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]

Thursday, October 29, 1998

• 0911

[English]

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

This is the consideration of Bill C-35, an act to amend the Special Import Measures Act.

You will recall that a subcommittee of the committee, with a subcommittee of the Standing Committee on Finance, did a report on the Special Import Measures Act. I believe everybody has seen that report. As I understand it, the bill substantially replicates what was in the report and the recommendations of the two subcommittees to the House and the government.

We have with us this morning six witnesses. I'm going to ask if Mr. Valeri would lead off, then we'll go to Mr. Larry Herman, Mr. Van Loon, Mr. Peter Clark, Mr. Albrecht, and then Mr. MacDonald. Many of them have appeared before the subcommittee, as I recall. I'd like to go in that order.

I believe the witnesses have been asked if they could keep their presentations to eight to ten minutes, because we want to finish this part of our hearings this morning. We have until 12 noon. Then we'll do clause-by-clause next Tuesday.

Mr. Valeri, sir.

Mr. Tony Valeri (Parliamentary Secretary to the Minister of Finance): Thank you, Mr. Chairman.

There are three individuals from the finance committee here as well who will be able to answer any specific questions members may have.

What I will attempt to do is provide some overview of what the bill contains and the actual origins of this bill with respect to the subcommittee.

The bill proposes amendments that will improve the operation of Canada's trade remedy system as set out under the SIMA and the Canadian International Trade Tribunal Act. As committee members are aware, the substantive amendments contained in this bill are proposed in direct response to the recommendations of this committee and the Standing Committee on Finance, which established subcommittees in 1996 to undertake a joint review. The review by the subcommittees consisted of extensive public hearings and deliberations on both policy and procedural elements of the SIMA system. This work was marked by a high degree of cooperation among all members of the subcommittees, and there was certainly consensus on the main elements of the report.

Regarding the nature of their work, the subcommittees noted in their report that the main question we address is whether the current law adequately serves those firms that are being injured by dumped or subsidized imports, as well as those domestic interests that may be adversely affected by anti-dumping or countervailing duty actions.

In short, the committees sought to establish whether the balance struck in 1984 continues to be appropriate in the new economic situation of the nineties. In this regard, Mr. Chairman, the subcommittees concluded that the law continues to protect Canadian producers from injury caused by dumped and subsidized imports, while limiting collateral damage to consumers and downstream users. They then went on to identify several areas where adjustments would make the legislation more efficient and more responsive to Canada's economic needs. It's the implementation of these recommendations, Mr. Chairman, that you have before you today in Bill C-35. As the bill represents the first time the government has had the opportunity to undertake a comprehensive review, it also contains several amendments of a technical or housekeeping nature aimed at clarifying existing provisions in the law.

If I may, I'd like to identify the main themes of the subcommittees' report, which are reflected in this bill. They are rationalization of the SIMA process in order to improve efficiency, access to the SIMA system by small and medium-sized enterprise, clarification of the public interest provisions, and the enhancement of transparency and procedural fairness.

• 0915

Mr. Chairman, based on over 12 years of experience with this law, the subcommittees have identified ways in which the investigative functions shared by Revenue Canada and the Canadian International Trade Tribunal could be rationalized. As it stands, Revenue Canada is largely responsible for issues of dumping and subsidization, and the tribunal is largely responsible for determining injury to domestic producers. However, these roles become mixed at the preliminary and review stages of the case.

Bill C-35 will correct this by adjusting the responsibilities of each body so that the tribunal addresses the injury issues at all stages of the process while Revenue Canada concentrates on the issue of dumping and subsidizing. While the functions of Revenue Canada and the tribunal are being rationalized to better reflect their respective areas of expertise, no change is being made to the threshold for imposing SIMA duties, nor are there any changes to the legislative timeframes in which the decisions must be made.

In an effort to minimize the cost and paper burden, which is of particular concern to smaller producers, Revenue Canada will be the single point for the filing of complaints from the domestic industry and for the initiation of cases.

The subcommittees also recommended that Revenue Canada take concrete measures to ensure fair and equal access to SIMA by small and medium-sized businesses. The issue must be of continuing concern to the government, as I'm sure it was of great concern to the committee members. So while Revenue Canada has traditionally made a considerable effort to assist small producers in assessing the SIMA system, since the time of the parliamentary review, it has initiated a number of new outreach activities to further facilitate access. There's the presentation of seminars to key government and business organizations across Canada, technical assistance to small producers, staff training, preparation of SIMA-related materials, and the establishment of an Internet web page to provide ready access to SIMA-related information.

Mr. Chairman, with respect to the issues of public interest, the law currently contains a general provision that allows the tribunal to conduct a public interest inquiry to determine whether duties put in place to eliminate injury to producers in a specific industry sector should be reduced or removed as a result of broader public interest concerns.

In this respect, the subcommittees recommended that the government establish a non-exclusive list of factors to guide the tribunal on issues of public interest. They identified some factors, such as the impact of duties on other industries and consumers, and they also recommended that the law should explicitly provide for a lesser-duty option by the tribunal, which may recommend a duty sufficient to eliminate injury that would be lower than the margin of dumping or subsidization.

The bill responds to these recommendations in full, and the factors proposed by the subcommittees will be implemented by regulation. The government will be consulting on these regulations as soon as the bill is passed.

Overall, these clarifications will provide, as intended by the subcommittees, an improved balance in the law between various domestic interests. At second reading some members indicated that they would like the law to go further on the issue of public interest. There has been a suggestion, Mr. Chairman, that the issue of public interest should be considered at the time of the original injury inquiry rather than in the context of a separate inquiry after SIMA duties have been put in place.

I'd like to register, Mr. Chairman, a note of caution here. As noted by the subcommittees, the legislation must strike a careful balance between domestic interests seeking protection and those who may be negatively affected by such protection.

If the tribunal were required to examine public interest issues in all cases, as suggested, many Canadian producers would be of the view that this would unnecessarily tilt the balance of the law away from its primary objective, namely to protect Canadian producers from injurious dumping and subsidy practices.

Just as important, requiring public interest inquiries to be conducted in conjunction with injury inquiries within the existing statutory timeframe could, in some cases, deprive the tribunal of the flexibility it needs for the fulsome consideration of the broader public interest.

Moreover, we should remember that Canada is already out in front of its major trading partner, the United States, on the issue of public interest. The U.S. law does not allow for any input respecting the broader public interest.

• 0920

It's our view that the amendments being proposed to this committee strike a good balance in this regard. They respect the fundamental objective of SIMA to protect domestic industry from injury caused by dumped or subsidized goods while at the same time providing for a separate process that allows for the full consideration of other compelling interests that may arise in the circumstances of a particular case.

It's very clear that a SIMA investigation must respect rules of procedural fairness. In this regard, the subcommittees made a number of recommendations that touch on the procedural elements. Their objective was to ensure that all interested parties could fully present their arguments and rebut the evidence put forward by others. Most important in this regard are amendments that improve access to confidential information. The subcommittees recommended that counsel be provided with increased access to confidential information in dumping and subsidy investigations conducted by Revenue Canada. This would allow for greater consistency in the treatment of such information throughout the investigation process by bringing Revenue Canada's practices in line with those of the tribunal.

The subcommittees also recommended that SIMA be amended to allow for the more effective participation of expert witnesses in the tribunal proceedings. Currently, experts who have received access to confidential information as counsel for a party cannot then appear as witnesses in the same proceedings. Recognizing on the one hand the important role that expert witnesses can play and on the other hand the commercial sensitivities associated with confidential information, the subcommittees made a recommendation to strike a balance in favour of controlled disclosure to experts, subject to appropriate penalties to deter the misuse of such information.

The bill responds to all of these recommendations. It provides for more open access to confidential information, but at the same time it ensures that such access does not lead to wrongful disclosure by introducing new sanctions such as significant monetary penalties.

Finally, I would like to touch on another important matter that was raised in the subcommittees' report, the issue of short supply. The subcommittees recommended that the Minister of Finance consider amending the law to allow for the temporary exemption of goods from SIMA duties in circumstances of short supply.

I'm pleased to advise this committee that the government has reviewed the matter and is in fact satisfied that existing statutory authorities, including the authority to remit SIMA duties, combined with the amendments contained in this bill, would adequately address short supply situations that may arise. In fact, short supply situations have recently been addressed by the government under existing legislation.

In conclusion, I would like to congratulate members of this committee for their very extensive review of Canada's trade remedy system under the Special Import Measures Act. The government has made every effort to faithfully implement the proposals that emanated from that review. I trust that members will recognize this and will assist in moving this bill forward in a timely fashion.

Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Valeri. My understanding is that you have some conflicting duty in the House or something that might require you to leave before 12 o'clock. Is that correct?

Mr. Tony Valeri: Yes, Mr. Chairman.

The Chairman: Members, I suggest that if there's some question one wanted to ask especially of Mr. Valeri, maybe we should break now and ask him. However, I would just remind members that we do have Mr. Terry Collins-Williams here. We all know him very well from many other meetings. We also have Carole Nelder-Corvari and Pat Saroli, who are here from the department. We also have people from the Department of Foreign Affairs and International Trade, Revenue Canada, Canadian International Trade Tribunal, and Industry Canada. So we have lots of backup for Mr. Valeri if he has to leave. My own inclination would be to move on to the next witness, who's Mr. Herman, but if somebody had a specific question for Mr. Valeri, let's ask it right now for fear that he might have to jump up and leave to go to the House.

Are there no problems? Good.

Mr. Tony Valeri: Thank you, Mr. Chairman.

The Chairman: When you have to go, we'll see you slide out without trouble.

We'll pass then to Mr. Herman, please. We welcome you before the committee, Mr. Herman.

Mr. Lawrence Herman (Individual Presentation): Thank you very much, Mr. Chairman.

I should explain to members and others that I was asked by the committee itself to appear as a witness who is a lawyer involved in SIMA proceedings as a large part of my practice, and I guess as somebody who works in the trenches on these kinds of issues.

• 0925

I listened with great attention to Mr. Valeri, and I think I would agree with him, overall, Mr. Chairman, that the bill represents a carefully honed balance between the various interests involved in the SIMA process. I think it was carefully drafted after extensive review by the joint parliamentary committee and their report. In my view, it faithfully implements that report and the government's response to it.

Let me say, in very brief fashion, that generally in Canada the trade remedy system works well. I think it's a process with which we who work in the trenches have had reasonably satisfactory experience over the years. Bill C-35 makes some modest adjustments to the trade remedy process, although there are some changes that are more important than others. It is a housekeeping or fine-tuning bill, subject to the points I'm going to make on some substantive issues. But the manner in which the changes are implemented in practice through the rules and the regulations are the key. What is in the bill is a framework. The amended legislation will go forward and the manner in which it is implemented is the key.

I think a couple of other points are essential to understand when this committee considers the bill. SIMA implements Canada's obligations under international law. It flows from Canada's obligations under the WTO agreement, and Canada cannot depart from those obligations. My review of Bill C-35, and indeed of SIMA, is that the provisions are consistent with Canada's international trade obligations.

Another point I would make, and I think it is important to understand this, is that SIMA is not a protectionist piece of legislation. It is a measure that Canada implements pursuant to international acceptance of the trade-distorting effects of unfair pricing and subsidization. These are international rules and international norms that Canada respects.

I know, and I might say this parenthetically, that there are commentators who claim that anti-dumping and countervailing duties are retrogressive measures that penalize the importing country because they somehow provide undue protection to a domestic industry that is unable to compete internationally. I think that is a distorted view. SIMA represents Canada's response to international rules, recognizing the harmful effects of unfairly traded goods on free and open markets.

One of the major changes in Bill C-35 is the movement to a bifurcated system. That is one of the substantive changes I indicated earlier. I think it has implications we must consider, and I think the value of those changes can only be realized in the process of implementation. As Mr. Valeri said, the reason for the bifurcated system whereby Revenue Canada makes determinations of dumping and subsidization and the tribunal deals with all matters of injury is to allocate resources efficiently among the government trade agencies involved in the application of SIMA, and—I have to emphasize this—hopefully to reduce the costs to the parties of using the SIMA process.

I'm a trade lawyer, and every step I take and many other of my colleagues around the room take when we act for a client entails a cost to the client. Whether one is a domestic producer or an importer, there is a cost. And I think the committee must understand that if the objective of rationalization and improved efficiency that Mr. Valeri mentioned is to be achieved, there must ultimately be either a control or a cap on the costs of using the system, or a reduction of those costs.

• 0930

Let me go back to one of the rationales of these modest adjustments in Bill C-35. One of the concerns voiced early on in the SIMA review process was the lengthy hearing process conducted by the Canadian International Trade Tribunal in matters of injury in anti-dumping and countervailing duty cases. There has been a concern voiced by many, representing a variety of interests, that the hearing process entails a burden and that the burden seemed to be increasing as the hearings lengthened. And this developed over the years in our experience with SIMA.

One of the rationales of moving to the bifurcated system, in my view, was to ensure that the SIMA inquiry process conducted by the tribunal was shortened and made more efficient, reducing the costs to the users. To achieve this it was deemed appropriate to allow the tribunal to get into the act earlier, if you like, through the bifurcated system. In other words, the tribunal will conduct now in Bill C-35 a preliminary determination at the outset as to whether there's a reasonable indication of injury to the domestic producers. That is the new part of the system, and it's a substantive change from what we have now.

When you consider these amendments it is important to have in mind the fact that these amendments only make sense, in my view, if at the end of the day having the tribunal involved at an earlier stage through a preliminary determination of injury results in a more efficient and less costly hearing process down at the end of the road. If not, then I think the committee should review this at the next appropriate time, because the achievement of that cost efficiency and cost saving will not have been realized.

There is always a note of concern. I'm not suggesting that anything needs to be changed in the bill, or shouldn't be changed in the bill, but I'd add a note of concern. Whenever a new process is instituted, as in this bifurcated process, if we don't control the implementation carefully there's a layering on of additional processes and costs to the clients.

Another point I would make, and this is simply a means of setting the stage for your final consideration of Bill C-35, is that you should understand—and Mr. Valeri touched on it—that we in Canada operate in a North American trading environment. Our laws are comparable to U.S. laws. They have to be. It is not appropriate for Canada to depart radically from the kind of trade remedy system that is operational in the United States. It's simply a fact of life that we do have this circumstance. On the other hand, I think we have to resist to the extent we can some of the complex overlayering of procedures that exist in the U.S. system. I think our remedies must always be comparable, but they can't in every respect replicate the U.S. system.

My message in closing is that the key to these amendments is to ensure improved efficiency and rationalization of resources. Getting the tribunal into the process earlier on should allow us to do that. Proposed subsection 34(2) is the main substantive change from my perspective in the bifurcated system. If at the end of the day the costs have increased to the users, the danger is that only large, well-funded, deep-pocketed companies will be able to afford the process and the smaller companies will not.

• 0935

On a couple of final points, number one, certainty is important as a value in the SIMA process, and orders issued by the tribunal should be maintained intact, unless there are compelling reasons to alter them.

Number two—and this is something that may come up in questioning—there is a need through the implementation process to accomplish all of the values Mr. Valeri spoke about in terms of confidentiality of proceedings and confidence of parties in using the proceedings that their privileged corporate information will not be disclosed or copied widely in the processes.

Finally, on the public interest issue, I believe, as Mr. Valeri has indicated, the values have been appropriately balanced in this legislation. The issues were carefully considered, and I don't see the need to alter the approach that is being taken in the bill. As Mr. Valeri indicated, we are ahead of the U.S. in that regard. We have to be cognizant of the fact that we operate in the same trading environment as our U.S. counterparts, and our legislation should be, to the extent possible, comparable.

Those are my comments, Mr. Chairman.

The Chairman: Thank you very much, Mr. Herman, for those helpful and lucid comments. It's remarkably disinterested to have a lawyer before us telling us to reduce costs. It's a refreshing and somewhat different approach, speaking for some of the other lawyers on the panel. That's something. That was very helpful.

We'll go to Ms. Van Loon, who is president, as you know, of the Canadian Steel Producers' Association. Welcome back to the committee, Ms. Van Loon.

Ms. Jean Van Loon (President, Canadian Steel Producers' Association): Thank you very much, Mr. Chairman.

[Translation]

I wish to thank the committee members for inviting us this morning.

[English]

I'm here today as president of the Canadian Steel Producers' Association. I'm accompanied by Mr. Dennis Martin, manager of trade relations and market data for Dofasco. We've agreed that I'll make the opening statement, but both of us are available to answer any questions.

In my statement I'd like to cover three points: who we are; why this legislation is important to us; and what we think about it.

The CSPA represents Canada's primary steel producers. It's an $11 billion industry employing over 33,000 people directly, and about four more for each of those people indirectly. We're not only a major supplier for downstream industries, we're also a major customer for some of the growing and important new industries, such as environmental services, information technology, and engineering services.

Why do we care about this legislation? We need effective tools to fight unfair trade. It's a fact of life that the North American steelmaking region is the only one in the world that doesn't have a significant excess of production over consumption. We're therefore a target market at all times. Steelmakers, by their nature, would rather dump abroad than cut back production at home. So we, as an open market, are a target. In times like today, when over one-third of the world's production capacity in steel is operating in distressed markets, we're especially vulnerable. Without effective remedies, temporary market problems in other countries can lead to permanent damage to the Canadian economy.

Do we make anti-dumping allegations every day? No, we don't. We have an extremely open market for steel in this country. About 95% of steel imports come in unaffected by any trade actions. Last year over 35% of the domestic needs of Canadians were met by imports and these imports came from 54 different countries. This is an open market.

Most dealers trade fairly, and that's fair. What we need is effective tools to deal with the minority of situations when the steel is traded unfairly.

• 0940

Now I'd like to turn to our views on the bill. Our general position is this bill represents a fair and balanced framework. It could be an effective statutory framework for effective trade action, but it needs sound rules and regulations, as authorized under the bill.

We are looking for a fair and transparent process. The bill clarifies the rules of Revenue Canada and the CITT and realigns them somewhat. It authorizes regulations for the first time to specify the conditions under which you take various types of reviews—interim, sunset and public interest—and the factors that should be taken into account in conducting those reviews. We see these as positive steps.

We are looking for adequate protection for confidential information. You've heard already that there will be more access to confidential information. We recognize that's necessary, but it must be handled in a responsible way. We're concerned about cases where, in our members' opinion, confidential, highly sensitive information that did not have a bearing on the issues at stake before the commission were, nonetheless, required to be produced in many copies and widely circulated among counsel involved in the cases.

We see the CITT letter of intent about how it intends to proceed with its rules as a positive step. We believe it provides us some assurance that things will be handled in a responsible way, but we will want to see the draft rules themselves.

We are looking for protection too against frivolous reviews of existing rulings. Larry mentioned the importance of having some certainty. The legislation provides some more flexibility for interim reviews. Again, we are not quarrelling with the intent of that, but we would not want to see it used frivolously so cases can be reopened at any time, at great expense to all parties, and at great uncertainty for the industry that required the protection in the first place. We believe the proposed draft regulations provide an adequate and balanced approach to this. Provided they go forward, we would be comfortable with them.

We're looking for constraints on the use of interrogatories in the CITT process as fishing expeditions. Again, interrogatories have a legitimate role; we don't quarrel with that. But the process cannot be abused. Again, the CITT's letter of intent goes in the right direction, and we will look forward to seeing the draft of the rules themselves.

As a final point, I'd like to mention our concern. Even though our members are on the larger side of the spectrum, we are also very concerned about the cost of these proceedings. Some of our members have even been approached by downstream, smaller companies asking that steelmakers take a case on their behalf because it will be too expensive for them. It's very important to keep the costs to a minimum required to have a fair and transparent process. Under the proposed draft regulations under SIMA and the CITT letter of intent, we think they're moving in the right direction. If they continue in that direction, we would be supportive.

On the whole, we're comfortable with the balance in the legislation. We're comfortable with the direction the regulations and rules appear to be going, but we regard the regulations and rules as sufficiently important that we really want to see the final text before we're completely comfortable.

Thank you very much.

The Chairman: Thank you very much, Madam Van Loon. That was very helpful.

Mr. Clark, sir.

Mr. Peter Clark (Representative, Grey, Clark, Shih and Associates; Krupp Fabco Inc., Maksteel, Titan Tool and Die Ltd., and Magna International Inc.): Thank you, Mr. Chairman.

We've circulated a note that contains our views, and my colleagues who are here with me today have pointed out to me that I've made a grievous error. I've indicated they're all from Ontario, and this is not correct. When I introduce them, this will be made quite clear.

I've brought with me Mr. Wayne Brush, who's vice-president of purchasing for Magna International. In addition to their plants in Ontario, Magna also has plants in Quebec and one in North Sydney, Nova Scotia. Magna employs 14,000 people in Canada and 49,000 worldwide.

• 0945

Also with me is Mr. Mike Morris, who is the steel buyer at Krupp Fabco Inc., which has 650 people and has plants in Windsor, Ridgetown, and Dresden, Ontario.

Also here today is Martin Carfrae, who is director of purchasing for Maksteel and Makauto. They have plants in St-Hubert, Québec; Mississauga, Windsor, Concord, and Scarborough, Ontario; and the United States.

These people are major users of steel. They stamp automotive parts. They are in the most free-trade-oriented part of the North American economy: the automotive industry.

While we agree and don't dispute that Canadian producers who are injured by dumping should have protection, we would like to ensure that this protection doesn't strangle downstream industries, like the automotive industry.

We share the concerns that have been expressed by Mr. Herman and Miss Van Loon about the cost of the process. The fact of the matter is, if the procedures are there, both Mr. Herman and I have to use them in different ways to defend our clients to the best of our abilities. But if we're constrained in what we can do, then it's going to be cheaper for our clients. Make the process more credible all around, and make it accessible to small and medium-sized business, which it currently isn't. There is no way they can afford it.

We have read through the government's response to your recommendations, Mr. Chairman, and we found that indeed with respect to small and medium-sized Canadian producers, Revenue Canada does go out of their way to help them with their preparations. They always have, and I think that is something that should be encouraged. But Canadians who from time to time need to import products also have costs, they are also voters, they also employ people, and they need fairness.

We have found that after our discussions with you last time around, and after our concerns about shortages developing at the peak of the cycle when anti-dumping duties were imposed, Revenue Canada has modified their procedures with respect to small exporters who are not manufacturers. They do not automatically require that they provide cost of production information any more. It is an important step, and we would like to see them continue that.

On the bifurcation process, about which Mr. Herman and Ms. Van Loon have spoken, we fully support the changes proposed in clauses 17 to 23 of Bill C-35 and would oppose any changes to those provisions. We hope, too, that the process will become more efficient. I would note that there shouldn't be much need, based on what the tribunal intends to do, as expressed in Mr. Gosselin's letter of intent. There shouldn't be much more for a petitioner to do, in terms of their complaint, to get it past the tribunal.

With respect to respondents, it's going to give them a chance to eliminate a lot of cost at the other end of the investigation. It will certainly be more cost-efficient for them. It is also procedurally fair, and it's consistent with Canada's obligations under the WTO. This is one of the areas where we do lag behind the United States. We are not proposing to go as far as the United States, and I think what Mr. Gosselin has proposed is both sound and reasonable.

With respect to access to confidential information, I'm pleased to see that the penalties that have been proposed should ensure confidentiality. That was something that was missing in the legislation before.

With respect to access of information to experts, Mr. Herman will not be surprised that I agree with him on this, because we were at a meeting with Mr. Stobo and his staff, and Mr. Albrecht was there as well, a practitioners meeting, where we indicated our concerns about access and our desire to ensure that the access was restricted to no more than was necessary for the experts to do their jobs. We have that type of assurance from the tribunal secretariat.

While I raise that, I should point out that in my experience in dealing with these committees, going back to the first CMA committee in 1982, we have never had such extensive consultation with the agencies and departments in terms of the legislation as it was being developed. I think it's very commendable, and I think that's why we're not up here with grave differences. I think they've done an excellent job of trying to carry out the intent of your regulations within the limitations that are imposed upon them.

• 0950

In terms of experts, we do have concerns. Those concerns, Mr. Chairman, arise from the fact that if people are experts, they tend to sell their expertise. The information they gather tends to stay in their minds, and whether they intend to reveal it or not, whether they do it accidentally or not, that information is there. We'd therefore like the access to information to be really focused and restricted, and I think we're going to have that.

On recommendation 6, this is taking into account dumping in third-country markets. I can't resist the comment, Mr. Chairman, that this was a wonderful selling job by our friends in the steel industry the last time around. The fact of the matter is that you really can't trade internationally unless you dump. What you're trying to discipline under the anti-dumping agreement is injury, not dumping, because trade wouldn't move if you didn't dump. Evidence of dumping in a third market therefore is not necessarily evidence of a threat of injury.

The tribunal does look at this from time to time. If somebody has been subject to an injury finding in another market, or a pattern or behaviour that relates to injurious dumping, that's one thing. But just on simple dumping, the fact of the matter is that if you have a manufacturer located in Trois-Rivières and he sells something to Shawinigan, his net back to his plant is going to be much better than if he sold the same product at the same price to somebody in Edmonton. Technically, that difference in net back to the factory is dumping.

So I think simple evidence of dumping in a third-country market is something that really goes beyond what people should be looking at. If it's only a factor to be considered, though, then it's a matter for argument. I really don't see anything that recommends this change in logic or in the pragmatic, real world.

We support a number of the other regulations, which we're not going to address.

With respect to the prospective method of duty assessment, we reviewed this matter before coming to you, because we noted that the government had made a number of proposals in the legislation with respect to the collection of duties after an appeal or a NAFTA review, and if the finding was indeed reversed. Mr. Chairman, this gives an industry that loses its case, either at the tribunal in the original injury inquiry or in a review under section 76, an extra year of effective protection because it creates uncertainty in the marketplace.

There is logic in insuring that people have the right to appeal decisions that are made by expert tribunals, but and I'm sure Mr. Herman could explain this better than I could, because he's a lawyer and I'm not. I have a problem here, though, and it's one that I've discussed with my friend Mr. Séguin several times. During this period of uncertainty, when people are subject to a potential liability for dumping—which can come back and hit them a year or more later—Revenue Canada will not tell us what normal value is. It's a matter of policy that they will not tell us how we can price in such a way that we can avoid that dumping duty if it comes back a year later.

We believe the legislation does not preclude Revenue Canada from doing that now, but it creates considerable uncertainty and unnecessary uncertainty. If you're going to have a retroactive provision, I think that the taxpayers' bill of rights, which is up on Mr. Séguin's departmental web site, does permit the taxpayer—and Canadians do pay these taxes—to know what their liability is. If the committee agrees with that, we would appreciate either some comment in your final report or some amendment to the legislation if Mr. Séguin and his colleagues need that, in order to ensure that we don't get into these situations.

With respect to the interim and expiry reviews, I had always been under the impression that the tribunal could review decisions at any time under the existing legislation in any event.

• 0955

With respect to the portion of clause 36 dealing with accumulation, we reviewed clause 36 and we support it, because the tribunal has the discretion to determine in which circumstances they should exercise accumulation.

With respect to your recommendation 13, we note that the non-exclusive list of factors has been included in the regulations and not in the act. Not being a lawyer, I had always understood that regulations are guidance and the law is direction. Mr. Saroli has tried to explain this to me before. Since he's here, maybe he could try to explain to me again why this doesn't dilute the committee's original intentions in recommending that these be taken into the act.

With respect to the lesser duty concept, we're pleased to see it in the legislation. This was the most important recommendation that you made for the automotive stampers in your original recommendations to the government, Mr. Chairman. I'd like to see it made even tougher, but I think this is perhaps a matter of being able to demonstrate to the tribunal, through practice, how this can really be done. We wouldn't propose any changes to that element of the legislation.

Finally, with respect to the temporary exemption of goods from anti-dumping and countervailing duty orders under conditions of domestic short supply, I would ask Mr. Brush to review for you very briefly our experience with this. It's been suggested that the existing legislation will address these situations, and it does. In our view, however, it doesn't do it well enough or automatically enough. To the extent that the complaining industry has a veto or appears to have a veto on relief, that's not satisfactory to us.

Thank you.

The Chairman: Thank you very much.

Mr. Brush.

Mr. Wayne Brush (Vice-President, Purchasing, Magna International Inc.): I'll just make a quick comment, Mr. Chairman.

Peter has described the situation quite well, but let me reiterate that we don't carry a lot of inventory in our plant in the stamping business. There may be one or two days' worth of inventory. If we get into a shortage situation, we don't have the luxury of time. If we shut a customer down, we're faced with financial penalties and penalties to our reputation that could impact on future business. Of course future business means jobs, so the situation has to be responded to quickly.

The problem with the process now is that it requires a consensus among the suppliers in order for us to get an exemption. Even though we have to move to get the steel in to keep our plants operating, we can still get hit with duty after the fact. We therefore need a process that's not only effective, but one that's quick and doesn't tie up a lot of time for those of us who have to deal with this after the fact.

The Chairman: Thank you very much. That's helpful, and I appreciate it.

Mr. Albrecht.

Mr. Dalton J. Albrecht (Partner, MacMillan, Binch; Representative, IPSCO Inc.): Thank you, Mr. Chairman, members. I'm here on behalf of IPSCO Inc., a major Canadian steel producer headquartered in Saskatchewan but with operations across North America.

Overall, IPSCO supports the package that is Bill C-35 and its subsidiary legislation. By the latter, I mean the proposed draft regulations, as well as the proposed new tribunal rules. IPSCO has concerns about the preliminary determination of injury, particularly in terms of the additional burden and costs involved therein, but IPSCO realizes that it has to be a balanced package overall.

Similarly, we accept the prospective application of dumping duties with known normal values, allowing people to have a degree of certainty. That's quite different from the U.S. retrospective system, which is certainly perhaps more punitive and would be more favourable from our viewpoint, but we recognize the need for the prospective nature and the fact that it's more consistent with the GATT of 1994.

We do see it as an overall balanced package. In the past, however, we have been concerned—and we remain concerned—about the disclosure of confidential, highly sensitive information to non-legal counsel under the current legislation. We note the further disclosure to experts, as proposed in the amendments to section 45 of the CITT Act, in which “experts” is not defined, by the way. They would basically appear to be anybody the tribunal recognizes as bringing value to its determination; they're possibly a very widespread group. We suggest this exacerbates the problem, the concern about the widespread dissemination of proprietary business information that is not disclosed elsewhere and indeed is not often even generally available within the organization.

• 1000

I'm referring to such things as minutes of board meetings, confidential briefings, high-end strategic plans, and details of cost relating to subsidiaries in other countries. These things have all been demanded as part of the discovery process.

Instead of a small number of counsel who appear regularly before the tribunal and have an interest in and a sensitivity to maintaining confidential information, an interest in continuing their livelihood there, we're going to have a multiplicity of people with access to this information. These will be so-called experts not regulated by any body, maybe one-hit wonders who are here one minute and the next minute they're representing someone else in the industry as a consultant, or are even employed by someone else.

So IPSCO wants to put its continuing concerns on the record. We've expressed these to the Department of Finance, to the responsible minister, the Honourable Jim Peterson. Despite the imposition of the potentially significant monetary penalties, as proposed in the amendments, we think this is still a grave concern.

The honourable Mr. Penson referred to that in the debate on the second reading, the grave concern and the major damage that could be done if this information is even inadvertently disclosed.

The Chairman: Can you remind us of the section number again?

Mr. Dalton Albrecht: The section number? Which one?

The Chairman: The one on disclosure in the bill.

Mr. Dalton Albrecht: Well, there are two parts on disclosure. I'm referring to section 45. That's the section itself to which an amendment is proposed. It's clause 59 of Bill C-35.

The Chairman: That will amend section 45?

Mr. Dalton Albrecht: That's correct.

The Chairman: Thank you very much. Sorry to interrupt you.

Mr. Dalton Albrecht: Proposed subsection 45(3) will provide for additional disclosure. Proposed subsection 45(7) will provide for the penalties. But it's clause 59 of the bill. My apologies for the confusion.

We are prepared to support the bill. This is based on the tribunal's October 19 letter of intent, which has been disclosed, regarding proceedings under SIMA, and the proposed new CITT rules—which IPSCO understands will be implemented substantially as set out in the letter—as well as consultations on the proposed draft regulations. We do, however, want to note our grave concerns.

I wish to move on to comment on the proposals for further amendments to the public interest provisions. I note that this bill has been developed through a comprehensive joint committee and subcommittee process, in which all parties participated. As part of this, comments of stakeholders and the public were all solicited. All of this resulted in a government report tabled in April last year.

I would submit that it's very late in the day to be considering fundamental changes of the type proposed, in terms of the public interest provisions. I'm talking about the type that were proposed in the debate on second reading. There was a lack of detail in terms of the actual proposals, but they seemed to be very fundamental in nature, to go to the heart of the process.

To conduct a public interest inquiry simultaneously with, or as part of, a section 42 injury inquiry would mean that the intended protection of domestic producers from unfair trade practices would be gutted. This is because the paramountcy of the injury inquiry would be subsumed in a general economic inquiry, which is not the purpose of SIMA.

Even an automatic public interest inquiry, if that's what was intended, is not necessary. It's not appropriate. There are provisions for a public interest inquiry if there is a significant public interest, and all persons are free to make representations.

While the public interest inquiry is important, and this is reflected in the bill, which prescribes factors to be considered by the tribunal in such an inquiry, these are likely to include the impact on consumers, downstream producers and Canada's competitiveness. This interest cannot be equated with the protection of domestic producers from unfair trade practices. This is the purpose of SIMA, and this is what is provided for under GATT 1994, as part of the WTO arrangements.

In fact Canada is one of the few countries with a formal and transparent public interest process. We've heard that the U.S.A. does not have one. It's not mandated, or even directly referred to, in GATT 1994.

The public interest inquiry process was considered extensively by Parliament, and it was a focus of a joint subcommittee report and the government response. This is more than sufficient.

We would also point out that, in any event, this is not needed at the front end of an inquiry, because the public interest is only relevant if there is an injury finding. Why confuse the inquiry?

Therefore, we would strongly submit that no changes be made to the bill in this respect. And if it is to be amended in this respect, IPSCO would request a further opportunity to be heard on this, as well as to address its other concerns.

Thank you.

• 1005

The Chairman: Thank you very much.

We're now going to move on to Mr. MacDonald, whose position in the committee room does not necessarily mean he's a member of the Reform Party.

Mr. Charlie Penson (Peace River, Ref.): No, but we'll heartily welcome him, considering that I'm here by myself.

The Chairman: It may be good for you, Mr. Penson. Finally you have a wing man.

Voices: Oh, oh.

The Chairman: Mr. MacDonald, sir.

Mr. Ken MacDonald (Secretary and Director, Policy Development, Automotive Parts Manufacturers' Association): Well, thank you, Mr. Chairman, for that comment. I do in fact have to be very circumspect, as I am here on behalf of the auto parts industry's diverse membership.

We in the association represent manufacturers of parts, materials, and equipment used in the manufacture of cars and trucks, ranging from steel and glass to electronic components and remote-sensing equipment.

The members account for about 90% of the industry, which totalled $26 billion in shipments last year. We represent about 92,000 Canadian jobs. And as I alluded to, the membership includes both steel producers and numerous steel users. They are just some of the familiar faces around this room, and all of those have considerable experience with the anti-dumping measures.

Therefore, the association has taken a keen interest in SIMA and related trade issues for some time now. We presented submissions to the subcommittee almost exactly two years ago today.

In the spring of 1997, APMA members sought and obtained a remission order concerning SIMA duties on corrosion-resistant steel. This spring they were back here in Ottawa to make submissions on a CITT hearing on cold-rolled steel sheets, and we've closely monitored the Bill C-35 process.

Of course there are marked differences of opinion about SIMA among our members. Steel producers need to ensure that they do not lose sales due to unfair price competition from imports. On the other hand, steel parts makers need reliable, economical access to foreign sources of steel. Although those steel part makers source the vast majority of their steel from Canadian mills and service centres, they do need access to foreign sources in certain circumstances.

We've already heard reference to the shortages that develop from time to time in Canada for certain types of steel. An example that first comes to mind is corrosion-resistant steel in the spring of last year.

As you may know, our customers expect just-in-time deliveries, which sometimes allow a window as small as two to three hours. The parts maker has no option but to source the material from a foreign alternate source on a temporary basis. As well, some of our members' customers will sometimes stipulate that certain materials be sourced from a particular supplier outside Canada.

After the SIMA review committees released their recommendations in December 1996 we surveyed our members to obtain their views. Several recommendations in those reports had the support of the majority of the respondents, and those findings form the basis of my submissions today, which will necessarily be fairly general.

We're anxious to see that the existing prospective method of duty assessment be continued. It's imperative that when importing the material our members know whether they'll be liable for anti-dumping duties. Any proposed changes to SIMA, to clause 33 of Bill C-35, must be weighed in that light. SIMA processes must be kept as efficient as possible to ensure fair and equal access for small and medium-sized companies as complainants and respondents.

We're most pleased to see the introduction of specific factors to guide CITT inquiries concerning the public interest. As you know, since the enactment of SIMA in 1984, economic integration has accelerated, resulting in increased reliance on imported inputs for further manufacturing in Canada. This is true for many sectors, but none more so than our own.

We're especially pleased to see that those public interest factors reflect industry concerns about short supply. We would recommend, though, that the CITT decision arising out of that inquiry be reviewable by the Federal Court—i.e., that it be a legal, not a political, review.

• 1010

In a similar vein, we welcome the amendment allowing for consideration of representations in respect of undertakings, although we're advised that the regulations would permit only a seven-day window to make such representations. In our view, such a window is rather short, especially if the undertakings are received soon after the preliminary determination.

We're glad to see a provision giving the CITT authority to apply the lesser-duty concept. However, we'd argue that the lesser-duty concept ought to be applied in every instance where duties are imposed, i.e., not limited to cases where the CITT has determined that imposition of full duties would not be in the public interest. Such a limitation is not consistent with the purpose of SIMA duties, which are to provide a remedy for injury.

Finally, we welcome the expansion of counsels' and experts' access to confidential information.

In closing, we're pleased that, by and large, our members' views and recommendations have been addressed in Bill C-35. Rectify those outstanding issues I mentioned on prospective duty assessment, public interest increase, undertakings on lesser duty, along with SIMA, and that will serve us all very well for many years to come.

Thank you.

The Chairman: Thank you, Mr. MacDonald. May I just quickly ask you, do you suggest that the public interest determination would not be reviewable by the Federal Court?

Mr. Ken MacDonald: We propose that it be reviewable by the Federal Court.

The Chairman: Is there any suggestion that it wouldn't be in the present legislation?

For all matters, presumably, if there's an error in law in the review undertaken by the CITT, it would be reviewable by the Federal Court, wouldn't it? I mean, the Federal Court has general jurisdiction over all conduct of the—

Did you want to comment on this, Mr. Herman, so we can just clear this thing up?

Mr. Larry Herman: I don't think these are reviewable, because they are opinions and recommendations of the tribunal.

The Chairman: Okay, fine. They're purely administrative in matter and therefore— But presumably if an error of law of some kind were made—or would it have to be something like bias to make it reviewable?

Mr. Dalton Albrecht: The conduct of the hearing might be reviewable—

The Chairman: Yes, it would be the conduct of the hearing.

Mr. Dalton Albrecht: —but not the final outcome, because it's really the minister's decision.

The Chairman: Okay, I understand. Thank you very much. That's helpful. Sorry to make that interruption. Very good.

Mr. Peter Clark: Mr. Chairman, might I have 30 seconds to respond to the point raised by Mr. Albrecht? If I'd known he was going to raise it, I would have addressed it in my comments.

The Chairman: This is what happens in this committee all the time.

Mr. Peter Clark: I thought you might be flexible on it.

It's not necessarily a position of Mr. Albrecht's. It's a position of his clients' that he's raised in the past. He objects to counsel who are not lawyers having acess to confidential information. Since our firm appears before the tribunal probably more than anybody, we take exception to this view. We'd just like to make a couple of points.

It's been a long-term Canadian practice to permit both legal and non-legal counsel to appear before administrative tribunals. The proceedings before the tribunal are about determining injury, which is an economic process. That's what we bring to the table. There have really been no breaches of confidentiality that I'm aware of by either lawyers or non-legal counsel appearing before the tribunal. Integrity is not something that is conferred with admission to the bar, Mr. Chairman. So we would object to that proposal.

Thank you.

The Chairman: We'll let the last one go by. We won't require you to go to law school, Mr. Clark, if that's your point.

Mr. Dalton Albrecht: Mr. Chairman, could I have just one second?

The Chairman: No, we're not going to get into a debate on this.

Mr. Dalton Albrecht: No, I'm not debating. I just want to make it clear there was nothing intended personally.

The Chairman: We're going to move on. If this comes up in questions, we'll move out of it.

The chair acknowledges Mr. Penson.

Mr. Charlie Penson: Thank you, Mr. Chairman.

Welcome to all of the people here today from the industry.

Mr. Chairman, it seems like we almost might have done the impossible here at our subcommittee. We might have struck the balance that satisfies everybody, or so it seems from listening to people here today. Although there are specific things I see that might need to have some clarification, I think it is a good thing that we seem to have moved past the stage where we're talking about mirror legislation with the United States in dumping. It just seems to me from what I'm hearing around the table, and somebody can correct me if I'm wrong, that the balance has been struck fairly well in this legislation.

I would like to ask a couple of questions. I wasn't clear on Mr. Brush's comments about shortage, the situation in terms of shortage, that a consensus is required, therefore hurting your ability to act quickly. Could you elaborate on that or give us a little better understanding of what you mean there?

• 1015

Mr. Wayne Brush: It's the recovery or reduction in the penalty. The cold-rolled penalty was 87.5%, and coated is 155% dumping duty. So if a mill doesn't have a normal value, we have to pay that. We can get some drawback on that if the parts go out of the country, but if they're put into vehicles in Canada we don't necessarily get that.

We have to act anyway if there's a shortage situation. We can't shut a customer down. When we go back to cabinet to get some sort of remission order to cover us off on those exposures, unless there's consensus among the mills there's a veto opportunity there. So then we can't get recovery for it.

The time Peter was talking about we had shortages both in cold-rolled and in coated product. We were experiencing those situations. We had to go outside to the U.S. to get what we needed to keep our plants going.

Mr. Charlie Penson: I understand that, Mr. Brush, but the shortage provision has been introduced this time. Hopefully it's a workable situation.

You seem to suggest that because consensus is required it may not be serving your needs again and you still may end up paying duty here. Is there a better process? Is there something you can suggest that would help that along?

Mr. Peter Clark: Mr. Penson, there has been no change made to the legislation to implement that recommendation. It's been suggested that existing legislation does the job. Mr. Brush was essentially saying that the existing legislation is highly discretionary. The practice to date has been to get consensus from the industry that's being protected on whether or not a remission should be granted.

Mr. Charlie Penson: So the obvious question is whether there is a process that would better serve your needs. Are you suggesting an improvement of some kind? That's what I'm asking.

Mr. Wayne Brush: I haven't got a suggestion. I was commenting on the application of the legislation as it sits today.

Mr. Charlie Penson: Okay.

The other question I would ask of the panel, Mr. Chairman— There's one section we seem to have forgotten about in all of this for specifically dealing with Bill C-35. There was a time when we talked about trying to work out a deal with the United States to abandon trade law. There were panels set up in order to try to achieve this end. There was no discussion of that today at all.

I'm wondering if that's something members here have thought of as an unworkable situation, that there's no possibility of it ever happening. Considering that a lot of the product we're talking about, steel for example, is largely integrated industry of North America, I would think we would still be trying to pursue that goal. Is that something we should be trying to move toward?

The Chairman: What you're suggesting is that we would still need this law vis-à-vis Russia and Brazil and everybody else, but—

Mr. Charlie Penson: You're talking about the integrated products—automobiles, steel, beef, all of those that are integrated in North American markets.

The Chairman: —within the NAFTA context whether or not we've been able to deal with anti-dumping.

Do you want to make any—

Mr. Dalton Albrecht: Just a brief anecdote, Mr. Penson. I once asked Mickey Kantor that exact question, and he laughed and said no, because only about 5% of the U.S. market is involved in terms of the international trade. It just would not happen because of the way Congress works down there. His viewpoint was that it was unworkable and it would be kind of foolish to pursue it.

The Chairman: Ms. Van Loon, perhaps you'd like to respond.

Ms. Jean Van Loon: Perhaps I could speak about that, because our industry was very keen to pursue that idea. We did a lot of work a few years ago to try to mobilize support, particularly in the United States, for a change in that direction. We tried to work with other industries integrated across the border, the automotive industry and so on, but we were not able to get any support. There's adamant opposition in the United States. Very few people are willing to stand up and promote this idea.

The Chairman: Can we ask Mr. Collins-Williams or somebody whether the committee still exists? There is a Canadian, Mexican, and U.S. committee that continues to study this issue, along with 44 other committees or whatever they are. Is it still there and doing yeoman's service?

Mr. Terry Collins-Williams (Director, International Trade Policy Division, Department of Finance): Mr. Chairman, we continue to believe that the anti-dumping regime should be modified in a free trade area where you have highly integrated industries. We have worked very hard with our NAFTA partners, with some support from Mexico, to achieve that objective. There were working groups on anti-dumping and subsidies countervail that met for two years to consider changes to our anti-dumping regimes. Some modest changes were achieved, mainly in the consultative area and transparency. But I can confirm what Ms. Van Loon has said, that there is not support politically in the United States to move to an anti-dumping exemption regime within NAFTA.

• 1020

Mr. Charlie Penson: Mr. Chairman, the reason I asked that question is that in the legislation before us today— It seems, with most of our trade in Canada and the United States being cross-border, and a lot of those industries being integrated—steel, automobile, beef, for example, probably lumber to a large extent too—a lot of this wouldn't be needed if we could move this along.

And I would suggest further that it seems to me we should be trying to advance trade law or the liberalization in trade wherever we can, thereby making progress that we can take to another round of the WTO or future rounds of NAFTA. But I gather the attempts have pretty well met with resistance on the other side and we've given up on it. Is that—

Mr. Terry Collins-Williams: No, I wouldn't say we've given up on it. We continue to work with interest groups in the United States—and there are groups in the United States that share our view—and to work with the U.S. government. But this is an evolutionary process.

Mr. Charlie Penson: I have just one further question, and that's to Ms. Van Loon—

The Chairman: Can I ask you a question on this issue? In the Canada-U.S. Parliamentary Association, which you usually attend, do you sit on the committee that would discuss this issue of whether any congressional—

Mr. Charlie Penson: No, I haven't.

Ms. Van Loon, I was just going to ask the other question. In terms of steel, you talked about the new environment out there where there's a lot of excess steel coming in from markets outside of North America. How big a problem is that for your industry at the moment in terms of potential or actual cases of dumped product coming into Canada?

Ms. Jean Van Loon: I think it is a serious problem. Some of our member companies issued a press release in late September saying they were preparing three cases, and I think work is continuing on those cases.

What we're seeing is an extraordinary surge of imports. Imports have traditionally been 20% to 25% of the Canadian market. Last year it was over 35%. In July it was 48%. A lot of this is coming in from the areas of economic distress and causing clear downward price pressures in the marketplace.

Mr. Charlie Penson: Would you suggest that product is being dumped at the moment?

Ms. Jean Van Loon: Well, Mr. Clark tells us it's all dumped.

The Chairman: It depends what your net back is. He qualified it by that.

Mr. Charlie Penson: Are you anticipating taking any cases?

Ms. Jean Van Loon: The industry has indicated it is.

The Chairman: Thank you.

Mr. Sauvageau.

[Translation]

Mr. Benoît Sauvageau (Repentigny, BQ): Ladies and gentlemen, welcome and thank your for coming to meet us again. During the review of the Joint Subcommittee on Finance, we welcomed and heard a number of the stakeholders who are here this morning. I am therefore happy to great you again.

I should emphasize that we are quite a number around this table this morning; many members from our political party came to welcome you and hear you, and we are as many as the members from the government party. Even though it is inappropriate to point to the few absentees, one can all the same notice that their is a lack of representation from one political party.

• 1025

As you well know, the Bloc Quebecois has followed with a great deal of interest the workings of the joint subcommittee and the review of this act, which were technical endeavours. Those who followed our work and who read the recommendations, whether it be personally or through a third party, with colleagues and consultants that were representing them, were able to note the efforts made by the Bloc Quebecois in order to improve the report and the provisions of the Special Import Measures Act.

My first comment will be on recommendation 2 which we tried to improve. My question is to my neighbour to the left. The recommendation reads as follows:

The Sub-Committees recommend that Revenue Canada take concrete measures to insure fair and equal access to the SIMA process by small and medium-sized Canadian producers.

In its response, the government noted its acceptance of recommendation 2. I would therefore like to know what has been done since then to improve concretely such access. I talked with Mr. Stobo about a small clothing manufacturer who works in Mrs. Debien's riding and who had to face the Canadian International Trade Tribunal process. I would like to know what concrete improvements have been made for small and medium-sized producers.

My other questions are to Mrs. Van Loon and to the other stakeholders. The Bloc quebecois has some reservations concerning some areas where he thought that an improvement of the legislation might be desirable but that improvement did not come about. For instance, we really wanted the spontaneous representations made by other parties besides the complainant excluded from the process before the beginning of the inquiry. What would your position be if we passed the Act as is, without taking into account the reservations we expressed?

Unless the information I was given is wrong, we asked for a definition of the terms "material harm", since it doesn't seem to be in the act and it could lead to different interpretations. Is there any intention of better defining the terms "material harm"?

My next to last question deals with the prospective method. If I remember correctly, after a comment from the steel manufacturers, it was proposed that Revenue Canada be allowed to use a retroactive method of duty assessment in exceptional circumstances. I would like to know where we are at with recommendation 10, where we were asking for the status quo and where only a prospective method was mentioned, even though we had proposed a retroactive method.

My last question deals with the principle of lesser duties, Mr. Herman talked about, which would impose, according to us, additional constraints to our American neighbours. We would be acting in an ambiguous way giving ourselves additional constraints too. We would like to delete this principle of lesser rights from section 45.

Those were my four recommendations, the first being on SME and the others, on the Act. Thank you.

[English]

Mr. Tony Valeri: Mr. Chairman, I would like to reiterate that in the presentation I did address a number of issues that pertained to access and support of the small and medium-sized businesses in a very general sense with respect to presentation of seminars, technical assistance, staff training and preparation of SIMA-related documents. But I would ask that Revenue Canada respond in more detail to Mr. Sauvageau's request. And with respect to the considerable damage question, I would ask that the finance officials would respond to that.

The Chairman: And the issue of lesser duty.

[Translation]

You also talked about lesser duties.

[English]

Mr. Séguin, and then Mr. Collins-Williams.

[Translation]

Mr. Robert A. Séguin (Acting Director General, Anti-dumping and Countervailing Division, Revenue Canada): The issue of greater access for small and medium-sized enterprises was indeed one of the priorities of the department.

• 1030

We first of all told our officers delivering services to small and medium enterprises to make sure they were aware of the special needs in these areas. Since mid-1987, we made presentations to different groups, particularly to federal and provincial government employees, and to associations and groups dealing regularly with small and medium-sized enterprises, so that they are familiar with the act and the process, and also with the way people contact the department and file a complaint for dumping or a subsidy.

Besides those presentations, we increased the technical assistance given to small and medium-sized enterprises which contacted us. For instance, although this has generally to do with public information, we assisted them in their research endeavours in order to help them identify the different members in the Canadian industry and know what support they can get when they decide to file a complaint. We also help them identify the goods that are coming into the country, their level, their volume and their price, so that they can establish whether the harm done to them comes from those dumped imported goods.

There was a follow-up with those small enterprises who had to go through the complaint filing process in order to know how we could improve the process and help them file their complaints.

As already mentioned, we also tried to circulate more information and we have an address on the Internet so that businesses can get more information on the whole process, including the filing of a complaint.

Even if we talk of a bifurcation between the tribunal and the Department of Revenue, it is important to remember that for the filing of a complaint, small and medium businesses only deal with one agency, namely Revenue Canada. I think it is important to emphasize this.

A voice: How much does it cost?

Mr. Robert Séguin: As already mentioned, when small and medium businesses first contact our department, most of the time they have not yet retained a lawyer or a consultant, which proves that they certainly can go as far as the filing of the complaint and even up to the initiation of the investigation without going to a consultant or a lawyer.

[English]

The Chairman: Your Internet address is wwwdump.com?

A voice: It's http:www.rcggc.ca/lmse.

The Chairman: It's too Ottawa bureaucratic for us. We wanted something zippier.

Mr. Collins-Williams.

Mr. Terry Collins-Williams: I will ask Pat Saroli to respond to the question of injury standard and I'll respond to the question of lesser-duty provisions.

Mr. Pat Saroli (Senior Economist, Trade Remedies and General Economic Relations, Department of Finance): Thank you.

On the definition of material injury, we looked at the feasibility of including such a definition in the bill, and quite frankly, it was felt that the materiality of injury depends on the circumstances of each case. It's very difficult to come up with a hard and fast definition, given the variations and permutations that can arise in the variety of cases.

• 1035

The United States has endeavoured to do this, and all they were able to do was define materiality in respect of injury through a string of adjectives—i.e., injury that is not inconsequential or immaterial. I don't think that's very helpful.

The fact is that the CITT is the body that deals with this. They developed a body of jurisprudence, and this really hasn't been a problem. So I think given these factors, the fact that there are so many variations in the cases, the fact that the definition the United States, for instance, has come up is not entirely helpful, and given the fact that a body of jurisprudence has been developed, it was felt that it's better to leave the status quo.

The Chairman: Would the definition of material injury in any given case be appealable to the Federal Court on the grounds of the jurisprudence set out if a party alleged that the tribunal had departed in some substantial way from previous jurisprudence, or is that entirely within their discretion and would be not subject to review?

Mr. Pat Saroli: I'll defer to my colleague, Mr. Gerry Stobo of the tribunal, to address that.

Mr. Gerry Stobo (General Counsel, Legal Services, Canadian International Trade Tribunal): Thank you, Mr. Chairman.

Yes, in fact if the parties feel that we have it wrong, it is something they can and often do take to the Federal Court and say that we did get it wrong. However, the court has been very generous in the degree of deference they've given us with respect to this issue, saying that it's very much within our proper ambit and jurisdiction.

The Chairman: Then, just to push this one step further and get into Mr. Penson's area of interest, would material injury finding be subject to an appeal to a chapter 19 or 20, whatever, NAFTA tribunal?

Mr. Gerry Stobo: Yes.

The Chairman: Under the same rules as for the Federal Court?

Mr. Gerry Stobo: Yes.

The Chairman: Thank you. Mr. Collins-Williams.

Mr. Terry Collins-Williams: On the question of the introduction of a lesser-duty concept in this legislation, I would note that the amendment implements a recommendation of the subcommittees' reports from your and the finance committee. It introduces a lesser-duty concept in a very limited way, in that lesser duty is one approach the CITT can consider and recommend to the minister in a public interest case. We're not introducing the lesser-duty concept to the application of the dumping duty per se.

I think it serves the purpose in the public interest context. It provides an approach by which if there is reason, as determined by the CITT and authorized by the minister, that the duty should be reduced, in exceptional circumstances lesser duty is one approach by which that could be done. It is not exclusive and it's not mandatory, but it provides an approach by which the public interest can be accomplished.

[Translation]

The Chairman: Mr. Turp, did you have any questions?

Mr. Daniel Turp (Beauharnois—Salaberry, BQ): Not right now, but could I come back later on?

The Chairman: Yes, if you want. I myself have a few questions.

Mr. Benoît Sauvageau: I have a question for Mr. Stobo. I understood that the determinations of the Canadian International Trade Tribunal were non-binding, that they were rather an advice given to the Department of Finance.

[English]

Mr. Gerry Stobo: I'm sorry, which decisions?

[Translation]

Mr. Benoît Sauvageau: The determinations by the Canadian International Trade Tribunal are pieces of advice sent to the Department of Finance. They are not binding.

[English]

Mr. Gerry Stobo: The only decisions that are not final decisions are in fact those we make on public interest; they are recommendations to the Minister of Finance. As well, in our textile cases, those are recommendations to the Minister of Finance. They are not definitive findings in that sense.

[Translation]

Mr. Benoît Sauvageau: Okay. Has the Department of Finance always implemented those recommendations these last years or have its officers told you on occasion that they did not agree with you?

• 1040

[English]

Mr. Gerry Stobo: Yes. For the very most part, the recommendations the tribunal has made— Remember that we've only conducted actually three hearings into the public interest, and in two of those we recommended a reduction in the amount of duties. In one case there was a reduction in fact implemented, and in the other case, the beer case, which took place in the mid-1990s, ultimately that finding was rescinded, so there was no need to reduce the duties.

In the more recent case of refined sugar in 1997, the tribunal did not make a recommendation that there be a reduction in the duties.

The Chairman: The beer case finding was rescinded by virtue of a NAFTA panel, was it not?

Mr. Gerry Stobo: No.

The Chairman: That was another beer decision.

[Translation]

Mr. Daniel Turp: Thank your, Mr. Chairman. I have a question for Mr. Herman, but if the other panellists want to answer, their comments are welcome.

Mr. Herman said that the bill and the amendments to the Special Import Measures Act were generally consistent with our international obligations. Does this comment apply to all our obligations, under the agreement on subsidies, the agreement on dumping and NAFTA all together, or do you have reservations? Do you really mean it when you state that we are consistent with all our obligations? I gave you a copy of the rules and regulations. Do you think that the regulations or the draft regulations being reviewed are also consistent with our international obligations? That is my first question.

My second question deals with the changes concerning the public interest issue and the prescribed factors which we now find in subsection 45(3) of the act and subsection 40.1(3) of the rules and regulations. Do those who have looked at the draft regulations think that the factors that are now listed in them represent a correct interpretation of the recommendation made by the subcommittee? It seem that we want to add all the factors in addition to the ones that were recommended. I know this is a concern for the Canadian Steel Producers' Association, among others. In the submission you produced this morning, you say that your concern is to know whether the rules and regulations are precisely consistent with the proposed recommendations.

Those are my two questions, Mr. Chairman.

The Chairman: Mr. Herman.

Mr. Lawrence Herman: To answer your first question, I think that the Special Import Measures Act is consistent with Canada's obligations as stated in the anti-dumping agreement. You have to understand that the anti-dumping agreement has been drafted in a very general way and is not very precise. It does not say how each country is supposed to implement its obligation. I do not see a paragraph or a provision that is not consistent with Canada's obligations in international law.

[English]

I don't think there's anything in SIMA or in the amending legislation of the bill that puts Canada at odds with its international obligations, but as I said, those international obligations in the anti-dumping agreement part of the WTO agreement are written in fairly general terms.

The more important question I think is whether there's anything in SIMA or in the amending legislation that puts Canada at odds with its trading partners. In other words—and this is just a question I pose—if the measures were not as effective as comparable measures in the United States, or if certain provisions were excessive or more generous than those provisions in the United States, I think Canada would have to consider whether there are consequences to that.

• 1045

That's answering your question with, in a sense, another question, but I think—

Mr. Charlie Penson: It sounds like question period.

Mr. Lawrence Herman: I'm not suggesting that it is a problem, but let me just give you an example. Mr. Stobo and Mr. Saroli talked about the definition of material injury. If it were the case that there was a much more generous approach to the definition of material injury, and a much more onerous standard in Canada, I think Canadian legislators, the members of the House, would have to consider whether we have to do something about that, because clearly in a North American context there would be broader remedies available south of the border than available north of the border.

I'm not suggesting that is the case, but I'm giving that as an example of where Canadian legislators and those who implement the legislation through regulation must be concerned about, as I said in my opening remarks, Canada's position as a part of the North American continent. And whether we like it or not, a lot of what we do or can do in terms of trade remedy legislation is driven by the U.S. laws.

[Translation]

Mr. Daniel Turp: Mr. Chairman, I only got part of the answer to my question. Are the act and regulations consistent with the subsidies agreement and not only with the anti-dumping agreement?

Mr. Lawrence Herman: I think so.

Mr. Daniel Turp: Including on the matter of material harm?

Mr. Lawrence Herman: Yes.

Mr. Daniel Turp: It's a little more complicated than that. Is the way we see the material injury, including the interpretation of the notion by the Canadian International Trade Tribunal and the Federal Court, consistent with our international obligations or is it that by refusing, for instance, to define material harm we are trying not to upset our American partners?

Mr. Lawrence Herman: A moment ago, I was going to say that Mr. Turp, who is one of the big experts in public international law in Canada, could answer the question himself. I'm sure he has really delved into the matter, but since he asked me, I will say that there is no international definition, not even in the anti- dumping agreement, of the terms "material injury" or "dommage sensible".

You asked me a few questions concerning the draft regulations which I just saw a few moments ago.

[English]

I note that in the public interest factors that are prescribed for purposes of proposed subsection 45(3) there are a range of things including any other factors that are relevant. I think that the tribunal, as has been indicated by Mr. Saroli and others, has developed a process and a jurisprudence in respect of—it's a thin jurisprudence, but it's there—public interest inquiries. And I think just reviewing very quickly the factors that have been set out in the regulations, including the fact that they can consider any other relevant factors, will ensure that the tribunal does look at all of the relevant issues affecting the public interest in such an inquiry.

Only so much can be done by regulation. The regulations are subsidiary forms of legislation. and they can prescribe a lot of things, but I think we have to also rely on the ability of our trade agencies to administer SIMA in a fair and balanced way, in accordance with the spirit of the legislation.

• 1050

In my experience as a trade lawyer, and with many others around this table probably more expert than I am on these matters, the application of the provisions of SIMA in accordance with its intent and spirit has been working remarkably well in Canada. I think it will continue to work well, including on the matter of public interest.

The Chairman: Do you say that about the cases you lose as well as the cases you win?

Mr. Lawrence Herman: On the cases I lose I don't necessarily feel that way the day after, but after due reflection and sober consideration, I come around to that view, Mr. Graham.

The Chairman: You hope to anyway.

Mr. Lawrence Herman: You can quote me when the 30-day appeal period expires.

The Chairman: As my former partner, Mr. Sopinka, always said, this is why not to write articles or be quoted publicly.

Mr. Clark, you wanted to add something.

Mr. Peter Clark: As somebody who was involved in the early part of the Tokyo round, we had difficulty trying to define material injury because it's a concept you have to measure in every case, but in the case of every industry what's material will be different, just because of the nature of the industries.

We had long debates. We wanted a variable concept and the European Union wanted a quantitative concept. We could never reach agreement. It's very difficult to quantify, in a general sense, what material injury is, because it will differ from case to case. It will even differ for the same industry, depending on the economic conditions in play at the time you examine them.

As for the rules in SIMA and the rules for dumping and for countervailing duties, they're all as consistent as anybody else's, and perhaps more consistent than some, with the international agreements under the WTO.

The Chairman: That's helpful information for all the committee members. Thank you, Mr. Clark.

I have two other members, Mr. Penson and Madame Debien, but maybe I could ask a couple of questions first and then we'll go to Mr. Penson.

Mr. Stobo, I wonder if you would comment on Mr. Herman's observations about costs before the tribunal. It seems to me there's a factor of cost that is relevant in Mr. Sauvageau's question to Mr. Séguin about the cost to small and medium-sized businesses of getting access to the tribunal. There's also the issue of the cost of tribunal hearings being a form of non-tariff barrier itself.

There are a lot of countries, particularly poor countries, that take the position that the minute a case is started against them they'll retire. Just think of our own lumber case in the United States, where the lawyers' fees were $4 million. There are a lot of countries that would back off before they'd even start such a process. As we seem to get more and more legalistic and surround this whole process with more experts, lawyers, etc., the more the costs and everything escalate.

Is there a sensitivity in the commission to this, in an attempt to try to streamline proceedings to reduce costs for our own producers and suppliers, but also in the interests of fair trade and those who want to come to this country to sell their goods?

Mr. Gerry Stobo: That's an important question, Mr. Chairman. I can respond by very simply saying it's very much an issue on the minds of the tribunal. Mr. Gosselin, our chairman, has made it very clear to us and those groups of stakeholders with whom he has met that getting our process as efficient and cost-effective as possible is clearly one of his primary objectives.

I'll explain how some of those objectives have been met, but first I want to say that our process has been described as complex, very costly and cumbersome. However, I note that over the past two to three years we have had some very small domestic producers coming before the tribunal. An example of one of the industries we have heard from is concrete panels, where the entire domestic industry, consisting of two people, was in the hearing at the time we were considering their dumping case.

We also have dealt with cases involving a very small domestic garlic industry. We have dealt with a case involving bacteriological culture media, where the domestic industry was very small indeed.

• 1055

We're not entirely convinced that all processes are inaccessible. We have tried to make them more accessible by undertaking a review of all of our SIMA procedures. We're trying to get more information out before the hearing starts. As Mr. Herman mentioned, once the hearing begins, that's when the dollar machine starts to print out for everyone's costs. So we have tried valiantly to get more information out and to make it available to parties before the hearings so that the hearings go more quickly than they have in the past.

I think I can say, Mr. Chairman, that the tribunal has been successful in reducing the length of hearings in the past. I'm not going to pretend they are simple or that there are simple cases. There is a certain amount of complexity that comes with the bringing of a dumping case, but we have tried to shorten the hearing process. By being more active managers in the pre-hearing process, we have also tried to assist everyone in order to make the process move more smoothly and more efficiently.

We believe very strongly that the changes proposed in Bill C-35 will help us again, particularly because we'll be able to get in at the preliminary determination of injury stage. We'll be able to move into the facts of the cases much earlier, and we expect to be able to shorten our hearings even more very quickly after the implementation of Bill C-35 because we will have dealt with some framework issues like definition of domestic industry or definition of like goods. Those issues that are typically hard fought issues during the course of the hearing can be dealt with up front, and we can get them out of the hearing. So we are hoping to bring the hearing time down even more.

The Chairman: Thank you, that's very helpful.

Members, before we go on to further questions, I understand some members may have to leave because of other obligations. We have a quorum, so I want to take this opportunity to introduce the issue of formation of our subcommittees again. Let's get that done now.

If I may, I have some resolutions that I would like to read. They propose going back to what we were before; it's just that the names are different somewhat. The first is that the Subcommittee on Human Rights and International Development be composed of nine members or associate members, of whom five shall be government members—namely Colleen Beaumier as chair, Jean Augustine, Paul Bonwick, Claudette Bradshaw, and Sheila Finestone—and four shall be opposition members, one from each opposition party.

Are we ready to name members?

Mr. Charlie Penson: Yes. Keith Martin will be there for our party.

The Chairman: Keith Martin from the Reform Party, along with Madame Debien, Mr. Svend Robinson, and Diane St-Jacques.

Some hon. members: Agreed.

The Chairman: The second is that the Subcommittee on International Trade, Trade Disputes and Investment be composed of nine members or associate members, of whom five shall be government members—namely Sarmite Bulte as chair, Murray Calder, Raymonde Folco, Sarkis Assadourian, and Bob Speller—and four shall be opposition members, one from each opposition party.

Do we have the names at this point? Mr. Penson, Mr. Sauvageau, Mr. Blaikie, and Mr. Bachand.

[Translation]

Mr. Benoît Sauvageau: May I ask a question, Mr. Chairman?

The Chairman: Yes.

Mr. Benoît Sauvageau: Is Mrs. Folco a member or is she an associate member of the Foreign Affairs Committee?

The Chairman: Mrs. Folco is an associate member of our committee.

Mr. Benoît Sauvageau: Thank you.

[English]

The Chairman: Do I have approval of the members?

[Translation]

Mr. Benoît Sauvageau: But Mr. McWhinney is not a member?

The Chairman: Mr. McWhinney is a member of the finance committee and he has gone with Mr. Valeri.

[English]

The Chairman: Do we have approval?

Some hon. members: Agreed.

The Chairman: Thank you, members, and excuse me for interrupting the questions.

I have one more question for Mr. Séguin, and then we'll go back to Mr. Penson and Madame Debien.

Mr. Séguin, I thought Mr. Clark made a very cogent point about this problem of the retroactive duties that we've heard about. For those of us who have practised in this area, this is a big problem. It happens a lot with Revenue Canada. It's not just in this area that you could suddenly bring something. With importations, as you know, even import duties quite often sometimes wing in and hit you some time after the case, and they can have very unfortunate circumstances. Is there some way in which the definition of normal value would be a way of dealing with this in a way that would address Mr. Clark's concern?

• 1100

Mr. Robert Séguin: I believe the issue Mr. Clark was raising was a very specific situation where there is an appeal. It would have to be an appeal of a no injury finding or the rescission of a finding where we are not enforcing the case or we have ceased the enforcement of the case as a result of a no injury finding, and the domestic producers then appeal the no injury decision. Therefore, since we are no longer enforcing the case, we no longer issue rulings as to what is the normal value.

Mr. Clark's concern is that his clients, whether they be importers or exporters, have this potential liability if somewhere down the road, let's say a year or a year and a half later, that finding of no injury is overturned and there is that potential liability for the period from the time there was the no injury finding to the overturning of the decision.

I guess my response to Mr. Clark would be that we mentioned, particularly in our presentation to the two subcommittees the first time around, that one of our major concerns is when we're talking about making the process more efficient and the concern of the costs to all the stakeholders, including the government departments, we have to ensure we make effective use of the resources we have to deliver the program. The resources we have basically have to be divided between providing the advice to Canadian producers and helping them along, if they want to file a complaint, between receiving and analysing the complaints.

We're warranted with initiating that investigation and conducting those investigations. Obviously when there are findings in place, we have to ensure we properly enforce those findings. For example, we are enforcing approximately 40 findings right now. In a number of those findings we have to basically conduct annual investigations to ensure we are in a position to issue specific instructions to the foreign exporters in terms of what the normal values are.

In those instances where a no injury finding results or a finding is rescinded, we have committed to providing them with general guidance and general instructions in terms of what those normal values are, but we're not really in a position at this point to go beyond that.

The Chairman: So you're not going to give a legally binding thing, but you'll give an advice as to where you see the parameters.

Mr. Robert Séguin: That's correct. That's basically the position we have adopted.

The issue was raised today, and I guess to a certain extent it's unfortunate it wasn't raised early in the process or even the first time around. It certainly is an issue where, as with the rest of the legislation, you are trying to strike that balance between the protection to Canadian producers and the continued access to importers. It is an issue that's important to both sides, and you probably had to have pros and cons as to how this issue should be addressed.

The Chairman: Okay. Thank you. That's helpful.

You want to write a réplique, do you?

Mr. Peter Clark: I know what the legislation says. When we file information with Revenue Canada we calculate the normal values for our clients. We know what the normal values should be, but we can never guarantee that 18 months later Revenue Canada will agree with us again, because things can happen. That's the problem.

The Chairman: Yes, we understand.

Mr. Lawrence Herman: There have been very few instances of no injury findings. I'm trying to remember the last time a no injury finding by the tribunal was overturned on appeal.

The Chairman: Well, let's not get into that.

Mr. Penson.

Mr. Charlie Penson: Thank you, Mr. Chairman.

There are actually two points I want to make and get response to. The first is just to follow up on this short supply situation.

The committee recommended in recommendation 16 that the Minister of Finance consider amending SIMA to allow for temporary exemption of goods from the anti-dumping countervailing duty orders under conditions of domestic short supply. At the time, the case was made pretty strongly by the automotive parts manufacturers and the alliance of manufacturers and exporters why that should be the case. Technically, I understand there is some provision for that, but Mr. Clark has made the case, as well as Mr. Brush, that there has to be concurrence to allow that to happen.

I'm wondering, Mr. Collins-Williams, why this recommendation wouldn't have been picked up. I noticed that in the presentation today by Mr. Clark and his associates, they say they would have been more comfortable had we accepted this recommendation and implemented it. My understanding, and I could be proved wrong here, is that concurrence is hard to get, and there are times of domestic short supply when we in fact use it in manufacturing and re-export it, so it's necessary to have some relief. I'm wondering why that wasn't picked up.

• 1105

Mr. Terry Collins-Williams: As I recall, the recommendation asked the Minister of Finance to consider whether changes were needed to SIMA to deal with situations of short supply. Our conclusion is that the Minister of Finance has authority under another law, the Customs Tariff Act, to provide the remission of anti-dumping duties in instances when he feels it's warranted. Short supply could be—in fact it has been—one of those instances. We had examples in the past year of anti-dumping duties being remitted as a result of representations made by steel importers, for example, of short supply.

So we're satisfied that the statutory authority exists. It happens to exist in another law. So SIMA doesn't require a specific amendment to provide the Minister of Finance with that authority.

Mr. Charlie Penson: But doesn't that require concurrence, Mr. Williams?

Mr. Terry Collins-Williams: It doesn't require concurrence because it's a decision by the Minister of Finance, who makes that decision based on the information available to him.

Obviously, when a question of short supply is raised by importers, domestic users of the product in question, it's incumbent on us, in considering and making advice to the minister, to determine what the situation of the domestic market is so that we do go out to consult all parties in the market, including of course the domestic producers of that product. Their views are taken into account in the advice we give and the determination made by the minister.

Mr. Charlie Penson: The other issue that was spoken of a few times earlier today—I know some of our members raised it in second reading of the bill—is the public interest component of the SIMA legislation. There have been some better guidelines put in around the public interest portion.

Here's our concern. I think Mr. Stobo talked about it a little bit in terms of cases where you can actually have a monopoly situation develop. It's where sometimes there are only a few producers—maybe they're very inefficient producers—in Canada. Definitely, it can be proven that there's dumping. It can be proven that there's injury to that producer. But is this in the public interest? I'm struggling with this myself. It seems to me that there are cases where we would have to maybe have a look at this legislation down the road and see whether the public interest is really being served.

Another case in point, I guess, is the Gerber case that came about after our committee considered this some two years ago. In that case, it looks like a monopoly situation may have developed as a result of duties that had been put on after a finding of injury.

What I'm wondering is, can there be a better process that sort of stops this? Technically, it's absolutely right that there is dumping and injury, but is it in the public interest? I guess that's where I have a problem at the moment. I'm wondering whether there's a better solution that we can work toward to address this public interest side of things.

I understand that we are sort of out ahead of the U.S. in terms of this area, but my understanding is that the European Union considers it a matter of course. Do you have any comments with regard to that?

Mr. Terry Collins-Williams: Perhaps I'll comment first, then I could ask Mr. Stobo and perhaps also the representatives of the Competition Bureau, who are also with us here.

The public interest provisions of SIMA, as they are now in the law, were put there to accomplish this rather extraordinary and particular purpose, which is to determine whether, even in the circumstances where it had been established that there was dumping and injury to the domestic industry, there might not be some other circumstances that should be taken into account in the application of dumping or countervailing duty. That was introduced in 1984.

• 1110

In the present law there's really no guidance provided to the CITT as to what factors might be taken into account. So they have been operating blindly until now. It's not only the CITT, but all of the parties interested in a case. It's not made explicit what factors would give rise to public interest and how the public interest should be determined. For that reason, following the committees' recommendations, we propose to set out in legislation some specific factors that are not inclusive but might be considered in the determination of public interest.

I might mention that one of those factors we proposed and that will be published in draft regulations for public comment is whether the imposition of an anti-dumping countervailing duty in the full amount has eliminated, substantially lessened, or is likely to eliminate or substantially lessen competition in the domestic market. That's a factor we think is relevant and should be taken into consideration.

Mr. Gerry Stobo: Mr. Chairman, I would like to augment Mr. Collins-Williams' answer very briefly. Without going into the Gerber and Heinz case, I can assure the committee that this issue was raised. There was the possibility of a monopoly being the result of the injury finding of the tribunal. It was very much a live issue during the public interest hearing. Certainly I think my friend from the Competition Bureau can speak to this issue as well, but it's certainly something the tribunal has to take into account, given the significance of it in the hearing itself.

The Chairman: Mr. Lancop.

Mr. Robert G. Lancop (Assistant Deputy Director, Investigation and Research, Department of Industry): As Mr. Collins-Williams and Mr. Stobo quite rightly remarked, we were quite an active participant in the Gerber case. We were indeed concerned in that particular case about the creation of a monopoly in Canada, and we made representations to that effect.

I think Mr. Penson made a point we raised at an earlier stage because of a concern in this overall process about duties being imposed that would be greater than were necessary to address the injury that the domestic industry would be faced with.

Our greatest area of concern, though, is in those areas where we do not have a competitive market in Canada. In those industries where we have a competitive market in Canada, there's a great deal less concern about downstream users and also consumers and the impact the duties might have on consumers. We're much less likely to see any increase in price or any adverse effect upon those two groups: consumers and downstream users. However, in a situation where there's likely to be the creation of a monopoly, or at least market power, we are very concerned.

We think this law, this bill as proposed, addresses that concern in a couple of ways by ensuring that there's a standard that's understood in law of reasonable grounds as well as a basis for a public interest issue before the CITT.

Second—this is certainly a point we made to the joint committee about which we feel very strongly—there should be guidance to the CITT on the issue of public interest. We think the draft regulations, which a number of people have spoken about today, do a pretty good job in addressing the issues we think are relevant.

To that extent, while we think that there's an argument in favour of doing something like the European model, we think equally that this bill represents a very good balance in protecting the interests of those two groups I spoke about, the consumers and downstream users, as well as allowing protection for the domestic producers. So to that extent, we're very supportive of this bill.

• 1115

Mr. Charlie Penson: Could I just ask another question?

Considering that you believe the public interest portion of this bill is going to be effective in this area, how do you see it being different from the environment you operated in for the case with Gerber, when the bill was not in effect? Is the bill going to strengthen your hand in this area?

Mr. Robert Lancop: I would be very reluctant to address the Gerber situation at the present time, because the matter is still before the CITT, but I think I can address the more general question you asked, which is how will the bill change the situation from what we have right now.

What we have right now is a situation where parties to the proceedings can make an application for a public interest hearing. In the past, the tribunal has made its decision on the basis of whether the circumstances warranted it. They put into place a standard that has been understood to be exceptional circumstances. We had an application in a case of home canning for a public interest inquiry that was rejected by the tribunal because they did not feel the circumstances were sufficiently exceptional to warrant one.

Now this is dealt with in the bill, and we think that the standard of reasonable grounds is a standard that's understood in law and has great definition in law. So we believe this is a great improvement.

Also, as one of the witnesses said, to some extent, the tribunal was flying blind, and we had some earlier situations in which there were decisions in regard to a lesser duty on beer and corn grain. More recently, we have not seen that again. Indeed, in the case of beer, the direction given to the finance department was not implemented because it was not clear enough to implement. I guess I'm cutting to the bone on that.

So now the tribunal will get direction as to what things they should consider, and we think that's a vast improvement. Also, if indeed they make the decision that the full amount of duties are not warranted, then they would apply a lesser duty. So to that extent, it's very clear to the tribunal now what specifically the role is in regard to a public interest hearing.

We find that a significant improvement. I think it will potentially serve to guard against the creation of monopolies in Canada, which could obviously have some adverse consequences. So we're quite pleased with the bill as it stands.

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

[Translation]

Madam Debien, I figure you are last.

Mrs. Maud Debien (Laval-Est, BQ): Thank you, Mr. Chairman.

You mentioned a moment ago the bifurcation in the inquiry system at the preliminary stage. My question is probably to the parliamentary secretary. I would like to know the reasons for a transfer of authority at the preliminary enquiry level stage from Revenue Canada to the Canadian Trade Tribunal. I am thinking here of the submission presented by the Canadian Steel Producers' Association in which it seems to be a serious concern. I would like to know if you can guarantee that the process will not be more cumbersome and that there won't be any increase in costs for the SME, which would mean a decreased access for SME, if this authority ever gets transferred to the Canadian Trade Tribunal. Those are my two questions.

[English]

Mr. Tony Valeri: I'll have Mr. Williams answer that question.

Mr. Terry Collins-Williams: Thank you.

The rationale for bifurcating, if we can use that term, the preliminary investigation and transferring the preliminary determination of injury from Revenue Canada to the tribunal is an effort to make the best use of the expertise of these two bodies through the entire course of the investigation. That means Revenue Canada's role is essentially that of making determinations of dumping or subsidization, and the CITT's role is that of making a determination of injury.

• 1120

Under the existing law that is done at the final stage. What we are proposing to do in these amendments is to bring the CITT into the injury determination from the outset of an inquiry. We believe this will allow the CITT—and I believe Mr. Stobo spoke to this earlier—to be involved at an earlier stage to develop a better record, and to get information from the participants in the inquiry and get information out to the participants in the inquiry at an earlier stage. Thereby, when they are at the stage of their final determination, which is the stage at which they hold public hearings—which I think a number of witnesses have indicated is the most costly part of probably the whole SIMA process, because in most of these hearings, in complex cases, parties need to be represented by counsel, consultants, and possibly by a battery of expert witnesses—the CITT believes they can shorten the hearing process because they will have had a longer time to develop a record and to have discussed that record and had it understood by the parties to the case.

Mr. Gerry Stobo: Mr. Chairman, if I can just add one point, and it's a point Mr. Herman made earlier, I think an important one, the changes to the SIMA should not result in a huge expense for parties, given the consequences on accessibility. We are very mindful of that. Certainly in our internal discussions, while the process we envisage will be more transparent and will allow for more people to get access to information regarding the complaint, we don't anticipate that this is going to be a cumbersome process. We will try to develop it in a manner that is as summary as possible but that will allow for the greatest transparency that we can have within a 60-day period. That's how long we have to do it, so we have to move along very crisply.

The Chairman: Thank you.

Mr. Valeri.

Mr. Tony Valeri: I want to add that, very clearly, the purpose of this change is to allow the CITT to get involved, in essence to start to provide information and start to build a perspective before parties start to incur the greatest cost, which would be starting to appear before the CITT. So from that perspective, you have cost reduction for those parties that are going to end up at CITT. That's very clearly the intent of this change.

The Chairman: And presumably, as well, unlike the previous cases where preliminary injury finding was made by revenue and then you might get disagreement, at least half the work has already been done by the CITT by the time you get there.

Mr. Gerry Stobo: Correct.

The Chairman: And then the costs will be reduced and the parties will know better where they're going, presumably, by having that exclusively in one area. I think this was a big issue that was discussed by the committee and one of the more important procedural changes that I think was recommended.

[Translation]

Is it alright, Mrs. Debien?

[English]

Very quickly, Mr. Herman.

Mr. Lawrence Herman: In my view, this is one of the most important consequences of the change. And it has to be watched very carefully, because as a practitioner I know that changes to the process like this have a way of ratcheting up complexity and cost. I think this could be a problem if it's not handled very sensibly by the parties administering the regulation.

[Translation]

The Chairman: We are always very aware of the problem of perverse effects in this committee; we see quite a few.

Ms. Van Loon.

Ms. Jean Van Loon: Mr. Chairman, I would like to add that our association has had very serious reservations in this regard from the start. Since then, we discussed the issue on a number of occasions and we are now aware of the potential benefits, but also of the risks. However, the letter we received from the tribunal suggests that the risk level is tolerable.

• 1125

[English]

The Chairman: On behalf of the committee members, I'd very much like to thank all our witnesses this morning. It was very helpful and enlightening.

Maybe on behalf of the full committee, we should thank Mr. Speller, Mr. Assadourian, Mr. Sauvageau, and Mr. Penson for the work they did on the subcommittee. I think that work, a year and a half ago now, is what created the well-balanced piece of legislation we have with us today.

There are two supplementary items. First, there was some suggestion, Mr. Assadourian, that we might get a briefing on Turkey and Syria. As you know, they've come to a solution of their problems. So we can perhaps hold that down for the moment, since the state of tension—

Mr. Sarkis Assadourian: I believe November 5 was the date for the submission.

The Chairman: Yes, but because of the fact that they've now announced a settlement of their issues, could we stand that down? It's no longer—

Mr. Sarkis Assadourian: I think the issue is there, but—

The Chairman: Maybe we can discuss this afterwards, then. Thank you.

The next meeting is November 3, at 9 a.m., in Room 209, West Block, and we'll do clause-by-clause of the bill.

Thank you very much.

The meeting is adjourned.