: —was that we have a minister who is committed to fight on farmers' behalf.

There are export interests at that table that frankly are not elsewhere in the food sector. The position we're strongly in support of supports Canadian agriculture and is of benefit to other stakeholders in the industry as well.

So I think we can get bogged down in who aggregated what, and who did what, and who didn't put the dot on that i and the cross on that t. The point is, in the commitments there are divergences from how closely guidelines were followed in terms of whether they were seen as rules or not. It's about that simple.

There are easy positions to take. Some of them are so straightforward one would almost wonder out loud why Canada should even go—you know, just send a letter saying, “Here's what we'll do”, and not go—when it comes to the question of over-quota tariffs, minimum access increases, and those types of things.

Thank you very much.

The Acting Chairman (Mr. Jerry Pickard): Thank you, Mr. Boyd.

Ms. Kathleen Sullivan: Mr. Chairman, Madam Debien had posed some questions to CRFA, and I wonder if we might have an opportunity to respond.

The Acting Chairman (Mr. Jerry Pickard): Just one moment. I'm going first to Mr. Stolp.

Mr. John Stolp (Representative, Supply Management Commodities of Ontario): Thank you very much, Mr. Chairman.

I want to touch on both points, if I can.

Yes, there are things we do here in Canada that may be offensive to our neighbours to the south, and yet there are many things our neighbours to the south do, such as putting $6 billion into farm aid packages, that are quite offensive to us. We found that to be totally against the whole idea of liberalizing agricultural trade, or trying to liberalize the distortion of it.

The fact that what we do and what they do may be offensive shouldn't be part of the discussions at the table. There is the whole question of, well, certainly supply management is on the table. Supply management is domestic in nature. Whatever comes out of the trade round will tell us how well we can manage that system of supply management.

The position we're delivering is the position that says, okay, this is what we feel is important for Canada so that we can continue our system of supply management. However we manage our supply of poultry and dairy, and they manage their supply of peanuts and cotton, or whatever they do with peanuts and cotton, it's our choice to do it that way.

Once everything had tariffication, it put one word, tariffication, on all the different types of systems there were. Now things were subject to tariffication—1,370 different TRQs.

Of all the kinds of imaginable ways of protecting themselves...and we call ours supply management.

I'll end with that and let Kathleen continue.

The Acting Chairman (Mr. Jerry Pickard): Ms. Sullivan.

Ms. Kathleen Sullivan: To respond to Mr. Blaikie's question—madam, I guess we'll go back to yours on your next round—we clearly do see things differently. I don't know that it's an issue of ideology so much as the fact that we're being practical in our approach to this.

Mr. Bill Blaikie: Not in your case; it's if the Americans decide...[Inaudible—Editor].

Ms. Kathleen Sullivan: I think Phil suggested that we have ideological differences in how we viewed this.

Mr. Phil Boyd: I think that's fair.

Voices: Oh, oh!

Ms. Kathleen Sullivan: We are taking a look at what the WTO is about. The WTO clearly states that it's about the progressive liberalization of trade.

Mr. Bill Blaikie: Why assume it's only about liberalizing trade?

• 1720

Ms. Kathleen Sullivan: The fact is that we are looking at more liberalized trade. Our key trade negotiators have also made it clear that this is....

You know, I'm not a trade expert, but I look to the experts to understand what's going on. They are saying that in the next round and successive rounds, what we're looking at is continually increasing or liberalizing trade.

I think we clearly have to address all of the issues that are going on in terms of export subsidies, distorting domestic support, and things of that nature, but if we go into the next round of negotiations with an untenable position, a few things are going to happen. One, we'll be forced to adopt a position that is imposed on us by our trade partners, just as we were the last time around with tariffication. Two, we will lose control over the transition period to more open markets. Three, what will happen to the industries in Canada that are export-oriented—the sugar industry, for example?

I guess I disagree that the CFA's position is tenable. I think we're going in saying that we want to extend in one area and stay protectionist in another. If all the countries in the world go in saying that, then should we really be going into another round of negotiations this fall?

The Acting Chairman (Mr. Jerry Pickard): Thank you very much.

I want to make a comment while I have the chair.

The chair of this committee does agree with the presentations that have come today. Quite frankly, I would support Bill's position—I was kidding before—but there's a point that has to be made here: the supply system has been great for Canada. There's no question about that. It's been great for the consumer. It's been great for the restaurant industry. It's been great for everybody in the system itself.

Yes, Bill, your point was well put that the Americans do not see it as great in their economy, but the reality is that we did go into a trade negotiation last round, and we did strike a deal that appeared on the surface to be workable, but enforceable it wasn't—or at least they haven't lived up to what was negotiated and agreed to.

I have to commend all of the commodity groups sitting around this table, because I think each and every one of you has moved a tremendously long way in order to come up with a new solution, a solution that is credible, and one that can move forward.

I believe there's been a tremendous amount of sacrifice from each of you, because your positions earlier and your positions today are dramatically changed.

The fact is, what we need to do is utilize the fact that we put a good position on the table, which Ms. Sullivan put forth very well, but it has to be an enforceable issue. That's really where we have run into problems with both the European Union and the United States. It's not only, then, the position we put there; it's also the position they are going to have to live by. There will be all kinds of arguments at the table.

I think one of the positions they're going to quickly take—and I would like your response—is that 5% access means something different to the United States than it does to Canada. They're going to be talking quantity, not percentages. We're talking percentages, not quantity. We have to have a clear position on that.

Maybe we can have comments from each of the groups on that, because I think that will be the main barrier with Europeans and with the Americans.

John.

Mr. John Core: If I may, Mr. Chairman, I agree with you. When I listen to the rhetoric, I'm hearing Americans and Europeans say, well, 5% access to our market is ten times bigger than 5% access to your market, and that's not fair; let's do it on a tonnage basis.

The reality, though, if you're going to have a level playing field, is that access has to be proportional to market size. That's the only way it has the same impact on the domestic market in the other countries as on the trade competitors.

So I think you make a very good point, Mr. Pickard, because that is lost quite often. I've even had—horrors to say—members of Parliament ask me that same question: isn't 1% access to the huge American market worth far more to you than 5% access to the Canadian market, and isn't that part of the levelling of the playing field?

That's not the issue. The issue is that the domestic production within that country has to feel the same pressure on its market size as the domestic producer in another country if you're going to level the playing field.

• 1725

The Acting Chairman (Mr. Jerry Pickard): I just wanted to make sure that point was on the record, because it does get lost.

Mike, were you going to respond as well?

Mr. Mike Dungate: No.

Mr. Bill Graham: I know I should be there, Mr. Chairman, but may I ask a question?

The Acting Chairman (Mr. Jerry Pickard): Certainly. Mr. Graham. Five minutes, sir.

Mr. Bill Graham: I know I have to be very quick. These are three quick questions I have and they're all rather technical. Well, one is sort of philosophical.

Everybody says we have to get rid of export subsidies and everybody says it's the Americans and the Europeans that are doing it, so how...Jean asked earlier today how we are going to bell the cat. Well, who is going to tell the Europeans and the Americans to get rid of...or make them; there's no point in telling them. They've been promising to for a hundred years. It's like the nuclear disarmament thing we went through. Everybody signed the treaty and everybody agreed to do stuff, but nobody's done it for 25 years.

Now they've promised to do it and they haven't done it, so who's going to make them do it if they don't want to do it? That's my first question.

The second question is, if you have blue boxes and green boxes and all these four different colours of boxes, presumably those were agreed to by everybody in the negotiations. How can the United States and Europe move something from the orange box to the blue box or the amber box to the green box, or the blue box to the green box, without anybody else's authority around the table? It sounds to me as if they just did it unilaterally. The question I have is how can they do that? Are they entitled to make unilateral decisions?

The third question was, you talked about 54% of the TRQ in the United States—I forget whether it was chicken or turkey—was not filled. Does that mean you could be filling it? Does that mean that's a market space that's open for our producers to go in and take, or what?

The Acting Chairman (Mr. Jerry Pickard): Mr. Boyd, do you want to tackle that first?

Mr. Phil Boyd: Thank you very much, Mr. Chairman. I will just deal with the first question.

I believe the question Mr. Graham put forward was, what will make the Europeans and Americans forgo export subsidies and eliminate them and address their other issues? I don't know what will make them do that, but I know tampering with over-quota tariffs on Canadian products won't make them do that, and I think that's the point we're making, okay?

The other thing, I guess, is that as my memory goes, the Europeans and the Americans...the Europeans, in fact, favoured article XI back in the early days of the last round, and it wasn't until the last minute, when they went into the Blair House and cut a deal, that they backed off.

The Acting Chairman (Mr. Jerry Pickard): The Japanese apparently did support us at one point as well.

Mr. Phil Boyd: Yes, and they walked as well. But I think our Canadian negotiator would say that what happened last time did not isolate Canada one little bit. I believe he testified to that fact before the House Standing Committee on Agriculture.

The Acting Chairman (Mr. Jerry Pickard): Does anyone want to tackle the question about the movement from amber to green and blue? Mike?

Mr. Mike Dungate: I will, seeing as I raised the issue. What they've done is they've changed their domestic program. So what you get is a wheat farmer in the mid-west in the U.S. who was getting a payment of, say, $30,000 a year, based on how much wheat he was producing each year. That was an amber program. It was directly linked to production. So what they said is, okay, we'll just block you at your historical production and we'll give you $30,000 a year. We don't care what you grow now. This guy's been growing wheat on his farm for the last 40 years. He's getting the same $30,000. What's he going to do? He's going to plant wheat again this year.

Mr. Bill Graham: They built it into the loan program or something like that. They don't say what they're....

The Acting Chairman (Mr. Jerry Pickard): John.

Mr. John Core: One of the other elements of our policy position is that there should be a pre-approval process. You have to have green programs, but let's have a pre-approval process at the WTO level that applies the same rules to everybody as a subset of the policy.

Mr. Bill Graham: As in export subsidies—there already is an industrial export subsidy where you have a list of what's permitted and it's clear.

The Acting Chairman (Mr. Jerry Pickard): Cor.

Mr. Cor Kapteyn (Board Member, Ontario Broiler Hatching Egg and Chick Commission): I have just one little comment, and maybe this will confuse the issue more. I understand they're trying to put together another box in Europe and that's called multi-functional. There's been quite a bit of discussion between the Europeans that it doesn't fit into any colour, but they are there for doing things other than agriculture. One of the things is to attract tourism, so they have to keep the countryside looking pretty. They have environmental issues that have to be looked after. So they're even creating, at this point, another box that is multi-functional, so it'll get more complicated.

The Acting Chairman (Mr. Jerry Pickard): Could I have a very quick answer to percentages of access from that, and then Ms. Augustine is going to ask a question.

• 1730

Ms. Kathleen Sullivan: I would just like to respond or address the issue of tier two access and whether it's filled or not. I think when we talk about this 5% access we need to question whether we are suggesting other countries didn't live up to their commitments that are in the WTO schedule, or are we suggesting the commitments were too flexible, and I think that's the case.

I think one thing we all agree with around this table is that in the next round we have to make sure that access commitments, whether they're at the 5% level or, as I would suggest they're going to be, at a higher level, are in fact clear and they're enforceable and everybody agrees to live up to them.

I think another point that is important is that we often—and this has been raised by previous groups who came before you—think of ourselves as boy scouts. We're not up to 5% on all of our products in terms of access commitments. We do have a unanimous WTO ruling that suggests that our dairy pricing system is in fact export subsidies and that in fact we're not living up to our commitment to import fluid milk.

So I think we have to bear that in mind as well. There are other countries that have concerns about what Canada is doing too.

The Acting Chairman (Mr. Jerry Pickard): Ms. Augustine.

Ms. Jean Augustine: Mine is a more cooperative kind of question. It was interesting this morning that one of the witnesses said to us there's nothing wrong with the WTO; what is wrong is that they're negotiators. I wondered if there are any comments any of you would want to make to that.

The Acting Chairman (Mr. Jerry Pickard): John.

Mr. John Core: I am assured over and over again that the negotiators for Canada reflect government policy in negotiation and I've never seen them divert from that.

If Mr. Gifford is in fact selected as agriculture negotiator, we feel he is the most experienced, knowledgeable person, and I'm sure he'll follow the direction the Government of Canada provides to him.

That's why we're here, to influence the policy position of the Government of Canada.

The Acting Chairman (Mr. Jerry Pickard): And the Government of Canada tried to keep the community involved in negotiations last time. They had negotiators right there working side by side.

Ms. Kathleen Sullivan: I would echo John's comments about the quality of our negotiators and what we've empowered them to do, but I think what is important is that we as industries and as Canadians come up with a common and credible negotiating position that we can then turn over to our negotiators so they can actually achieve real and meaningful results for us.

The Acting Chairman (Mr. Jerry Pickard: Mr. Ferrier.

Mr. Andrew Ferrier: I was going to make a similar comment on that. I think one of the problems our negotiators have is that the general promise that I think the minister has made in the past is not trading sectors off against each other. We clearly have different interests, where you have one sector that says it is export-oriented and needs other countries to dismantle some of their supply management, and we have other sectors that say they need some supply management because other countries aren't dismantling, and we get into a bit of circular argument.

I think Kathleen hit the nail on the head. We should spend a little bit more time internally trying to find common ground between export-oriented industries, or those industries that are desirous of exporting and are stopped from doing that because of other countries' distortions and our own needs.

I think we have a lot of work to do in order to not put our negotiators in this position of having to trade one sector off against another.

The Acting Chairman (Ms. Jerry Pickard): Ladies and gentlemen, that comment has also been made by many others. Don't trade one group against another. Stand for the positions we have.

I really want to thank each and every one of you for coming and putting your information on the table. There's no question that your input is going to be very important to our finalizing the report, so thank you very much. We very much appreciate it.

We are going to break. We're out of time, so we're going to break for the next 12 minutes, and we'll be back at 4.30 p.m. for the next group.

Thank you very much.

• 1734

• 1758

The Chairman: We're still waiting for Ms. Grey to come, but she knows where we are and I'm sure she'll arrive shortly.

In the meantime we have the Council of Canadians, represented by Catherine Goulet. Thank you very much for coming. You know that we had Ms. Barlow before us in Ottawa.

Ms. Catherine Goulet (Southern Ontario Representative, Council of Canadians): Yes, I do.

I only brought five copies of my remarks. I'm not sure if the members have it. But I will—

The Chairman: We had to give it to the interpreters. But don't worry, that's fine. We'll make sure—

Ms. Catherine Goulet: Okay. I'm just reading.

I wanted to begin, first of all, by thanking the committee for the opportunity to speak to you today. As noted, I work with the Council of Canadians, a national, non-partisan, public interest group with more than 100,000 members and over 50 local chapters across Canada.

As the chairperson indicated, this committee has already heard from Maude Barlow, our national chairperson. I share her concerns and fully endorse her presentation. So rather than repeat some of the points Maude made, the two key issues I would like to address today are the low-profile nature of this consultation and the Canadian people's lack of access to and understanding of the issues involved in the FTAA and the WTO.

I do want to note that I think these hearings are an important initiative and a good first step. While I appreciate the time and resources the government has allocated to have this committee travel across the country to speak with concerned Canadians, this is far from being a full canvass of public opinion on the matter. Most Canadians are completely unaware that we are being asked to respond to this process. Admittedly, the media have contributed to this lack of information by neglecting to cover these hearings. However, I believe the committee and the government have a responsibility to inform us about the critical issues before this committee.

• 1800

Members of the committee may be aware that the Council of Canadians, along with 40 other national organizations, undertook a consultation on the MAI last fall. We held public hearings in eight major centres, and almost 15,000 people participated across the country. I believe that was probably larger than the process you're engaged in now.

I understand that Minister Marchi and the provincial trade ministers met with the Business Council on National Issues and others to discuss how public consultation on the WTO should be undertaken. I would like to suggest that the minister consider meeting with a broader representation of the Canadian public. Perhaps someone on the committee could inform me further on this.

Given the public relations disaster governments around the world suffered as a result of not consulting their citizens about the MAI, I'm surprised and disappointed that the government is not doing more at this time to avoid similar problems. I'm concerned that the Canadian public has not been informed about what is involved in these agreements and how individual Canadians will be affected by them.

It is my understanding from the documents I received from this committee's clerk that the WTO member states are engaged at the moment in a process of developing proposals. I'm concerned that by engaging in these consultations at this time before our proposals are developed, the Canadian public will not have the opportunity to respond to anything concrete. We seem to be being consulted before the fact.

I have been involved with organizations concerned about international trade issues since the early nineties, and yet I often feel that my government does not inform me enough about our trade agenda. Macroeconomics, trade law, the WTO, and GATT are not light reading for a day off, and yet this is what many Canadians are attempting. We're becoming schooled in economics. We're reading everything we can, going to lectures, and attending these hearings, all in a concerted attempt to understand issues that are vitally important to our day-to-day lives. But government must do a better job of getting this information in understandable language into the hands of Canadians.

Although we may not have economics degrees, it is clear to me and to many Canadians that the NAFTA experience has not been good for us. Canadians have been told that we have seen an economic recovery, but we know that many Canadians don't feel this is the case.

Canadian trade policy has always been based on the idea that what was good for business and trade was good for Canadians. I would argue that this is no longer the case. As the economy has become increasingly global, trickle-down economics and the resulting benefits for average Canadians are not being seen. The global economy does not trickle down; it appears to flood up. It does not benefit the greater part of Canadians. The Canadian government has a responsibility to develop policy that is good for the majority of us.

Governments need to respond to the people about our concerns and our sense of being uninformed. It is incumbent on government to inform the electorate and to engage in broad and in-depth discussions with us.

The government must respond to concerns raised in this discussion before proceeding with negotiations. Therefore, I urge the committee to undertake to ensure that Canadians are better informed and much more seriously consulted and to recommend that Canada stop negotiating agreements at the WTO and within the FTAA until this occurs.

Thank you.

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

We'll we go next to Mr. Porter of the Centre for Equality Rights in Accommodation. Mr. Porter.

Mr. Bruce Porter (Executive Director, Centre for Equality Rights in Accommodation): Thank you, Mr. Chairman.

You'll see that my submission is entitled “Rethinking Trade and Investment Within a Human Rights Framework”. I'm just going to briefly summarize it for you, and I hope to discuss it a little more in questions.

CERA has worked in the area of human rights in housing for well over a decade. We primarily work with people living in poverty who are having difficulty securing adequate housing. The majority are women and children.

But in the course of our work in domestic human rights, we have increasingly come to realize that the causes of poverty and systemic homelessness in Canada go well beyond our borders to things that are happening internationally. This has led us to become quite involved in the area of international human rights. We've coordinated NGO submissions to several human rights treaty monitoring bodies on the occasion of Canada's review before the Committee on Economic, Social, and Cultural Rights, and most recently, just a couple of weeks ago, before the Human Rights Committee in New York. And we work with other NGOs internationally, promoting social and economic rights, such as the right to an adequate standard of living and the right to housing.

• 1805

Essentially what I want to suggest to you today is that Canada's initiatives in the area of trade and investment in recent years have been misguided and have really been based on a paradigm of human rights that is incompatible with the history of human rights in Canada, with our own Constitution, and with the will of the majority of Canadians.

I talk about retrieving Canada's commitment to a holistic approach to human rights. We sometimes forget that we have a very major difference with our neighbours to the south. The United States has steadfastly refused to recognize any social and economic rights in international human rights law, even to the point of being one of two countries in the world that has refused to ratify the Convention on the Rights of the Child.

In our own Constitution, this difference is reflected in the decision not to include property rights in the Canadian Charter of Rights and Freedoms for fear that it would lead to the kind of case law that has occurred in the United States, where corporate rights end up taking precedence over the human rights of vulnerable groups. Yet what we've been peddling in recent years in the international domain of trade and investment is essentially an American paradigm of human rights, in which property rights, corporate rights, are given a higher priority than the rights of vulnerable groups.

This has led to what David Schneiderman and others have described as a constitutional change by stealth in Canada, where through agreements such as the NAFTA investment chapter and some bilateral trade agreements, and certainly in what was proposed under the MAI, corporations are given standing to challenge certain kinds of regulatory initiatives by government, which very well may be designed to protect the rights of vulnerable groups. Corporations are given standing to challenge those regulations as a form of expropriation, which the Supreme Court of Canada, very early in the history of the charter, in Irwin Toy, said was not a right that corporate entities had within the Canadian constitutional regime.

So we've really departed from an essential tenet of our constitutional system, which is expressed in section 36 of our Constitution, where we in Canada have recognized that governments have positive responsibilities to protect vulnerable groups and to provide for things such as shelter and an adequate standard of living as a component of a holistic approach to human rights, which is really the only approach that is consistent with the international regime of human rights. All of you will know of course that the Universal Declaration of Human Rights and subsequent covenants have all recognized the interdependence of social and economic rights with civil and political rights.

So I'm suggesting that in our work in trade and investment, Canada has to retrieve its historical commitment to that holistic approach to human rights and depart very dramatically from what is a very negative approach that essentially, as I suggest in the submission, turns social and economic rights on their head by giving standing only to corporate entities to challenge regulatory measures by governments, and giving no standing to citizens—who may rely on those measures for the protection of their basic rights—to take any kind of complaint forward alleging that their government is violating their rights by failing to protect them or failing to regulate the market.

I outline some of the things in the MAI that are most frightful to those of us who work in the area of social and economic rights. Just to mention a couple, the rollback and standstill provisions that were developed there are in blatant contradiction to the very important principle in social and economic rights of progressive realization, which essentially means that in ratifying the Covenant on Economic, Social, and Cultural Rights, Canada and other state parties are committed to trying to move forward in the protection of social and economic rights, and not to take deliberately retrogressive measures.

The committee in Geneva, in reviewing Canada, has identified some very serious retrogressive measures recently, particularly the revoking of the rights under the Canada Assistance Plan Act, which are really the foundation for the protection of an adequate standard of living and an entitlement to basic necessities in social assistance programs. That of course has been followed by dramatic increases in poverty and homelessness, both of which have been identified most recently by the two major human rights treaty monitoring bodies of the UN as very serious problems in Canada.

• 1810

Yet what we have is a regime where, when the highest-level human rights bodies identify very serious violations of social and economic rights in Canada, we see barely a ripple in terms of government policy, but when an American corporation invokes the investment chapter of NAFTA or when there's a WTO challenge to split-run magazines, we see very strong effects on government policy and immediate review. There hasn't been any sign of such a review or any change in policy that came from the comments of the Human Rights Committee of the United Nations.

So we have a very gross disparity in the degree of enforcement of social and economic rights of citizens in comparison to the corporate rights of investors and trading partners.

What I'm suggesting as a new approach is that we essentially turn the whole thing around again and put the primacy of human rights of citizens as the general framework for negotiating trade and investment treaties.

• 1815

What does it look like? First of all, we have to have domestic enforcement provisions of social and economic rights. That's the basic starting point.

It's of great concern to us that in the recent social union agreement, there's no reference to federal-provincial cooperation or agreement to protect the basic rights of citizens or to meet our obligations under international human rights law. The issue of federal-provincial cooperation has come up repeatedly before international human rights monitoring bodies as a basic problem in Canada, and clearly the social union was the occasion when there should have been an agreement to make that one of the major priorities. We didn't even see the restoration of the rights under CAP that had been lost with the CHST, despite very serious concerns that have been raised continually by monitoring bodies about that.

So we have to start with domestic enforcement provisions for social and economic rights, which have been recommended by various human rights treaty monitoring bodies.

We also have to look at implementing Canada's international human rights obligations more effectively. We need to start to develop, within the international human rights regime, effective enforcement mechanisms so that when disputes arise with trade and investment partners about potential violations of a trade treaty, but they involve issues of the protection of the social and economic rights of citizens, there's a method for adjudicating the human rights questions that arise.

Our approach is not to give that adjudicative role to the WTO or to trade and investment tribunals. We feel human rights jurisprudence over the last 50 years is very important to preserve, and we feel it's important to ensure that bodies with the competence to adjudicate human rights issues, whether they be domestic or international, be the ones to adjudicate issues of human rights.

So we envisage something like, in every trade and investment agreement, instead of a social clause, some kind of human rights clause that essentially says human rights have primacy over any of the provisions of the trade and investment agreement. For example, where something in Canada is challenged as a form of expropriation, Canada would have the opportunity to say, “No, this a component of the protection of groups that's required by our international human rights commitments”, and where there's an issue of whether something is an obligation under human rights law, it would be a human rights body that considers that issue.

It's clear that we have to move, both at the international level and at the domestic level, very dramatically to create enforcement mechanisms that are at least as strong and effective as the enforcement mechanisms that have been developed in recent years in the area of trade and investment.

I'll leave it at that, and I'd be happy to take questions at the end. Thank you.

• 1820

The Chairman: Thank you, Mr. Porter. That was very helpful.

I'll go back to Ms. Grey, who has now joined us, although I could go to Mr. Jennison first, if you want. I'll go to Mr. Jennison, and then come back to you later.

Mr. Don Jennison (Individual Presenter): Thank you.

I'm listed here as being an independent, but I do have the permission to speak on behalf of a local organization called WORLD 19. We came together as a group in 1997 to oppose the amalgamation of the city of Toronto. At that time, 78% of the people were opposed to amalgamation, but we got it anyway. Our opposition to the megacity was based on that—

The Chairman: I was one of the 79%.

Mr. Don Jennison: Was it 79%?

The Chairman: I was part of the 79%...[Inaudible—Editor]

Mr. Don Jennison: Hear, hear!

Our opposition to the FTAA is based on the same scenario. People didn't want it, but big business did—and the BCNI has been mentioned over here by my colleague from the Council of Canadians. That's part of the issue here today. We don't have much clout as citizens, but the BCNI and the OECD have all kinds. I guess that is the premise of what I really want to say today.

I had difficulty even getting on this panel, which is rather unfortunate. One of my colleagues over here mentioned that as well. I don't know where people got their information; there was a huge crowd in before. But I'm an ordinary guy. I read the papers every day. I belong to the Council of Canadians. I belong to the Canadian Centre for Policy Alternatives. I don't know where people found out about this. I guess the fact that there are only five or six of us here to speak about this issue is pretty indicative of how much people know about what's going on in the federal government. I'm appalled, really, that so few people are here.

Our little group got started just a little while ago, but we're going to branch out into other things in the political field. This is just one indication.

I got this notice from a girl in Vancouver, who is making a civil challenge about the MAI or the FTAA—I'm not sure—and she told me to get on the list. I tried to get on the list; my MP didn't even know about it. I'm in the Parkdale riding, by the way. And I understand she's going to chair something that's coming up shortly.

I found out about five or six days ago that this thing was on tap, so I've been scurrying around for the last three or four days writing this little speech that I'm going to make to you. I don't think that's right at all.

Fortunately, I've read a lot about economics. I'm no economist; I'm just an ordinary citizen who reads a lot, and I have a strong feeling about this country and where it's going. It has taken me 72 years; that's about how old I am, so I have a lot behind me.

What I'm really concerned about here today is the lack of public participation. I don't think I can make it up, but I'm certainly going to give it a good try.

I find it puzzling that I am here, and there's so much information out there about free trade that has been spoken about by people like Linda McQuaig, Mel Hurtig, David Orchard, John Ralston Saul, Paul Hellyer, and of course Maude Barlow, Walter Stewart, James Laxer, Tony Clark, Murray Dobbin, William Krehm, Thomas Walkom, Ed Finn, and even Northrop Frye.

To quote just one source, Northrop Frye, he said:

The Americans made two attempts to occupy our country, both of them beaten off, but violence and the threat of violence continued in the Fenian raids and such as the Fifty-four forty or fight crisis. Then they [that is, the Americans] tried economic penetration, in which they were brilliantly successful. Why go to the trouble of annexing a country that is so easy to exploit without taking any responsibility for it?

He said that in 1991.

In addition to people who have said so much about this economic situation we're in, Richard Gwyn had an article in the Toronto Star this morning about the true allegiance of Canadian corporations. They don't care about us and human rights; they care about making a buck. The company mentioned here is Northern Telecom. He says quite blatantly here that he doesn't have any allegiance at all to Canada—and I'm sure he doesn't—and if our taxes don't go down they'll probably move somewhere else. That's a terrible way to control.... Well it's controlling our government, at least I know that. I have a feeling for that.

• 1825

In addition, organizations such as the Council of Canadians, the Canadian Centre for Policy Alternatives and Citizens Concerned about Free Trade have stated their concerns about the deal in many publications. Unfortunately, they are rarely seen in daily newspapers in this country. On the other hand, the Fraser Institute, the C.D. Howe Institute, the BCNI and the OECD have their opinions regularly published with national coverage. Citizens get a one-sided presentation, generally paid for by the business community.

After signing the free trade deal—I call it a deal but it was an agreement—Ronald Reagan was quoted as saying:

This agreement will provide enormous benefits for the United States. It will remove all Canadian tariffs, secure improved access to Canada's markets for our manufacturing, agricultural, high technology and financial sectors, and improve our security through additional access to Canadian energy supplies. We have also gained important investment opportunities in Canada. I congratulate Prime Minister Mulroney.

While we're at it, we should also congratulate our own Prime Minister, Mr. Chrétien. I wonder what can be said on the positive side of this agreement for Canada. How have we benefited? Can job losses and deindustrialization be called benefits? Can downsizing be called a benefit? Can 20% of Canadian children living in poverty be called a benefit? Can homelessness in our big cities be called a benefit? Can the fact that 30% of Canadians—this was reported in the paper the other day—feel they might lose their jobs in the next two years be called a benefit?

Can the fact that we have foreign ownership higher than the European Community, the United States and Japan be called a benefit? Can the fact that we have lost control of our economy and are fast becoming an appendage of the United States be called a benefit? Can our dollar, which virtually gives businesses away to the United States, be called a benefit?

I believe there is no political will to block the complete economic takeover of Canada by the United States. Fortunately, people have the will to change the terrible situation. I was in favour of free trade in the beginning. I naively thought other countries would have to come up to our standards for wages, benefits, health and safety standards, environmental controls, etc. Unfortunately, Canada is involved in a race to the bottom, and this is not acceptable. We must get out of this trap before we've been taken over completely by our American friends.

Thank you.

The Chairman: Thank you very much, Mr. Jennison, for taking the time to prepare that. We'll come back to questions later.

Ms. Grey.

Ms. Josephine Grey (Executive Director, Low Income Families Together): Thank you.

A lot of folks have presented to you. They have spoken about the technical issues, many of the legal issues, human rights issues and the like. All of those are very important and I support much of what's been said, particularly by my colleague Mr. Porter in his recommendation around how we address this issue by using international human rights laws as primary over free trade agreements.

But I want to talk about a couple of other things in relation to this—some of the perceptions I see amongst people in my community, young people and the like; some of the impacts I'm seeing increasing trends toward, particularly on families—and relate those to where I think this whole free trade agenda is going.

To start with, when I look at this whole free trade agenda and read all of the material, I find that the primary fundamental principle underlying it is greed. That sounds a little stark, but really if you boil it all down to the most singular point, greed always pops to the top. It floats like scum to the top.

• 1830

The statement of principles in the San José ministerial declaration says to promote prosperity, to increase economic integration and free trade among the countries of our hemisphere, which are key factors for raising standards of living, improving the working conditions of people in the Americas and better protecting the environment.

It reminds me of the marketing we see daily that claims having a Budweiser will get you out into the mountains and a date. It means nothing. It's a good sales pitch, but when we see how these laws work, who's benefiting and who's losing, when you look at all that, analyse it and boil it down, the reality is that greed is the bottom line. I find that very disturbing. I don't think we have traditionally constructed our world economic and social systems based on greed, but that's where we're going now.

What does that mean? If greed is the prime directive—in my analysis—I get the sense that this whole framework is like a legalistic, very complex way of excusing an addiction. The addiction is the accumulation of wealth for wealth's sake. We're not talking about people who build factories, invest in communities and provide jobs here. They are not the primary beneficiaries of these agreements.

The primary beneficiaries of these agreements are investors. For the most part our investors are people who simply gamble. If you strip away all the nonsense and the rhetoric, they gamble. The amount of money that flies around the globe in the hands of these people is 90 times larger than the amount of money that circulates in terms of goods and services. That's really frightening to me.

They do awful things to countries as they go swimming by, making their little percentage points and their digital wealth all over the place. I think it's an addiction. I think we have a very addictive society. Our whole society is moving in that direction, whether it's television, accumulation of wealth, crack cocaine, or whatever.

But when you ask the huge corporations, speculators, massive investors and the like to voluntarily behave themselves, voluntary respect human rights and voluntarily think about the principles in these government documents, it's like asking a crack addict, “Would you please stop robbing people so you can get crack?” It's just not going to happen. So there's my concern about greed.

The next thing is competition. It's all about competition. Let's be competitive; we have to compete. Competing in this particular context means bringing wage costs down, bringing standards down in every way possible. As a friend over there pointed out, he thought it would raise standards for other countries. That's what one would hope and believe in reading these things. But that is not what's happening, we can already see that. It's dragging us down to levels where no one should be living, but they already are in the south. I find that really frightening.

So competition is competition to make sure you get the maximum profit. It's competition to make sure the wealthy in this equation get wealthier. If we're not competitive by that standard, it's a disaster. Yet nobody ever asks who the competition will benefit. I have a real problem with the whole competition thing.

I don't think you construct a society and an economy based on the whole concept of competition. The only things you get out of that are winners and losers. When you have people who lose, when you have people who can only see that others are benefiting while they are losing and losing, what you end up with is anger, resentment, strife, stress, exhaustion and all of those things.

That leads me to what I think we're getting, what I think is really happening on the ground in our societies as this striving toward competition and greed increases, as the credibility and the belief in competition and greed increases.

In the organization I work in, I see a gradual increase in calls from people who find they can no longer afford to support their families because there's no way they can string together enough shitty little low-paying jobs to actually have any kind of security for their families. They can't come up with enough income, in the limited amount of working hours available to them, to afford the cost of living as it constantly increases.

The value of our wages has been dropping. I'm talking about the lower 20% to 30% in Canadian society, but I want you to remember that I think this applies to about 60% of people in the south. For this huge group of people, north and south, our standards of living are dropping. The value of our wages is dropping. The amount of work we have to do just to survive is increasing. Our ability to provide any kind of security and to plan anywhere into the future is decreasing drastically.

• 1835

What does this do? The key to what I really wanted to talk about today is what I see happening to the kids. I live in a neighbourhood that's just loaded with children. There are some 6,000 teenagers in my neighbourhood. Most of them are from immigrant families. They're children of colour. They come from working poor parents who work two, three, four shifts just to feed them.

These kids have no parents. My kids are no exception. I'm a single parent; I don't have time to parent them. I see this problem replicated all across North America, that the people who are trying to support their kids—and God help them if they have more than one or two—are working so hard that they can't be there for them. If they're not working, the unemployment income security programs are so dismal, miserable, demeaning, and cruel that they ruin and destroy people's lives. I mean directly. I know this because I see the fallout all the time. I know what happens when people go through those meat grinders of income security systems the way they have become.

The result of this is that you have cynical, angry children. They look at their parents and see that whether they came from another country with a post-secondary education or whether they did everything in their power but couldn't make it here, for whatever reason, they are not the fittest who are surviving at the top. For whatever reason that is, they see their parents losing ground. They see their parents' exhaustion, they see the despair, and they see the stress, and they're angry kids.

You tell them, it's important for you to go to school, and they say, “Why? I'm just from this neighbourhood. I'm a black kid. I'm not going to get anywhere, and I know it. If I'm going to get anywhere, how come there are all those people with Ph.D.s who are driving cabs?” They don't believe in that any more. You say, “Work hard and try hard and you'll get somewhere.” They say, “Why? The people who succeed in our society are not people who work hard and try hard. The people in our society who succeed are the ones with a silver spoon in their mouth who know how to gamble better.” That's what they can see. They understand this stuff. It's not because I explain it to them. They see it. So they don't believe in that either.

You say to them, “Don't worry, darling, everything is going to be okay. If we keep on striving for a better society, we'll be all right.” They say, “When I grow up I doubt there will be air I can breathe, because I know that governments no longer care about how clean our air and water are.” I can tell it's getting worse, because so many of our kids already have asthma. They go out in the streets, and they can smell it. They see that it's getting worse and that nobody's really trying. They can see the garbage everywhere. No one is really trying to make their future brighter, and they know it.

So this is the society we have, angry children who know that they are basically doomed to stay in the underclass. They can see the underclass coming like a freight train, and they see it more clearly than many of us who have been conditioned otherwise. This is what frightens me the most.

I see a lot of these kids. They come to my house. Their parents can no longer afford to have them in the home because they can't afford the housing. They come to my house, and this is the anger they carry with them. I have long conversations with these children, trying to encourage them that all is not lost, but this is what they believe.

When we see things like what happened in Colorado, we shouldn't be that surprised. It's a dreadful, extreme example of what many, many young people feel, that they are losing ground, that they do not have equality of opportunity, and that in fact they don't have a hope in hell. That's why they feel it doesn't matter what we do. It doesn't matter what happens. We might as well destroy it, because at least we get to be heard. That's a very frightening trend.

I had to emphasize that today, because I know that while we talk about all the bits and pieces around this rule and that law and side agreements, etc., what I'm concerned about is the human impact. As a parent, it's the children who concern me.

At any rate, to get off that subject a little bit, my concern is that we've managed to sell all of this agenda to the public, and I think a lot of the very well-meaning people in government and even in the business world swallow hook, line, and sinker the whole idea of constructive engagement, trickle-down economics, etc. They think, “Oh yes, it works. Any job is a good job.” Do you know how many times I've heard that?

Let me tell you something: any job is not a good job. The jobs that women in the maquiladoras are doing are not good jobs. Those jobs poison them. They destroy their lives. They destroy their very ability to survive. These are the kinds of jobs we're creating in the south—our corporations, our rules, our laws, our turning a blind eye to human rights. The result is women coming home from shifts at 6 in the morning in some of those towns in Mexico and being raped and murdered on the way, and nobody even bothers to find out what happened to them. Why? Their only value is their labour, and there are always more to replace them. That's the kind of world we're creating with these agendas. That's what frightens me.

• 1840

Meanwhile, we talk about deficits, productivity, etc., and these are the little sales pitches we use to sell an agenda that at its roots is causing utter social chaos, as far as I'm concerned. Maybe you have to live at the bottom to see how bad it is. I don't know. But there has to be a way to get people at the top to understand the danger of what's happening at the bottom. People at the top may think they can go live on another planet when ours becomes too toxic and polluted. They may think that as social unrest increases to the point where finally the masses blow up, which will happen, they can go live in a gated community somewhere.

We're all living on one planet, and until people wake up, get around the sales pitches, and start looking realistically at what matters and at what values we should have as societies, governments, and communities, we're going to keep playing this game where we say one thing and do the opposite. There's this thing about our urge to raise living standards for everybody. If that's raising living standards for everybody, why don't we have any accessible, resource-accountable mechanisms?

We have the Organization of American States. It's a structure. It exists and it has a charter. Why do we not follow it? We have the United Nations laws we helped to construct and that we signed and committed to. Why don't we exercise those things? It's because the values they have been inculcated with no longer make any sense. They've become meaningless, and the only things to succeed are the values that are not spoken, which are greed, competition, and winning at any cost.

All I can say is that when the losers become the majority, there's going to be a problem. It may be down the road, it may not be visible right now, but I can see it coming, because I'm looking into my children's future.

My whole point is that I think it's time to shift the debate and start recognizing what human crises and damage this has caused. I've been in Costa Rica and Chile, and I've spoken to people who live in those environments. I see us trading with Colombia while the labour leaders are being murdered. I see all of these things happening. I hear the stories of what's happening to people in the south. I see what has happened to people in the north. I don't see the awareness and the understanding of what's going on being reflected by the very people we elect to represent our interests.

I know for a fact that oftentimes, when I try to advance something that would help to solve some of these problems, the answer I get back is always the same: We're helpless in the face of globalization, and there's nothing we can do. We have a deficit to pay, and there's nothing we can do. Well, I'm sick of it, folks. As a parent, I think it's your job to protect my children's interests.

I think it's time to reframe this whole debate and discussion and recognize that Canada can play a very important leading role in the next couple of years, particularly as you chair the OAS summit and as the trade ministerial meets in Toronto in November. As you go through these processes, please push harder to make human rights primary over free trade agreements, because surely human beings come first. It's the only way to make the economy serve people rather than people serve the economy.

Thank you.

The Chairman: Thank you very much. As always, from you we hear a very powerful statement of principles, and I appreciate that.

Before I turn to questions, perhaps I might just respond to both Mr. Jennison and Madam Goulet. I want to make just one quick observation about the process and the timeframe. I'm not here to make excuses. I'm just going to give you some facts.

We have done our best as a committee to make it known to everyone that these hearings are taking place. One thing we did not do as a committee was to advertise in the daily newspapers, because the last time we did that, it cost us $60,000 and we were criticized for spending money on advertising. You can never do anything in this life without somebody criticizing you for something. So we counted on the media to get the message out. We sent press releases to practically every media outlet in the country. Nobody picked it up. Then people were saying, “We don't know what you're doing.”

You were good enough to mention the media situation in your presentation. So there's no media covering this or paying attention to it. Maybe that isn't their job. But it seems to me that, as Ms. Grey was saying, these are crucial issues we're trying to comes to grips with. But people are not covering it.

• 1845

So we are trying to do our best, and if I can speak for the members here, the other thing we have to face is the fact that this committee has a job to get this report done by June. To be effective, our mandate is that we must have it in by June. It has to go to the minister by June. So in the meantime, of course, there's Kosovo, there are the human rights issues we have before the human rights committee, we have a whole host of other issues before the committee. We're doing our best to try to fit this agenda into going across the country. I'm sure everyone would have liked to spend more time travelling and listening to people, but it's the most we can fit into our parliamentary agenda, given the fact that we also have responsibilities to be in the House.

That said—and I know everybody doesn't have access to a computer—if you want to go to our parliamentary site, www.parl.gc.ca, we've tried to put as much documentation in that site as we can, and we will be adding to that documentation. We just put on, for example, 21 different discussion papers there, Mr. Jennison, which we're trying to update all the time as we get material in before the committee.

So I agree we're not perfect. I'm not trying to justify or excuse, but I am saying here's what we are doing and what we'll keep trying to do as best we can to involve the public in recognizing that it won't be perfect.

• 1850

Why don't I go to questions? I'm sorry, did you want to make one quick observation, Ms. Goulet?

Ms. Catherine Goulet: It was just that this gentleman was under the impression that he was presenting on this panel as well. He doesn't appear on the agenda, but he was under that impression, so I was going to check the—

The Chairman: Sure, you're more than—

Mr. Don Johnston (Individual Presentation): I spoke with Janice Hilchie and she put me on the list. She told me I was on this time.

The Chairman: Fine, go ahead. I'm very sorry about that. I didn't realize. We thought you were....

Mr. Don Johnston: My name is Don Johnston. I'm with the Council of Canadians, People Against the MAI, OCAP, a lot of different groups. I'm one of those people suffering from a minestrone of anxiety over these trade agreements.

The Chairman: It's Mr. Johnston, is it?

Mr. Don Johnston: Yes.

The Chairman: Could you correct this? I've just spoken to the clerk, who tells me that she did speak to you about presenting and you said no, you just wanted to be an observer.

Mr. Don Johnston: No.

The Chairman: I'm quite happy to have you present, but I wouldn't want a false impression put on our record.

Mr. Don Johnston: I understood from the phone call I got from Janice Hilchie, confirming that I was to be on this—

The Chairman: Ms. Hilchie is here. She's our clerk and she's pretty good. She's not inaccurate as a rule. You're more than welcome to present.

Mr. Don Johnston: Okay. Here's a letter I wrote to Mr. Marchi expressing my concerns that he considers a minestrone of anxiety to be surrounding the Council of Canadians.

Through the representatives here in Toronto, concerning the implementation of the WTO rules and the signing of the free trade of the Americas agreement, I'm going to relay what the Lord told me I must do, because if I'm ashamed about God's words, then God would be ashamed of me.

He says: “Come let us reason together...though your sins are as scarlet, they shall be as white as snow”; and “prove me...saith the Lord”; “Bring all the tithes into my storehouse so that there is meat on my table”, and “I'll open the windows of heaven and pour you out a blessing that you won't be able to receive”. So this is a call to repentance and restoration.

If the government doesn't listen to alternative messages for reform and sustainable development, then I can safely issue the warning of the prophet Isaiah: “Woe to those who enact evil statutes and to those who constantly record unjust decisions so as to deprive the needy of justice and to rob the poor of my people of their rights, in order that widows may be their spoil and that they may plunder the orphans. Now what will you do in the day of punishment and in the devastation which will come from afar? To whom will you flee for help? Where will you leave your wealth? Nothing remains but to crouch among the captives or fall among the slain. In spite of this, his anger does not turn away.”

The MAI is irredeemable, and like criminals, you deny that it even exists. The WTO rules and the FTAA are only the MAI in another guise. We can't countenance such agreements. Furthermore, we must abrogate NAFTA, as Mr. Chrétien said he would do before the 1993 election.

Once these emergency measures have been taken, we must put in place the recommendations of the Carter commission on taxation to rebuild medicare, our public education system, rebuild the public infrastructure, take back those crown and public enterprises that have been appropriated by big business, and enhance social programs.

We must have a more humane way of dealing with debts, repudiate much of the debt that was caused not by social programs but by unpaid taxes by corporations and the wealthy, and by high interest rates imposed under John Crow. We must forgive—or “cancel” is a more appropriate word—the so-called debts of the third world, which are not the fault of third world citizens.

Ladies and gentlemen, this is an emergency, our social and public infrastructure is under assault by this government at the behest of powerful financial interests. So, as in an emergency, we must take drastic measures: use the central bank to rebuild the real economy, print up to 50% of the currency and cut back on the amount the chartered banks can create by raising reserve requirements up to the previous levels of 20%. This would prevent inflation. Since the current fear of inflation is in the private sphere, asset inflation and then deflation in the real economy could, if it continues, lead to economic collapse.

• 1855

These economic austerity measures must be reversed. We've got to increase our foreign aid budget, not just by 0.7% of GDP but by up to 7%. Why not bring the whole tithe into God's storehouse? We can't afford not to. We could ensure that our foreign aid dollars go to the needy in a majority world by increasing our United Nations peacekeeping forces and cutting back on spending for weapons of mass destruction. Let's return to Mike Pearson's “peacekeeper to the world” era and beyond by continuing the war on poverty where it was left off in the early 1960s, by putting in place a guaranteed annual income and pursuing a full employment agenda, not just in this country but as an example to the world. Let us stand against the current winds of globalization and help the poorer nations to develop sustainable enterprises.

We must not override the sovereign right of other nations to put in place capital controls and issue their own currency. Tax the businesses that extract resources from their lands and that use the people as low-wage slaves. We must follow the ILO's guidelines for providing a living wage for workers, strengthen our commitment to the Charter of Human Rights that Canada has signed on to, and provide for sustainable development and protection of human rights and freedoms as well as protection of the environment.

Forgive me if I sound like I'm telling you what you should do. After all, politicians and their bureaucrats are our servants and are not in the employ of transnational corporations and financiers. If you cannot bring about the progressive changes as recommended by People Against the MAI, the Council of Canadians and others, then perhaps it's time for a change of governments. The NDP would adopt the Alternative Federal Budget, put out by Cho!ces of Winnipeg. This document provides for many of our recommendations. Indeed, this is where we are heading, not in the direction you are going down.

You've made a good beginning, adopting the Tobin tax. Let's implement that at the G-8 and The Hague in June. It is possible to restore our former good standing in the world. Why stop at cosmetic gestures at real reform? Let's go all the way, and God would bless this nation mightily.

Ladies and gentlemen, we can't imagine what we are missing—literally heaven on earth.

Last but not least, I would like to address the national disgrace of homelessness. The 1% solution, as recommended by the Toronto Disaster Relief Committee, would be a good place to start to alleviate this problem. Don't buy into the idea that we are powerless in the face of global finance. Indeed, if we do these progressive recommendations, power would be on our side. And if God is on our side, who can be against us?

Thank you.

The Chairman: Thank you very much, sir.

We'll go to questions.

Mr. Deepak Obhrai: Thank you, Mr. Chairman.

Thank you for coming out and giving us a presentation from your perspective, your point of view, and quite a compassionate plea.

In general terms, the goals and the objectives that you have stated here I don't think anybody can argue about—on human rights and to take care of the needy and to achieve what basically you're asking. I think one could probably say there's a different opinion as well on how to achieve those same objectives.

You did mention quite a lot of points, and I commend you for working with those who need assistance. There are quite a lot in this society who need assistance. I think in general terms, when we sit over here, we get this perspective on how to achieve that, and groups like yours need to be commended for coming here to bring the other side of reality as well.

• 1900

Let me also say that you talk about those who have succeeded as having silver spoons in their mouths. I would like to differ on that. Many of us have come from backgrounds of severe poverty as well and do understand. I grew up in third world countries and I am quite well aware of the poverty. I grew up in that as well myself.

Ms. Josephine Grey: I wasn't referring to you, sir.

Mr. Deepak Obhrai: But let me get to my point. I know you're not referring to me.

All I'm trying to say here is that in WTO, in some things, there are what we see as some good points to achieve many of the objectives. It may not have arrived at where we want it to be at this given time. You and many others have raised a couple of flags, and I think we should look into those. It may not have achieved that, but I have difficulty in buying the argument that the whole thing is bad.

I think we have to look at the positive aspects of trade, the positive aspects there can be and that can in the end come along, take care of human rights and spread the wealth, as it is. That's my point of view.

Thank you.

The Chairman: Ms. Grey.

Ms. Josephine Grey: I should have emphasized that I am not in principle opposed to the concept of free trade or of globalization of economies, and so on. I am opposed to the primary directives that underlie the direction we're taking, and I'm opposed to the impact and the results of what we already have in place. That's what I'm opposed to. But in terms of other ways to achieve the same things, which I don't think anybody could argue with, there are proposals and there are concepts and ideas being put forward.

Currently I am involved with the Hemispheric Social Alliance, for example, and there are trade unionists, human rights activists, environmentalists, aboriginal groups, women's organizations, and networks from north to south, from Brazil to Central America to Mexico to the United States and Canada, who are working together on coming up with alternatives and ideas and frameworks that would suit the needs of the majority of the people, and not the extreme minority, that would reflect the needs of north and south, that would manage to integrate the very unbalanced sizes of these economies without destroying either side. Okay? There's a lot of work being done there, and that's not the only place.

My concern, and where I can get really upset with everybody about what's happening to the people that I'm dealing with and my own family, is that I would ask you to take a rational, long look at some of those alternatives and think about actually incorporating them. But when you do, recall that the power of wealth has come to the point where very few people are able to think straight when they're in these positions of having to make these decisions, partly because the wealthy finance political parties, partly because the wealthy have pay-for-say in the IMF and World Bank and everything else, partly because the fundamental principle underlying our entire economy is pay-for-say. What you do, your values as a human being, all of these things are basically irrelevant when it comes to the structure of our economy.

It's time to look at it that deeply in order to be able to understand what some of the better alternatives might be and counter the force of what is to me the sheer marketing that's coming out of the corporate sector. That's really all I'm trying to point out, not that I'm opposed to free trade.

The Chairman: Okay.

Mr. Deepak Obhrai: Is my time over?

The Chairman: We're moving out of here at 6 o'clock, but go ahead.

Mr. Deepak Obhrai: I think I mentioned the group you're working with and the points you mentioned are fine—it's not fine, but it's needed in this society to address those issues. I do not dispute that at all, but I think there are thousands of Canadians and people who have a different point of view. You have the point of view you presented, but there are others who have a point of view as well, and we listen to them in order to try to get a balanced approach.

It becomes a little difficult, even in your presentation, compassionate as it was...and this thing you call greed. I know a tremendous number of Canadians who are involved in international trade who have very compassionate feelings and don't have greed in their hearts. They're working hard, and when I sit over here and you come along and make a blanket statement about these Canadians—

• 1905

Ms. Josephine Grey: You misinterpret me, sir.

Mr. Deepak Obhrai: No.

Ms. Josephine Grey: You do misinterpret me, I'm sorry. I'm talking about those who have the power to influence these rules and agreements.

Mr. Deepak Obhrai: Okay, I'm done.

Ms. Josephine Grey: Not the rules about international exports and imports, okay?

Mr. Deepak Obhrai: Well, that's what we are here for. That's why I was saying WTO—

Ms. Josephine Grey: I wish. If we were here for smaller businesses, smaller corporations, local economies and the average person, fine. But that's not what's happening, in my view, and I can see it. And I think everybody else can see it. I think if we have 61% of families in our economy affected by unemployment, it's too high.

Mr. Deepak Obhrai: Hold on, there are lot of good Canadians out there too. You are looking for Canadians...[Editor's Note: Inaudible]

The Chairman: Wait a minute, Mr. Obhrai. If you want to speak to this committee, you have to speak into the mike or your words are lost.

Madam Debien.

You were giving an answer there, Ms. Grey. Did you want to complete it? I think your answer was comprehensive, but if you had anything else to say about it....

Ms. Josephine Grey: Well, I guess my answer to what he's saying is that the negative impact of the way our economy is evolving is affecting more and more people, to the point where we do have, according to Canadian government statistics, 61% of families within a year affected by unemployment. We have no security or stability left. Our income security systems aren't adequate to address that. This is part and parcel of the effects of free trade. I could quote your own government report to show how free trade has caused this kind of effect to take place as we try to lower our standards to equalize with the United States.

So I'm not saying free trade is wrong. I'm saying the premise underlying it is wrong and the way we're carrying it out is wrong. But for goodness' sakes, how could anybody in this day and age realistically oppose the concept of a closer global community, be it through trade or investment or communication or culture? You couldn't. However, when there's a factor this small, this tiny, dominating the rest of the planet, it becomes very selfish and greedy, I'm sorry. I don't think he can argue with that, but I'm sure he'll try.

The Chairman: No, that's all right. We heard some very interesting evidence in Winnipeg from the National Farmers Union that in fact it hasn't been beneficial to farmers at the base level, etc. So we're getting a lot of evidence of that nature, I quite agree with you. You're not a single voice by any means.

Ms. Josephine Grey: Congratulations.

The Chairman: Thank you.

Madam Debien.

[Translation]

Mrs. Maud Debien: Ladies and gentlemen, I will try to be brief. You stated initially that free trade was the cause of many headaches, despite the lovely underlying principles. It was supposed to bring prosperity for everyone. You are perfectly right to say that the results are inconclusive, but to go from that to blaming free trade for all of society's ills... I still have some reflecting to do on that.

However, I can tell you that in Quebec—and I said it this morning as well—, the Parti québécois and the Bloc Québécois have been reflecting since January on the negative effects and impacts of globalization on Quebec. This will continue until the end of the year. Reflection has begun for us. This is perhaps another way that we are a distinct society. I don't know. I am pleased that our two meetings in Toronto are ending with a dust-up. We've had our cage rattled, as they say. We like to hear the other side of the story.

I would like to provide some technical information to the lady. She said that political parties are financed by rich people, which is not the case in Quebec. We have a law on financing political parties that is very severe and prevents large firms from financing Quebec's political parties. This is perhaps another distinctive characteristic.

[English]

Ms. Josephine Grey: Congratulations.

[Translation]

Mrs. Maud Debien: I collect my financing $5 and $10 at a time from my fellow citizens.

[English]

The Chairman: Is that why Stéphane Bergeron is always trying to get me to go to one of his fundraising events?

Madam Augustine.

Ms. Jean Augustine: I must first of all say that your presentation was well received. I think you made the kinds of sharp points that we need to examine. I think this is one of the reasons this committee is on the road to talk to Canadians. We may not agree on each and every point you made.

• 1910

I also want to speak to Mr. Johnston, who invoked biblical references and put within his presentation the presence of a being greater than ourselves and to whom we have to.... However you framed it, I think you were bringing us a kind of moral message. So we thank you for that preparation.

I want to go to the issue of human rights, because there is a subcommittee of this committee on foreign affairs and international trade. Madam Debien and I sit on this subcommittee, which deals with human rights issues. It's one of the struggles we had. We put this into the arena—how, when we sit with 133 nations around the table, we ensure that our values and all the things we are signatory to in the international setting are imprinted on the work we do.

So this relates to your presentation, Mr. Porter. I must tell my committee members that I've known Mr. Porter for a long time, and he has really stayed with issues and has a sense of commitment to those issues he's brought before us today.

I think this is one of the issues we're grappling with, and we've heard it from several presenters. How do we take issues such as human rights, environmental issues, labour issues, and bring all of them together in a setting where we have to deal with issues that are very difficult? You said this is a work in progress; I want to ask that you continue to keep in touch with us in the work you're doing, especially with our subcommittee, because we would want to ensure that as a subcommittee we reflect on the whole issue of human rights as we do our work.

Maybe the question I should ask is, how do you see this global challenge and how do you see us as Canadians developing the kinds of partnerships we need to develop in order to get the issue on the front burner, as we talk about WTO issues?

Mr. Bruce Porter: As I mentioned in the paper, I think we're dealing with very crucial issues of global governance. I think, in response to some of the discussion about whether trade and investment regimes are good or evil or whatever, none of us here is denying that the reality is that we have really a new era upon us in which most of the major economic developments that will be affecting the well-being of people we care about will have very important global and international connections. Until we learn to govern economies and economic relations of investments and trade as a global community, we're going to continue to see some of the things that Josephine has so eloquently described.

I really think there are some simple things that Canada needs to start to think about. If we look at the history of governance of economic relations within countries, we have had an allegiance to a kind of laissez-faire—let the corporate rights prevail, a failure to protect the rights of vulnerable citizens with very real and forcible mechanisms whereby they can bring their concerns someplace and have them dealt with. The results have been, quite evidently, hardship and suffering and inequality. It's because we've developed an ability domestically to have legal protections in place for groups that need protections in labour law and in human rights and in social assistance regimes and so on that we've managed to move forward.

If you look at the structure of global governance of economic relations now, there really is this huge gap, and that's the protection of people's social and economic rights, the protection of vulnerable groups. If the Harris government moves to cut social welfare rates by 22%, and we see homeless people on the street, and it's blatantly justified as an attempt to move investors to Ontario, there's no place those citizens can go to say, look, this isn't working; here's something that's gone wrong in terms of some value that we have an agreement about.

• 1915

There's no reason that has to be the case. We could easily have a trade agreement, an investment agreement, that recognizes that if there's backsliding in the area of homelessness, or poverty, or hunger, that's an issue that should be of concern to the trading and investing partners, and that the people who are affected by it have some mechanism whereby they can bring that concern to the table. Instead of all the dispute resolution mechanisms and the mediation mechanisms and the ADR all being about these rights of investors and of capital to move around, if you create institutional mechanisms to deal with these other problems, then the problems will start to have a bigger place in our society, and some of them will be solved. I'm not suggesting a completely legalistic solution to this, but you have to have the institutions in place, and we simply don't.

Canada has traditionally, until recent years, separated itself from the position of the United States in terms of the kind of rights paradigm that is peddled as the new model of global governance, and I really don't understand what accounts for the shift. I know a lot of you don't accept that American model of property rights as the kind of human rights that we believe in.

There's such a very clear distinction in the international arena between what Canada has ratified and signed on to and claimed as its history, and identifies with in terms of its own cultural identity, and that of the United States, and yet, in the most recent years, there has been just no distinction that I can see between what Canada is promoting internationally and what the United States is promoting. So I think we need to look at other friends, other models—the European social charter.... Clearly, a lot of work has to be done to bring up the side of the protection of vulnerable groups so it becomes something that has institutional protections associated with it. It's not completely new, it's not impossible, and I think Canada could take a very important leading role in it.

The Chairman: Madam Debien.

[Translation]

Mrs. Maud Debien: I have a technical question.

[English]

The Chairman: Thank you. A quick technical question.

[Translation]

Mrs. Maud Debien: Is there a people's ombudsman in Ontario as there is in Quebec?

[English]

Mr. Bruce Porter: Do you mean an ombudsperson type of thing? An ombudsman, yes.

The Chairman: It's not as effective as we'd like to see it. It had much higher hopes, I think, when it was brought in than it's ever delivered on. There's the Human Rights Commission too.

Mr. Bruce Porter: I'm referring to international mechanisms primarily. Once you have global relationships, where if Michigan cuts its welfare rates and cuts its taxes by 25% and investors start moving there, then there has to be some ability to deal with that problem in broader terms than simply to say one province is going to elect a government that's going to double social assistance rates and increase taxes and thereby drive out investment. These are problems that we now have to deal with, with our trading and investor partners. We have to create a context whereby we can address those problems constructively and effectively.

The Chairman: Mr. Pickard.

Mr. Jerry Pickard: Ladies and gentlemen, I have to say first and foremost that these issues brought forward are important to us, and they have been listened to. We've had very diverse viewpoints as a committee, extremely diverse, and within the committee itself there are differing viewpoints. We wouldn't be out here listening and trying to glean the information that you're giving, and that others are giving, if we had the answers. The important task we have is to get the different viewpoints and put them together in a reasonable way so that we are dealing with the interests of all who need to be dealt with.

Quite frankly, the thing I see you bringing forward is the human element and the disaster that is happening, in some respects, to the human element. Quite frankly, it's something that I feel is extremely important. It's something that possibly in our trade negotiations in the past wasn't dealt with as well as it should have been. That's what you're telling us. You're saying, “Hey, guys, just slow down a minute. Remember, all the decisions you make affect a lot of people, and if they have negative effects, let's re-examine where we're going.”

• 1920

We as a country have another problem as well. The world is moving and changing direction, and we are part of that world movement. Poorer nations are struggling, and you very well pointed that out as well. It's not just the poor nations or the poor people in this nation; it's the nations around the world. How are our trade negotiations, the agenda that's moving forward, affecting us?

Other people have brought out questions about our ability as a government to control our own agenda. Again, that is another issue we have to look at.

• 1925

I've found that listening to different groups, listening to different viewpoints, has certainly helped me to better understand. I guess in some respects, though, I may be at a point where I'm not sure. I may be a little less sure than I was before about some things that are happening, and that's good, because it's forcing me to look at all the alternatives as carefully as I should.

So I am saying to each and every one of you, your voice is being heard. We do care. We want to make sure we're making decisions that are not going to further be problematic to many people in society. Yet the rest of the world is negotiating, so how do we, as Canadians, fit into that spectrum? My viewpoint is that we have to listen to all groups, and we have to then sit down and really analyse things as carefully as we can.

So I thank you for bringing your viewpoints forward. They're important to us. If it's done anything for me, it's left me with the position that I am not certain—I may be less certain than I was before—about exactly where we're going. I think many of the committee members feel the same way. We've had excellent presentations across the country and very different viewpoints.

So thank you.

The Chairman: I think Jerry said it very well for us all, but just let me add something. Mr. Porter's presentation particularly, and Ms. Grey's as well, stressed a different voice we haven't heard yet.

It's very clear from all the hearings that a great many people are concerned that the World Trade Organization as it's presently structured and trade rules as they are may be all very well in terms of liberalizing trade, but they're totally out of control in terms of any other human qualities that should be there. They've lost the human rights dimension, they're losing the cultural dimension, they're losing the environment dimension, and it doesn't seem to be clear to anybody what is the mechanism whereby we can redress that balance and put it back in.

What you and Mr. Porter have done that's slightly different is you've pointed out that when we talk about trade and human rights balance, we must look at the economic and social rights as well as the political and civil rights. That is perhaps something we haven't been addressing up until now.

It introduces, as you know, huge questions. You mentioned that the decision in the Human Rights Commission in Geneva was critical, both of Canada as a whole and of Ontario in particular, for many of the measures that the government of the day, elected by the citizens, had taken. It's going to be hard to persuade Mr. Harris to say, “I'm sorry, there's an international convention that doesn't let you do this.”

• 1930

What you've brought up and what I think a lot of us are trying to struggle with is that it seems, as politicians, we're willing to accept international constraints that tell us, “Oh, you can't pass a law on that, because the WTO says you can't when it affects corporate rights or it affects economic issues”, but there's nobody willing to take an international view and say, “Ah, but you can't interfere with certain basic fabrics of social society.” That requires us to get an international consensus on what those are. The day we get the Chinese into the WTO, we're going to have a new discussion.

I'd like to hear more about the Hemispheric Social Alliance, and that's why I think maybe we should be looking at something like Jean's suggestion about the human rights subcommittee. I'm presently engaged in trying to work on putting together a parliamentary association for the OAS with the same view, because in spite of the people who say Latin American politicians all come from one view, they don't all come from one view.

I met a Bolivian woman a while ago at a meeting. She was an aboriginal person from Bolivia, she was a member of their Parliament, and she had very strong views that were not very different from your own. Those voices have to get into these international fora, and we have to find fora for that to happen. That's one reason we're talking here about maybe a parliamentary assembly of some kind, even for the WTO. It would be difficult to construct, but at least it would allow voices other than purely ministerial and trade expert voices in there.

All of these things are helpful. They take a long time. I can't quite agree with Mr. Porter that it would be easy to have an agreement. He said we could easily put it together. We could put together an agreement, but I don't know how easy it would be. But certainly it's our duty to try to work on it, as Jerry said.

We're really grateful to you for coming and we appreciate your taking the time. It enriched our experience quite a bit. Thanks very much. We'll keep in touch.

We're adjourned, then, until tomorrow morning at 9 o'clock in London.