FAIT Committee Meeting

STANDING COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE

COMITÉ PERMANENT DES AFFAIRES ÉTRANGÈRES ET DU COMMERCE INTERNATIONAL

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, March 9, 1999

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[English]

The Acting Chairman (Mr. Jerry Pickard (Chatham—Kent Essex, Lib.)): Ladies and gentlemen, Mr. Graham will be here very shortly. But just so we can get underway, I'm going to ask Mr. Stein if he would take the lead and introduce the delegation to us and go from there.

Mr. Ken Stein (Chair, Cultural Industries Sectoral Advisory Group on International Trade (SAGIT)): Thank you. I think it would be actually a bit presumptuous of me to do so.

The Acting Chairman (Mr. Jerry Pickard): Okay. There's Mr. Graham, hurrying along.

• 0910

Ken, you might introduce yourself.

Mr. Ken Stein: Thanks very much, Jerry. I'm not exactly sure how you want to proceed. You have before you quite a range of individuals who I think will have very much to say about the issues of trade.

My particular interest in being here today is to put forward for your consideration some of the views that we developed as a special advisory group on international trade for culture.

The special advisory group report was referred to the committee by Minister Marchi. I think all members of your committee have received copies of that report. Of course, if any don't, we can make those available through the department.

The members of the Cultural Industries Sectoral Advisory Group are people who serve on their own time. They range from Christopher Maule, who I hope doesn't have a conflict of interest by also sitting on the research staff of the committee, to Michael MacMillan, chairman and chief executive officer of Alliance-Atlantis, André Bureau, chairman of the board of Astral Broadcasting Group, people like Peter Grant, who is senior partner with McCarthy Tétrault and is very involved in information and magazine issues with respect to trade. It's a representation of individuals from across the country.

As you know, SAGITs were set up as a result of the North American Free Trade Agreement to advise the minister on trade with respect to strategy and issues in particular sectors. To our group it become obvious over the past few years that culture, far from being some sort of orphan or side play, has become a central part of the new economy. So rather than simply trying to exempt it or take it off the table in trade discussions, it was necessary to develop new approaches to adapt our policies to anticipate and respond to change.

We have recommended to the minister unanimously as a committee that it is time to develop a new international instrument that would emphasize the essential principle of cultural diversity and set out the measures that countries can use in a liberal trade environment to enhance cultural and linguistic diversity and cultural identity.

Canada has always been at the forefront of international efforts to liberalize global markets. At the same time, Canada has been a champion of the need for nations to be able to define their own cultural policies. I would point out that the communiqué between the Prime Minister of Canada and the Prime Minister of France in December is very much in line with that tradition.

We must, however, encourage international trade policies that are culturally supportive. In the same way as we have accords on the environment and on telecommunications, it is essential that we do the same for culture. We want very much for our report to be more than recommendations to the minister. It is a call to the wider community to discuss and debate how the traditional tools we have used to build and sustain Canadian expression should be adapted or changed to preserve our own individual expression in an open and borderless cultural marketplace. For this reason, we are extremely pleased that the minister chose to submit this report to the standing committee directly. We look forward to your proceedings.

I would just take a few minutes to outline the key thoughts behind our report. The first is that we believe Canadian culture is a success. Our culture—our ideas, songs and stories—gives meaning to who we are as Canadians. Whether we're from Toronto, or the east coast, or Alberta, or Quebec, our culture is crucially important to how we see ourselves as Canadians. Through cultural products such as sound recordings, books, films, radio and television, we express our own ideas and see the world from our own perspectives.

For a small market, we have an amazing success. The sector as a whole is responsible for 3% of our GDP and over 600,000 jobs, and it is growing at nearly 10% annually, faster than just about any other sector. At the same time, Canadians want and will always have the most open market for foreign cultural goods in the world; 48% percent of the books sold and over 95% of the screen time in our cinemas is foreign, and Canadians, of course, enjoy a full range of U.S. and foreign broadcasting services.

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The goal of Canada's cultural policy has always been to foster an environment in which we can develop Canadian cultural content and ensure it is available to all Canadians. We have used a variety of tools to do this: direct subsidies, everything from Telefilm and the Canada Television and Cable Production Fund—originally established by the cable industry, if I can put in a small commercial—to book publishing grants and CBC/Radio-Canada. Other countries such as France, Germany and Italy have similar programs, and of course they have highly subsidized public broadcasting systems. We also create a place in our mass media for Canadian programs recordings through Canadian content rules, and these measures have been enormously successful. Other countries such as France and Australia use the same tools. We also have tax measures, foreign investment rules, and measures to protect intellectual property.

All of these are crucially important, and our ability to support and advance our own cultural policies must be retained. These are essential to our Canadian identity. But we face a challenge.

The new technologies, combined with more liberal trade policies, are creating pressure on the very cultural policies that have served to create a strong and diverse Canadian culture and our Canadian identity. The challenge for Canada is to achieve a balance between measures that aim to foster cultural expression and our international trade obligations.

Canada's cultural toolbox was assembled when technologies to produce and deliver cultural products were simple and limited and borders meant something. Now there is an amazing, perhaps uncontrollable complexity and abundance, and new distribution systems like the Internet can make borders seem meaningless.

The cultural industries today are also, most importantly, an essential element of the new economy. Internet, satellites, cable, multimedia and CD-ROMs are all now part of our everyday experience. At the same time, we see the emergence of huge multinational, integrated companies that are developing new products and markets at an explosive pace. If we are not players, we relinquish to others the major engines of this new modern economy.

To keep cultural goods and services from being treated like commodities, and to maintain and enhance our cultural diversity and our Canadian identity, we must be aware of the changes that are occurring around us and, as Canadian policy has always done, be prepared to respond. In our view, cultural exemptions in trade agreements can no longer provide the protection most nations need for their indigenous cultural industries. We need a new approach.

As a committee, we considered a range of options. First was to maintain the broad cultural exemption. Second was to have no commitment on cultural and do the best we could within any of these trade discussions. Third was a sectoral approach that divided up books, publishing, the art community, film or television, and took a different approach in each. Fourth was a new international instrument on cultural diversity, based on the kinds of things that were done in telecommunications and in the environment.

Based on the need to balance trade obligations with cultural policy objectives and to find a widely acceptable means to enhance cultural diversity, our committee unanimously recommends a new international instrument. This instrument would acknowledge that domestic measures and policies to support culture are essential, but would recognize that we must deal with a global competitive world.

This new instrument on cultural diversity would, in our view, include the following important principles. First, it would recognize the importance of cultural diversity. Second, it would acknowledge that cultural goods and services were significantly different from other products. Third, it would acknowledge that domestic policies and measures intended to ensure access to Canadian products and services were significantly different from other policies and measures. It would then set out the rules on the kinds of measures countries could and could not use. Finally, it would establish how trade disciplines would apply or not apply to cultural measures that met the agreed-upon rules.

We are convinced Canadians can and should take up this initiative and lead it. We believe we can find a better way. We can grapple much more effectively than in the past with the challenges to the ongoing strength or our cultural industries and our own expression of ourselves.

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We are very pleased with the response to our report to date. It has received extensive coverage across Canada. We hope your committee will further extend and encourage discussion on this matter. A new approach at an international level is desperately needed.

Thank you, Mr. Chairman.

The Chairman (Mr. Bill Graham (Toronto Centre—Rosedale, Lib.)): Thank you very much, Mr. Stein.

We will just go in the order on the order paper, so next will be Mr. Schwanen from the C.D. Howe Institute.

I apologize to everyone for being late; I got stuck on a long-distance phone call.

Mr. Stein was very good; he managed to time himself to the exact ten-minute period. But since there are eight of you, if we can keep it to about ten minutes each for your presentations, that will leave lots of time for questions. I'd appreciate that. Thank you very much.

Mr. Daniel Schwanen (Senior Policy Analyst, C.D. Howe Institute): Sure. Thank you.

I think we're all aware we're discussing an issue of strategic importance for Canada, from the point of view of both our trade policies and our cultural policies. The agenda suggested the presenters organize their comments around the SAGIT report, and since I think it's a very clear and forward-looking report, I'm very happy to organize my comments around their recommendations. I think I will be fairly short.

I agree that among the four options the report outlines for Canada—trying to gain a broad cultural exemption, go the sectoral reservation route, or negotiate measures with our trade partners within each sector—the best one is the one Mr. Stein has identified. Instead of always exempting ourselves, which many of our trade partners consider to be too blunt an instrument and I believe is too blunt an instrument to garner any support internationally, we should instead take the positive approach and attempt to negotiate an instrument on cultural diversity.

As the SAGIT report suggests, this instrument could begin by recognizing the importance of cultural diversity and would attempt to set out rules on the types of measures countries could or could not use to enhance cultural and linguistic diversity.

The report hints a lot at what those measures could be—what could be allowed under such an instrument that would presumably, or certainly in my view, be part of a broader trade agreement. But the report does not mention what our trade partners would wish to circumscribe in terms of what we are doing to support our cultural industries. I think it's very important to understand we will be asked to justify, a lot more clearly and objectively, what we are doing on the cultural front if we are ever going to sign such an instrument.

Nevertheless, the advantages for Canada are very clear, so clear that I certainly wholeheartedly endorse the approach.

What are these advantages? We would have an instrument within the broad trade framework that would recognize the specific role cultural goods and services played in a society that was different from the role of other types of commodified goods and services. It would also recognize officially, within trade rules, the legitimacy of measures promoting the production and distribution of cultural products within the domestic market.

Such an instrument would also focus on the goals of cultural policy that would be deemed acceptable to all the trade partners, and on the type of instruments and policies that would be acceptable to reach those goals.

It could therefore remain a useful instrument in spite of the evolution of cultural industries. If we just had an instrument on book publishing and another one on films and so on, we wouldn't be recognizing, of course, the convergence of the media and so on, for which we would need to then negotiate a new instrument.

So the broad cultural approach, where countries were allowed to agree on the objectives of cultural policy and the types of instruments that could be used across a spectrum of sectors, including new sectors, would be helpful. And of course such an instrument would go, I hope, a very long way towards getting rid of the “I used my exemption and you can retaliate” cycle, which I think is very hurtful for cultural and also other industries in Canada. In other words, more certainty for all would be the result of such an instrument.

• 0925

There might also be advantages for our trading partners. There are countries in the world that are attempting to block signals from satellites because of the political implications, and I think you could easily sell this instrument for promoting cultural diversity to our trading partners on the grounds that it actually could help promote the spreading of signals in countries that currently have various restrictive policies. This would obviously be to the advantage, for example, of the United States.

But as I was saying, we also have to realize that this approach to negotiating an instrument with our trading partners does not entail carte blanche for Canadian cultural policies. Our trading partners would ask us, and would be justified under such an instrument, to explain our policies in terms of the agreed-upon cultural objectives of the instruments. In other words, when we say we are open for trade, as the SAGIT report consistently reminds us—and that trade is very important for Canada, not just for the economy but for a society as a whole—we are going to be asked to put our money where our mouth is. That is to say we are going to be asked that our cultural policies be conducted in a manner that is consistent with the objectives agreed upon in the instrument, but also in ways that are the least trade restrictive possible. This is an outcome we have to expect from negotiating such an instrument.

So for people who want carte blanche for Canada's cultural policy, this instrument certainly is not going to give it to us. For example, we may be asked—and this instrument may speak of it—how countries set quotas. What are the objectives in relation to the marketplace, to the tastes that are evolving in the marketplace, quotas on television and radio and so on? I wouldn't be surprised if in negotiating such an instrument our trading partners said, “We agree that the diffusion of national culture is an important goal, but are you going to set your radio and TV quota three or four times above what the actual market share for these products is when Canadians are given a choice?”

So we are going to be asked to justify our quotas. We are going to be asked to justify our definition of local content. We are going to be asked within the context of negotiating such an instrument how our foreign investment restrictions actually help us reach the objectives. Now, that is not to say that our trading partners wouldn't recognize the objectives; we would just be asked for a lot more precision, if you like, on how it is that the vast array of policies we have on culture actually promotes these objectives as opposed to protecting certain commercial interests.

So that's my main message today, that I agree with the approach of negotiating an instrument on culture as part of a trade agreement, and that it would promote long-term certainty for cultural and other industries, but we shouldn't hope that this approach will give us a blanket endorsement of the current array of Canadian cultural policies.

The Chairman: Thank you very much, Mr. Schwanen. I hope you're going to work on providing us a comprehensive definition as to what is a measure that is protecting culture and which is not designed to protect a commercial interest. It seems to me to be the whole essence of what we're struggling with here. Anyway, I hope others will help us with that one as well.

Ms. Williams, please.

Ms. Megan Williams (National Director, Canadian Conference of the Arts): Thank you for inviting the CCA to address the committee. I'm here with my board member, Sandy Crawley, who will speak after I do.

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I want to explain briefly that the CCA is Canada's oldest and largest arts advocacy organization. We're a national arts service organization and so we're non-profit and non-partisan. Our membership is made up of individual artists and cultural workers, arts organizations, labour groups, cultural industry organizations and concerned citizens. Our board of governors deals with a wide variety of policy development issues that have a direct impact on the vitality of the arts and cultural industries in Canada.

The CCA's interest in the topic of Canada's trade objectives has increased along with the proliferation of international trade and investment agreements to which Canada is party. Much effort has been dedicated to a better understanding of the international trade environment by our organizations and its members.

Last year the CCA conducted a working group on cultural policy for the 21st century to chart a course to ensure the continuation of the success of the past fifty years of artistic and cultural development in this country. Throughout these deliberations, participants tried to reconcile our legitimate domestic cultural aspirations with the constraints inherent in international trade agreements to which Canada has acceded. The examination of the GATT, for example, led us to the conclusion that the existing provisions dealing with culture are either under siege from some members of the WTO or are so tightly constrained that they offer little assistance to any arbitration panel wrestling with disputes over cultural policies, institutions or practices.

The dispute over Bill C-55 has left us with little faith in the cultural exemptions contained in the FTA and NAFTA. A determined challenge to any specific cultural measure can be brought to the WTO, where a resolution to a dispute has scant reference to cultural measures. In fact, a review of the appellate body decision on the Canadian magazine industry demonstrates that precedents from other disputes in traditional trading commodities such as oilseeds and alcoholic beverages are brought to bear in adjudicating cultural matters.

The failed negotiation over the MAI was another source of great anxiety to the cultural sector. For the first time the disciplines of this proposed agreement would have formally included both the for-profit and not-for-profit sectors and sought to define intellectual property as investment. Such provisions would have meant an overhaul of the current cultural practices and institutions in Canada. Happily, the suspension of negotiations averted this prospect, at least for the time being.

The Canadian Conference of the Arts is not opposed to international trade or efforts to create a world trading system free of barriers. We recognize that Canada has greatly benefited from enhanced trading opportunities. However, we stress the need to be mindful that the integrity of the essential elements of Canadian culture and freedom of expression are not compromised by such efforts. As we look forward to the millennium round and continued negotiations on the free trade area of the Americas, it is a matter of some urgency that a broad and effective measure to affirm our national cultural rights is implanted in all future international agreements on trade and investment. This notion was central to the conclusions of the working group on cultural policy and incited the CCA to become involved with our international counterparts. It also figures prominently in a recent report of SAGIT and has been articulated by the two previous speakers.

Furthermore, Canada is not the only country that is thinking seriously about cultural sovereignty. Some major members of the WTO share our preoccupation with the integrity of their cultural identity and expression, while at the same time wishing to pursue broader international trade and investment opportunities.

The CCA and its membership solidly support the efforts of the Minister of Canadian Heritage and her vigorous pursuit of some consensus on how best this can be achieved. We've been encouraged by the increasing sensitivity of the Minister for International Trade, Sergio Marchi, to issues of cultural diversity. The CCA, in an effort to further Canadian cultural interests internationally, has been working closely with the Department of Canadian Heritage on a series of meetings for international ministers of culture and a parallel process for cultural NGOs. Canada hosted the first meeting in this series in June 1998, and both the CCA and the department are presently working with counterparts in Mexico, Sweden and Greece towards the next in a series of discussions scheduled for September 1999 in Oaxaca.

We've brought a document called At Home In the World, which is the report of the June meeting that I referred to, and I have copies here.

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None of the CCA's concerns about international trade agreements and their implications for cultural development are new to members of this committee. The mere ventilation of our anxiety does little to assist the positioning of the Canadian negotiators in the millennium round. Therefore we submit several recommendations that might guide the efforts of the Canadian negotiating team in the coming process.

The first is that traditional instruments that have been considered to insulate culture and other key sectors from the disciplines of international trade agreements should not be the basis of any Canadian position at the millennium round or the FTAA. Country-specific reservations and the cultural exemption model have not proven to be effective guarantees for cultural autonomy and self-direction. The frailty of these exemptions is too great to justify their continued use as vehicles to insulate culture and other key sectors from the full brunt of international trade and investment agreements.

Second, before the onset of the millennium round, Canada must spare no effort to develop measures that will effectively guarantee domestic autonomy and culture. It is clear that the resolution of the cultural trade challenge cannot be unilaterally resolved by Canada. It is also clear that Canada is not alone in its misgivings about the treatment of areas such as culture in international trade agreements. In order to be effective, such an instrument would have to be included in both the GATT and the GATS in order to give the WTO sufficient grounding to resolve disputes over culture, with recourse to the new instrument.

While there is still time before the commencement of the millennium round, Canada should officially convene a conference of international representatives that is specifically designed to draft a protocol or covenant to apply to all international trade and investment agreements. This would create the security necessary for the further development and promotion of measures that fortify key areas of national culture and expression. Such a conference should be open to any WTO member, including the United States, and experts from the cultural sector should be part of each national delegation.

Third, the protestations of some of our trading partners, particularly the U.S., that some of our cultural measures and policies are indeed an attempt to disguise commercial protectionism must be openly tested. The Working Group on Cultural Policy for the 21st Century recommended an extensive process to be undertaken by the Standing Committee on Canadian Heritage. This exercise would be an important dimension of proving Canadian good faith and honest practices in international trade and investment agreements. Failure to do this will likely result in the continuation of challenges on a policy-by-policy and case-by-case basis.

Fourth, in the past, due to the sensitivity of cultural issues at international trade and investment negotiations, culture has been left until the eleventh hour. By this time, the larger framework of the agreement has been forged, and negotiators often seek a quick and easy fix to the treatment of culture. The CCA does not wish to challenge the goodwill of our trade negotiators; however, we believe Canada and like-minded nations must start the millennium round with a clear enunciation of our concerns about the inadequate treatment of culture within the larger GATT and GATS framework. If the international conference is to be successful in developing an effective instrument to resolve this problem, it must be on the table from the opening moments of the millennium round.

Fifth and last, the CCA enjoyed ready and continual access to the Canadian negotiators for the multilateral agreement on investment. Thanks to the openness of the negotiators, Canadian artists and cultural workers were able to contribute constructively to the MAI process. The Minister for International Trade is strongly encouraged to make a public commitment to carry this openness forward into the millennium round at the WTO and FTAA, as well as any other negotiations Canada undertakes towards a world trading system free of barriers.

The CCA remains committed to seeking constructive and effective measures that secure Canada's right to manage our domestic affairs without threat of retaliation or outside interference. We also reaffirm our support for Canadian involvement and engagement in the world trading system. It is our hope that these recommendations will help the committee and the Government of Canada in preparing for successful participation and positive results in the resolution of cultural trade challenge within the international trade and investment domain.

Thank you. I'll pass the mike over to my colleague.

The Chairman: Thanks, Ms. Williams.

Excuse me, Ms. Williams, but before you introduce your colleague, you mentioned four countries. They're not mentioned in your paper. What were those four countries?

Ms. Megan Williams: The four countries were—

The Chairman: You're going to Oaxaca with who? You mentioned Mexico, Greece, and who else?

Ms. Megan Williams: Sweden.

The Chairman: So with Sweden and Canada, that makes it four.

Ms. Megan Williams: Yes, that's the core group that's working on the Mexico round.

The Chairman: Thank you very much.

Go ahead, Mr. Crawley.

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Mr. Alexander (Sandy) Crawley (Member of the Board of Governors, Canadian Conference of the Arts): I don't have any formal remarks, but I would like to comment on the final report of the Sectoral Advisory Group on International Trade, which I reread this morning. I served two terms on that body myself, and the only thing I would like to point out that I think is fruitful territory for the committee to look at is that there might be an interesting element that actually isn't alluded to directly in the report. That is an approach to human resource issues that differentiates Canada from other countries, which is fruitful in terms of...

Mr. Graham, you asked what cultural measures do not have a commercial basis or could be interpreted as non-commercial in their interest. The example I could give most recently, perhaps, is the granting of a licence to the Aboriginal Peoples Television Network, which I know the cable industry is embracing as a great Canadian content measure—and it is, in fact. I don't know whether you would argue that taking 15¢ out of every Canadian household and giving it to a human resource that hasn't had access to those financial resources before is a measure that has a commercial interest. I suppose it does in the long run. If tens of millions of dollars flow to a new network, and it goes into every Canadian home, you're going to build up human resources, creativity, and intellectual properties that didn't exist before in a new medium to those people.

That's a perfect example to me of a cultural policy that in the long term—and I hope we're all thinking in the long term as we talk about the millennium round of negotiations—will have a positive economic impact by creating expertise and intellectual property that has never existed before, from a cultural point of view that hasn't been represented before. So in terms of cultural diversity, it's a perfect example, it seems to me, of the kinds of measures...

There's another measure... I sometimes sound like a squeaky wheel, but no matter what hat I seem to have on, I remember that we have a new model in the world from the province of Quebec, and it's called statut de l'artiste, or status of the artist. We have the same model at the federal level. It's a very fragile model without provincial support. We have always been disappointed that provinces haven't acted on that. It's those kinds of policies that differentiate us and create a jurisdiction in Canada that I would suggest to you is not challengeable, or should be unchallengeable, under any useful new instrument. You're dealing actually with the individual creativity of the people, which leads me to my last brief point.

I made a representation in a round table to Mr. Eggleton when he was the minister, and I haven't had a chance to make the representation directly to Mr. Marchi. In terms of the Sectoral Advisory Group on International Trade, from its inception until halfway through Mr. Eggleton's term as minister, there were always artists organizations, organizations that represent the individual creators, represented in that group. At the time I was there it was the society of authors and composers, SOCAN, and ACTRA. But there are many to choose from: the Directors Guild of Canada, the Writers Guild, and the Writers' Union. There are many useful and mature organizations that represent creators. They should be represented on the sectoral advisory group, in my opinion. They should also have to be represented in any consultations around a new instrument.

I'm very happy to see the Canadian Conference of the Arts is here representing those interests today, but there are more direct and knowledgeable sources that should be available to a group such as the Sectoral Advisory Group on International Trade whenever it sits. I'm not casting any dim light on the people who are there; they're remarkable people and great supporters of Canadian culture. Mr. Stein mentioned Peter Grant. I think Peter Grant himself probably could be protected under the GATT as a national treasure.

However, I just wanted to make that point once again on representation in the hope that someone in a position to do something about it will be able to rectify that lack of representation.

Thank you.

The Chairman: Thank you. Mr. Crawley, I want to draw to the attention of my colleagues that Peter Grant is a lawyer. Since most of my colleagues are constantly criticizing lawyers, it's nice to know one is considered as a national treasure. I see Professor Bernier radiating joy at this prospect as well.

• 0945

Mr. Crawley, I thought your example of the native peoples' television was a very good one. I perhaps didn't put my point as subtly as I could have.

I once had a graduate student who, for me, spent a year trying to define the difference between what was a valid cultural measure, which incidentally affected commercial interest, vis-à-vis a commercial interest disguised as a cultural measure. I think maybe you've given us a good example of one. But you appreciate that this is the debate that occupies trade lawyers and I'm sorry it ends up using analogies from oilseeds and other cases as well. But these are the types of debates we spend a lot of time on.

Mr. Sandy Crawley: I would once again reiterate that if you have representation from the appropriate organizations that represent creativity itself and individual artists, you'll be less open to charges of hypocrisy of that nature.

The Chairman: We'll get there. We're going to go across the country doing exactly that, so we hope to have all that opportunity to do that. Thank you very much.

Now we'll go to Mr. Browne from the Centre for Trade Policy and Law.

Mr. Dennis Browne (Director, Centre for Trade Policy and Law): Thank you, Mr. Chairman, and thank you for this opportunity to appear before the committee.

I will just mention, for committee members, that the Centre for Trade Policy and Law is jointly sponsored by the Norman Paterson School of International Affairs at Carleton University and the Faculty of Law at the University of Ottawa.

The culture trade nexus does raise increasingly important issues for Canada, and I'm very happy this committee is taking the time to address these issues quite thoroughly.

In my remarks I'd like to address four basic questions referring to what I usually call the culture-trade quandary: First, why should we care? Second, how is culture different in international trade terms? Third, which ways are wrong, which ways don't work very well? Fourth, are there better ways?

Before considering the questions, I might just point out that I've left multiple copies of two documents with the clerk of the committee. One is the introduction to this book, which the centre published in 1997, called The Culture/Trade Quandary: Canada's Policy Options. And at the risk of embarrassing my neighbour Professor Bernier, I might say that his chapter in this book is probably the best setting out of trade law as it relates to culture that's ever been published. You don't mind my saying that?

The second document is an article that I had published in the January edition of Policy Options, which sets out in some detail why I believe Bill C-55 is a very good example of the wrong way to approach culture-trade issues.

Let's turn to the four questions. First, why should we care? Well, one of the mantras that's usually adopted by people speaking in favour of cultural openness is that Canadians must have opportunities to hear themselves speak in their own voices. With this I wholeheartedly agree.

We can all recognize that a sense of shared values is fundamental to the continued success of a democratic society. We can disagree on a lot of details, but if we didn't share the fundamental underlying values, then we wouldn't risk the possibility of passing political power from one party to another every few years. The only way we're going to maintain this sense of shared values is to have frequent opportunities to exchange and to share value-laden expression of ideas that reflect Canadian culture, whatever Canadian culture might be.

During the nearly six decades of my life, the Canadian population has become increasingly mobile, family ties have grown looser, community structures such as neighbourhood churches and neighbourhood playgrounds have become less central to our children's development, and the importance of commercial cultural expression has increased almost exponentially. So cultural expression tends more and more to be embedded in cultural products, most of which are the subject of commercial transactions. Here I'm referring to things like books, magazines, newspapers, films, television programs, recorded music, live performances, and so on. These products circulate or are distributed in our society, and we as individuals generally must choose from what's available.

So if we are to foster exchanges of Canadian cultural values, we have to address issues relating to commercial products and services that carry the cultural messages. As such commercial products and services are increasingly entering into international trade, the culture trade nexus becomes increasingly important. For Canada it's exceptionally important in light of the nearness, both geographically and culturally, of our almost overwhelming neighbour. So that's why it's important.

• 0950

We can move to the second question, how is culture different from a trade perspective? Well, the economies of culture are different from the vast majority of other goods and services. Generally speaking, the cost of a cultural product is in the first copy. It may cost anywhere from $2 million to $20 million to make the first copy of a feature film, but the 5th, the 50th, and the 500th copies by comparison cost practically nothing. The same principle holds true for television programs, recorded music, books, magazines, and any cultural product that's fixed in a physical form and sold in multiple copies or distributed in some way.

The same, of course, does not hold true for things like motor cars, bottle openers, or even computers. We all know that the intellectual content of many products is increasing, and in some products it's much higher than others, but a great deal of the cost of these products still continues to be in the actual production of the thing itself.

This means the dynamics of cultural business are different from the dynamics of widget business. Rules that effectively govern trade in widgets and increase the global economies of widget production will probably not be equally effective in governing trade in cultural products. So cultural trade differs from widget trade in at least two important respects.

First, for most cultural products, the cultural content is readily severed from the physical product itself. Some simple examples can illustrate the point. If you go into any video store in your neighbourhood, you'll have the opportunity to choose from scores of videos made by Warner Brothers, films produced by Warner Brothers. You'll end up renting a copy of an American film, and your transaction and those of other Canadians will probably generate millions or hundreds of thousands of dollars of gross revenues. But the actual video you rent will have been made, or at least recorded, in Canada. All that's been traded internationally will have been one master copy of the video, and that one copy could ultimately generate hundreds of thousands of dollars in commercial transactions, but its actual value as a physical good will be minimal.

Similarly, if you go to an international book fair, you'll find the publishers there aren't selling books; they're selling publishing rights. So if an Indian publisher, for example, buys the rights to The English Patient, a very popular, successful Canadian book, all that's going to move in international trade is an electronic signal that transfers the content of the book from the Canadian publisher to the Indian publisher. The expectation, of course, is that this one invisible transaction will result in sales of thousands of books in India, but the actual trade component is exceptionally small. This holds true for a wide range of cultural products, and as new technologies result in more digitized products, this characteristic is going to become increasingly prevalent.

Conversely to this—and there's always a converse—a producer of a fixed cultural product may develop some particular economies of production that enable it to sell physical cultural products internationally, even though the cultural content is foreign to the producer. As an example, about 10 years ago I was serving in the Canadian embassy in Sweden and we noticed that a high preponderance of records being sold in Swedish music stores were in fact made in Canada, even though the musical content of the records was not Canadian. So you have this other dynamic in there as well.

The second major difference for the treatment of cultural goods or services in international trade is that cultural products are usually not what we call in trade law “like” products. You probably know that the major objective of international trade regulation is to prevent discrimination by governments in their treatment of like products either at the border or within the domestic market. The most common tests of adherence to trade rules are MFN and national treatment. This is non-discrimination at the border and non-discrimination in the domestic market.

As the distinguishing characteristic of a cultural product is its cultural content, a cultural product from one country, by definition, is not a like product to a cultural product of another country. Consequently it's very difficult, if not impossible, to apply some trade rules, especially those that are meant to deal with unfair trade, to cultural products in the same way as we apply them to widgets. Consequently, these differences of cultural products, their economies and the way they enter international trade, as well as their socio-political importance, present a very strong basis for arguing that trade rules for cultural products should be different from trade rules for other products.

• 0955

So the third question is, which ways are wrong? Here we come to the issue, Mr. Chairman, that you've asked us to address. In my view it would be a mistake to continue to seek exemptions rather than rules. I'm pleased to hear that other witnesses so far this morning have put forward much the same view.

Our past approach has been to obtain exemptions from rules in individual trade agreements. We followed this in the FTA/NAFTA, in the bilateral agreements with Israel, with Chile, in about 19 or so bilateral investment protection agreements we've negotiated with various developing countries, and we also advocated a cultural exemption in the MAI. The difficulty with this approach is it results in no rules rather than clear or fair rules. We all know from experience that the smaller and medium-sized countries such as Canada are much better protected by agreed rules than they are by no rules. Inevitably in issues like this there are going to be international disagreements, and these should be settled on the basis of rules rather than on size or strength of the participants in the disagreement. So exemptions should be used only as a stopgap measure pending the negotiation of an agreed set of rules for cultural products.

Recognizing the specificity of cultural products through exemptions and regional agreements simply throws us back to the WTO, which generally doesn't recognize the specificity of culture, and at best this leaves us with a choice of either no rules or inappropriate rules. The FTA/NAFTA cultural exemption, with its balancing right of retaliation, is really the worst of both worlds. It removes the cover of agreed rules and hands the stick of retaliation to the bigger player.

Another problem of Canada's current approach is that we seem to have no clear idea of what it is we're trying to foster or protect. There appears to be no simple definition in official policy discussions of what Canadian culture actually is. Cultural exemptions in trade agreements have defined cultural industries as persons engaged in production, distribution, or sale of cultural products such as books, magazines, newspapers, films, videos and so on. By inference, then, the things that are produced by cultural industries are the cultural products we're dealing with.

Various government support programs include determinants of Canadian-ness of certain products such as films, television, periodicals, books, and so on, and the support tends to go to cultural industries that produce, distribute, or sell these cultural products. So the approach does tend to be very much an industry-driven approach. This leads more often than not to a determination of Canadian-ness based on ownership of the various segments of cultural industries.

The basis of Bill C-55, which is currently before the House, for example—it passed already? Well, too bad. Let's hope the Senate will take a second look at it. Not to be political here, but I have very strong views about this bill because it assumes a publisher that's 75% owned by Canadians will produce magazines with Canadian content, but a publisher that's only 74% owned by Canadians will not. That's a pretty tough assumption as far as I'm concerned. So a publisher that's 74% Canadian-owned will be denied access to Canadian advertising revenues irrespective of the content of the magazine or the fairness of its advertising pricing policies.

As we've heard already this morning, Canada has begun to try to build international consensus on the importance of preserving cultural diversity based on the needs of every citizen of every country to hear themselves speak in their own voices. The argument against this approach is that it is claimed to be in reality no more than a ruse to protect domestic commercial interests, domestic cultural industries. So long as Canada relies on the heavy-handed approach that's embodied in Bill C-55, which on its face has absolutely nothing to do with content and everything to do with ownership, we will support those who argue against us internationally and undermine our efforts to foster and protect cultural diversity.

My final question is, are there better ways? And the answer in a word is yes. In my view, the first step should be to agree on what we mean by Canadian culture. What is it we want to foster and protect?

• 1000

Our definition, in my view again, should be as broad as possible. Personally, as this issue becomes more and more discussed, I'm becoming increasingly comfortable with the notion that any value-laden expression of an idea or emotion made by a Canadian living in Canada is an expression of Canadian culture. At least it's an expression of one Canadian's culture.

There's no need to confine ourselves to “stories told about Canada by Canadians for Canadians”. A Canadian interpretation of international events is an application of Canadian values just as much as an interpretation of events at home. The residency factor is important. I doubt very much that a Canadian writer, filmmaker, composer who's been living in New York, Paris, Los Angeles for 20 or 30 years is still producing what we would call Canadian culture. Individuals may always reflect their roots and their work may always reflect their roots, but in my view expatriate culture is almost certainly tainted. That's the first step—let's get a definition.

The second step is that policies supporting Canadian culture should be primarily aimed, and be seen to be primarily aimed, at fostering the creation of cultural expression, and this is your point, I think. The test should always be Canadian content as, according to my definition, I would advocate myself. Other tests, such as Canadian ownership of the means of production or distribution should be, if not completely discarded, significantly downplayed. If the assumption that only Canadian ownership will produce Canadian content is correct, then content-based support will ultimately go only to Canadian owners. If the assumption is not correct, then it should not form the basis of such an important segment of Canadian policy.

Third, once we've set aside approaches that may undermine our efforts, Canada should give high priority to continuing and stepping up its efforts to build international consensus on the need to foster cultural diversity through international trade and investment agreements that clearly recognize and incorporate the specificity of culture. In this context I entirely support the recommendations of the SAGIT. I think they're very forward-looking and very much on point.

Fourth, Canadian officials, in consultation with all stakeholders, should begin to develop concepts for internationally agreed rules that will foster cultural diversity. I assume they're already doing that, and scope already exists for such rules once the specificity of culture is accepted. Government subsidies, for example, are permitted under international trade rules in a variety of circumstances. An approach to cultural subsidies could be clarified and incorporated into the World Trade Organization agreement on subsidies and countervailing measures.

Excise taxes or user fees can be used on a non-discriminatory basis to provide user-pay funding to cultural creators. This approach is already embodied in the Canadian Television Fund and could likely be applied to other cultural sectors as well.

GATT article IV provides for domestic film screen quotas in movie theatres. This article has never been practically applied, but the concept has been carried over into radio and television domestic content requirements, so far without clear rules and without unanimous approval within the trade organizations. Nonetheless, the concept of reserving some cultural shelf space for domestic content does exist, and it needs to be further refined and embedded in a new instrument.

In light of the special economics of cultural industries I referred to earlier, competition rules for the cultural sector need to be developed and internationally agreed. The sheer market power of U.S. filmmakers, for example, crowds out domestic films irrespective of their quality and potential viewer appeal. Existing competition rules and trade remedy laws are clearly not well suited to stimulating competition in various cultural product sectors.

In conclusion, I might just note that Canada does maintain a complex variety of programs and regulations to foster and protect Canadian culture and Canadian cultural industries. This inevitably leads to a certain amount of interference in the marketplace because that's where commercial cultural expression is found. Some of Canada's individual policies may well be misguided; some almost certainly need to be dropped or upgraded in the face of rapid technological change and the general forces of globalization. But in light of the very high percentage of foreign cultural products in all sectors of Canada's cultural market, our policies could hardly be said to be exclusionary.

Canadian policies provide plenty of choice for Canadians. Their principal objective is to maintain high levels of choice while ensuring that choice includes Canadian cultural products. By and large the policies have been reasonably successful, but they will come under increasing pressure from technological change and continuing movement toward more open world markets generally. These developments simply emphasize the need for a forward-looking approach and a determination to secure clear international disciplines on cultural markets that will foster cultural diversity.

Thank you.

• 1005

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

[Translation]

Professor Bernier, please.

Mr. Ivan Bernier (Individual presentation): Thank you, Mr. Chairman. Before addressing Canada's objectives in the area of culture at the upcoming WTO negotiations, I would like to highlight the fact that the culture of a country, from a sociological and anthropological point of view, which includes language, history, political and social institutions, customs and traditions, etc., will probably be affected by the liberalization of trade insofar as trade tends to limit domestic intervention in the economy and to impose the same trade mould onto the numerous expectations of citizens in the various fields of human endeavour.

So this is to say that the upcoming WTO negotiations, as was the case for the Uruguay Round negotiations and those that came before, will, whether we want to or not, have an impact on Canadian culture. By this, I don't mean to say that Canada should not participate in these negotiations in order to fully protect its culture; this would be an absurd proposal which would not take into account the fact that a living culture is basically dynamic and continually adjusts to changes from inside the country and from outside. But if these changes are imposed from above, without debate, domestic culture runs the risk of being assimilated or, conversely, it might reject any outside influence.

That's why I believe Canada should vigorously defend within the WTO, as it did during negotiations on these FTAA, the Free Trade Area of the Americas, of which it presently occupies the chairmanship of the committee on civil society, the principle that WTO negotiations should unfold with the greatest degree of transparency and with the dynamic participation of the civil society. What happened with the MAI clearly shows what can happen if you stray too far from civil society.

What brings us together this morning and what concerns us more particularly, is the question of how cultural goods and services are treated in international trade agreements, and more specifically within the WTO. Canada has always maintained until now that a country should have the right to protect its cultural sector and has vigorously defended its point of view in international trade negotiations for about 15 years now, beginning with the FTA, followed by NAFTA, during the Uruguay Round, in its bilateral free trade agreements with Chile and Israel, in all its bilateral agreements on investment signed since 1993 and, lastly, in OECD negotiations on investment.

Canada was relatively successful at the regional and bilateral level, but not at the multilateral level, since it was fiercely opposed by the United States. And so there is no reason to believe that it will be any different during the upcoming WTO negotiations. On the contrary, the recent behaviour of the United States in the magazine affair would lead us to believe that they intend to end what they now perceive as being a movement in favour of recognition that cultural products should have special status under international trade agreements.

In a recent study conducted by the International Trade Commission in the United States, Canada was identified as the leader of a group of countries trying to impede the export of American cultural products. Of course, I think that's a bit of an exaggeration, but it illustrates fairly well the current American point of view. Anyone following with the least bit of interest what the American trade secretary is saying, knows very well that Canada is the object of some rather harsh words, as are other countries who are trying to follow Canada's example. But you have to expect this kind of thing. It will necessarily affect the way discussions on culture within the WTO will unfold.

You can therefore expect that the next round of WTO negotiations will again highlight this issue. It seems inevitable in the case of the General Agreement on Trade and Services. You may remember that during negotiations on the GATS, the European community had tabled, at the very end of the Uruguay Round negotiations in 1993, a draft clause regarding cultural specificity. But it came too late and was dropped because of a lack of support. The draft had been tabled during the last days of negotiations, and everybody was obviously tired and uninterested in the issue, so the European proposal died.

• 1010

Several sections still need to be negotiated within the agreement, specifically the clause on subsidies to services and other safeguarding measures. Negotiations on subsidies to services have begun, but they are basically stalled or are advancing at a snail's pace. We'll have to monitor this issue closely since it will certainly come up at the next round. We will have to follow those discussions closely since subsidies are commonly used by every country to bolster their cultural sector.

If you analyze the situation, you would see that in many cases, subsidies are only given to domestic producers, but not to foreign producers, be it in the area of cinema, movies or books. That represents an implicit form of discrimination and, in the absence of any exceptions, these subsidies may eventually be questioned. That's why we will have to think of ways to protect culture in this area.

Furthermore, the fact that most countries refuse to make any commitment in terms of market access and domestic treatment of cultural industries—I'm still referring to the general agreement on trade in services—will not prevent the United States from mounting another attack in order to extract more commitments in this field. We have every reason to believe that the Americans will put on the pressure to extract firmer commitments from a greater number of countries in the area of cultural services.

More specifically, in the area of basic telecommunication services, they might also apply pressure to eliminate any form of content criteria. Because of telecommunications, the United States are now interested in content. This obviously might be an open door which will be difficult to close, if it comes to that, if we are not ready for it.

Furthermore, there is absolutely no doubt that if the OECD's Multilateral Agreement on Investment should be transferred to the WTO negotiations, the debate on the treatment of cultural products will immediately arise. In light of everything that's been said, including what was said before this committee and before other parliamentary committees, like the one which met last year, on the impact of the investment agreement, I feel we have reason to be concerned.

Of course, since then, other aspects of the MAI were worrisome, including the trend towards disguised expropriations, recourse to the idea of hidden expropriations to basically attack any type of government intervention which might displease a foreign producer. I'm exaggerating a little, but not much. At the moment, we are confronted by a problem in that area and the mere prospect that the agreement on investment would be brought up during the WTO negotiations is cause for concern.

Lastly, as long as the agreement on trade-related aspects of intellectual property rights, otherwise known as TRIPS, does not cover numerical copyrights, you can bet that there will be an effort to reach a consensus on basic rules governing the multimedia sector. At this point, I could mention other cultural areas which might be debated.

As you no doubt know, the issue of competition will be discussed at the upcoming WTO negotiations. Therefore, we should perhaps look more closely at what we should do and how to address the issue of abuse of dominant position. As for distribution, I feel we should closely monitor what the agreement may contain in terms of abuse of dominant position. Finally, as we can see, grounds for dispute regarding cultural products, could be many at the upcoming negotiations.

I have not yet spoken of the SAGIT's hypothesis regarding cultural products, which is that there may be a separate and distinct agreement. Perhaps I can briefly address that issue.

• 1015

As far as I know, it won't be possible to negotiate that kind of agreement in the upcoming negotiations. That means we will have to include it as a discussion item, probably when the mandate of the next negotiations is established. If that's not done, we may have a problem. There might simply be a lack of consensus on how to negotiate the matter. We really have to take this scenario and possibility into account, but we must keep in mind that it is important, from the outset, to convince others that the matter must be addressed at the next round.

That being said, we can however ask ourselves what Canada can and must do, and what its objectives should be. In view of the upcoming WTO trade negotiations, Canada will have to clearly establish its own objectives in terms of how cultural products should be treated and develop a realistic strategy to meet its objectives.

If Canada is to retain room to manoeuvre—which is essential—in its fight for the cultural sector, its first objective should be to convince other members that cultural products must have special status under international trade agreements. But it's only once we have recognized that cultural products are traded across borders, like any other product, and therefore government intervention on their behalf cannot completely escape international rules, that measures targeting culture per say, such as the preservation of a domestic presence in the cultural products market due to the role they play in terms of symbolic communication, should be excluded from international trade negotiations.

In other words, cultural goods are both objects of trade and instruments of symbolic communication—they have a dual nature—and we will have to make a greater distinction between authentic cultural interventions and interventions aimed at boosting the growth of the cultural sector.

On that point, I would say that most of the WTO discussions on exemptions or reservations in matters of culture are carried out on a case by case basis, focusing on what the ultimate goals of government measures are—is their use justified in meeting the objectives or are they simply there so objectives can be met—or, in an effort to determine whether these measures are not perhaps a disguised means of protecting domestic industries. All this is fairly well known. This is a proven approach used by the WTO. I don't think we need to search for an absolute definition of what constitutes a cultural intervention per say.

As for strategy, my position is a little more realistic compared to what I know of trade negotiations. We could take several approaches, from not making any commitment on culture at all to creating a new agreement on cultural products or diversity. Since several types of approaches were analysed in the report by the SAGIT, I won't go into them. However, I would like to insist on the fact that we should not delude ourselves into thinking that there exists a cure-all. I'm specifically thinking of the idea of a global agreement on cultural diversity. I said a little earlier that the U.S. is completely opposed to that approach.

• 1020

Second, that type of agreement would have to solve a number of problems, specifically its relationship with the GATT and commonly used provisions, including those used against Canada in the split-news magazine affair, section 3 on national treatment, or even section 11 on quantitative restrictions. We would have to establish whether this agreement would have precedence over GATT provisions or over other agreements which may go against the new agreement, unless, of course, there are no contradictions. But if there are none, countries could, as in the past, continue to seek recourse under the GATT as well as under GATS.

We would also have to convince enough countries that this is the way to go in order to achieve our objectives. A lot has already been done, and I don't think I can say it's an unrealistic solution. It may succeed, but there's no guarantee. We should be cautious and ask ourselves what would happen in the event no such agreement can be reached, if the issue is not included in the agenda at the outset of negotiations, if support for the idea is lacking, if we suddenly find ourselves at the negotiating table talking about cultural products or services, as during the GATS negotiations, without having a Plan B, without really knowing what it is we want to protect, in the event our main objective was rejected. That's why I think it is absolutely essential that our approach to cultural products be a general one, and that we keep in mind all possible scenarios. We cannot obviously put all our eggs into the same basket.

Beyond the attractive hypothesis of a new agreement addressing every problem related to the international movement of cultural products, we should also prepare for negotiations focusing on individual agreements, whose specific texts would be handed over in case people have reservations regarding this or that. If we find ourselves again in the situation, as was the case during the last round, where our only Plan B is "no commitment", we will again have missed the boat and perhaps be even more behind than we are now.

That was, in essence, what I wanted to say. Thank you.

The Chairman: Thank you very much, professor Bernier.

[English]

Professor Acheson.

Mr. Keith Acheson (Individual Presentation): Thank you, Mr. Chairman. I'm an economist from Carleton University and I'm here to prove there are diminishing returns when we have eight speakers.

The Chairman: Like Professor Bernier, remember you can talk as fast as you like before your students, but our interpreters have to catch you too.

Mr. Keith Acheson: I've been doing research on the cultural industries from an academic perspective—not involved in the industries themselves—for about ten years. I've included an advertisement of the work Chris and I have done and mentioned a book that addresses the topics before you, which will be out in a couple of months.

I'll make four points this morning. The first is the importance of doing a difficult task, separating cultural policy, which I would consider use of content, from the industrial policy—the regulatory, legal and tax framework of the cultural industries. The second point is the Canadian interest in negotiating a special agreement on culture in the WTO. The two concluding points concern the structure of such an agreement, and they are the necessity of integrating the industrial policy component with the treatment of other sectors in the WTO, and the importance of framing a cultural safeguard in the cultural agreement that cannot be opportunistically used to subvert the agreement's purposes. I'll briefly elaborate on each of these points.

• 1025

Policy in the cultural industries varies from the norm across other industries because of the widespread conviction that what we read, watch and hear affects our development and that of the communities in which we live. The ubiquity of this conviction is accompanied by a vagueness about what these linkages actually are. In Canada, I think an ill-defined cultural mandate has allowed a set of protectionist policies to develop that would not be accepted for any other Canadian industry. A starting point for developing an international governance structure for the cultural industries is this separation that I'm discussing.

The default position for cultural policy should be individual responsibility for choosing what to read, watch and hear. Let Canadians make those decisions. If some content is detrimental to the development of children or other vulnerable groups, encourages socially harmful behaviour, or endangers a building block of a community's culture—such as language—restrictions on its availability should be considered. If some socially desirable content is not available from existing sources, the government can either produce it or finance its production.

On the desirability of an international agreement, the case has been well made here today, but I'd like to emphasize that the part of each of the cultural industries that produces and distributes content that has an international market cannot be viable serving only the Canadian market without either large subsidies, barriers to the entry of cheaper alternatives for Canadian consumers, or—the last possibility—access to international markets.

For language-sensitive content, the French- and English-speaking Canadian industries are a small part of a large market. For music and visual images, the Canadian market is similarly a small part of a large hole. This is true for both mass and niche market product. Only very large subsidies can ensure world-quality content for producers limited to selling in a small country. Restrictions on foreign access curb the choices of consumers more in a small country, as the economy cannot provide the variety of content available from foreign sources. Given the high cost of these two instruments, access to foreign markets is critically important for the producers of content from a small country for creative people. With access to the same market as is available to their competitors, Canadian talent and businesses have an opportunity to express their creativity and Canadian consumers can enjoy a wide set of choices.

Exempting culture from trade agreements does not exempt cultural issues from international discipline. Without an effective institutional framework within which international trade and investment in the cultural industries can take place, Canada will experience a rising number of bilateral cultural disputes with larger and wealthier countries or blocs. In the past, the United States has taken a tough stance in cultural disputes with Canada because it was concerned with domino effects on the policies of other countries.

In an international trade negotiation, Canada can forge alliances with other like-minded countries that will improve the chances of developing a framework of values and rules that trumps the jungle of bilateral interactions. To me, from a university perspective, the mystery is not why countries like Canada should support a WTO agreement, but why the lords of the jungle—the United States, Japan, or the EU—should.

Turning to the international agreement, to say very little about the industrial component, it should be similar in principle to those governing trade and investment of other goods and service industries. I think the committee would be aware that this is going to require making all your policies transparent, as well as the policies of other countries, and the process is well illustrated by the telecommunications agreement under the WTO.

Turning now to the unique part of a cultural agreement, what this cultural safeguard will contain, how that will be framed, the reciprocal opening of markets that I think are important for a number of the Canadian cultural industries will not be achieved unless the cultural policy safeguard that is built in is limited. If it is just a means of creating a paper agreement in which the cultural loophole or safeguard—not the right word—allows people to do as they would do anyway, then you're back in the jungle. So I think you have to realize an international agreement is a disciplinary agreement; it disciplines others as well as yourselves.

• 1030

To be effective, the agreement is likely to limit the pursuit of the cultural objective to a few instruments and to restrict its overall use. With a number of distinctions among media included in the cultural agreement—and it's likely there will be such distinctions made amongst the different media—and a proliferating set of special agreements in the WTO, it is critical that all of these agreements have the same basic philosophy, and the spirit in which they are entered into and the differences between them don't become so marked that boundary problems will constantly occur.

An arrangement will not work well if dispute resolution mechanisms are made impotent by strategic behaviour. Canada has an interest in supporting agreements to which it has subscribed, both in spirit as well as in following the letter of its law. I am often reminded when I talk to people at Heritage Canada, for instance, that our policy is to look at the preamble of the Communications Act or the Broadcasting Act, which has a philosophy that is being pursued, and Heritage takes it as a defence of its policies. I think that's fair enough, but we should also read the preamble to some of our international agreements and enter into those with the same spirit, because I think we have a great interest in their viability.

Thank you.

The Chairman: Thank you very much, Professor Acheson.

We had a panel here last week and didn't have a chance to ask them whether the United States, Japan and the EU would cut this deal anyway and everybody else would just have to follow along behind. But you seem to be of that view in your paper. In the traditional situation, once the U.S., Japan and the European Union come together on an issue, it's very difficult for others to create an alternative pose—that seems to be the thrust of what you are saying.

Mr. Keith Acheson: I agree. But you have a better chance of forming an alliance to counter that than you do in a series of bilateral interactions with any of those countries individually. That's the point I was trying to make.

The Chairman: Thank you very much.

Our last witness is Ms. McCaskill. I'm sorry to keep you waiting so long. The members are also impatient to get going on questions.

Ms. Anne McCaskill (Individual Pesentation): Thank you, Mr. Chairman. I'm last, but I'll try not to be least.

I am a trade consultant based here in Ottawa, but I come from a background in trade policy in the federal government. For the better part of 20 years I was involved in the trade policy area and was also a trade negotiator, including in the last four years of the Uruguay Round in the WTO. I was the Canadian negotiator for the intellectual property agreement or TRIPS, and I have been directly involved—including in negotiations with the United States—in cultural issues for quite some time. So I clearly take a great interest in this subject.

I would like to try to inject a little bit of reality into the discussion that's taking place here today and the discussion that will unfold in the weeks and months ahead, as you hold your consultations across the country on the next round of negotiations in the WTO. I would like to take the opportunity to comment, as others have done, on the conclusions and recommendations of the SAGIT report. But I would also like to do that in the context of a practical assessment of what we face on the cultural issue, including in the context of the upcoming negotiations in the WTO.

• 1035

There's no doubt that the question of whether, and if so to what extent, the WTO trade rules should be extended to cultural policy will be one of the more difficult and controversial issues in the next round. How it is dealt with will be very significant, not only in terms of the effects of what results from those negotiations but also in terms of how the public will perceive the negotiations and the broader evolution of the international trading system. It will be essential to clearly define and defend Canadian interests in the area of cultural policy if the government wishes to secure public support for future trade negotiations in the WTO and elsewhere.

I think what's most important at this stage is to define issues and establish context. Since time is short for these opening remarks, I would like to focus on identifying three key questions I think will need to be addressed in order to develop a Canadian position on this issue for the new round. In the course of doing that, Mr. Chairman, I will address head-on this question you have pointed to, of the relationship between culture and commercial interest, which is indeed at the heart of the matter.

There are three questions that I think are central to this, and others have touched upon some of them.

First, what are the core objectives of Canadian cultural policy that we would wish to maintain, and on what grounds can those principles be explained and justified? Clearly, the question begins with what our domestic policy priorities are, and it is our domestic priorities that should drive the Canadian position in international negotiations, not somebody else's agenda.

Second, what challenges does Canada face in terms of our ability to achieve those objectives, and what needs to be done to address those challenges?

Third, is the WTO in fact the place where we're going to be able to deal with these issues? On that point, I will argue that in the first instance what we face is not a question of trade policy that can be solved purely as a matter of trade negotiation. Before we can address the trade policy aspects of these issues, it's going to be necessary to address the underlying cultural policy issues and to seek international consensus on what legitimate cultural objectives countries should be at liberty to pursue and also what needs to be available to governments in terms of measures and instruments to in fact pursue those objectives.

In the first instance, it is a question of cultural policy, and quite frankly, I don't think the WTO is the place where you can make cultural policy. I served at the Canadian mission to the WTO for four years and, if anything, I have a bias in favour of that institution. But just as the WTO is not a forum for establishing environmental or labour policy, nor is it a forum that has a mandate to establish cultural policy. There is a role, and I'll come back to that, but this is not simply a trade issue.

If we go back to that first question of core objectives of Canadian cultural policy, more time than is available this morning would of course be needed for a full discussion of that question. But I think we can nevertheless quickly touch on what most people would probably agree are some basic elements.

The first is promoting cultural diversity and choice through open markets for cultural goods. That has always been one of the cornerstones of Canadian cultural policy. Contrary to the impression that many like to convey, the Canadian market for cultural products is not protected. We maintain no measures that interfere with imports of cultural goods from anywhere in the world.

• 1040

If I might remind members of some statistics that will probably sound very familiar to you, the fact that our market for cultural goods is very open is illustrated in the actual levels of import penetration in our cultural sectors: 70% of the Canadian market for books consists of imports, mostly from the United States; over 80% of our newsstand space in the magazine sector is occupied by foreign publications, mostly from the United States, and imported magazines from the United States capture fully 50% of the total magazine sales in Canada; 70% of the music on our radio stations is foreign content; 86% of prime time English-language drama on Canadian television is foreign, mostly from the United States.

The Chairman: What was that percentage?

Ms. Anne McCaskill: That's 86% of prime time English-language viewing. Also, 95% of film revenues in Canadian theatres are generated by foreign, mostly U.S., productions.

To me, that is not the picture of a protected market for cultural goods; that is the picture of a culture under siege. We don't protect against imported cultural goods and Canadians have abundant choice. We do take measures in the services sector—not, once again, to keep foreign cultural industries out, but rather to provide a means to retain an ability to create our own cultural goods for Canadians, which unfortunately occupy a very small slice of the Canadian market.

Secondly, I think another core objective is in fact ensuring access to cultural goods that reflect our own society and values, as much of an uphill struggle as that is. Ensuring the availability of Canadian content in all media has long been one of the fundamentals of Canadian cultural policy.

Thirdly, ensuring that our cultural industries can create and bring Canadian cultural goods to the marketplace has been another objective. That is not because the Canadian government has pursued some illegitimate protection of commercial interests for Canadian cultural industries. The simple reality is that it is our cultural industries that bring the products of Canadian creators to the marketplace. Without cultural industries there would be no means, or at least greatly reduced means, to bring those cultural products to Canadians. So cultural industries are an integral part of Canadian culture.

Finally, we must recognize that ownership makes a difference in providing opportunities for creators to reach national and international markets. Here I must digress for a moment to respond to something that Dennis Browne said about Bill C-55, and the criticism that it does not deal with content because it is based primarily on ownership requirements. The simple reality is that it is Canadian publishers who produce Canadian content for Canadian readers in the magazine sector. Extensive research has been done on the magazine issue, and the vast majority of Canadian publishers producing magazines in this country today consistently provide 80% or more Canadian content in their magazines. That's the reality.

When it comes to the levels of ownership that are reflected in Bill C-55, they're nothing new and different; they're simply based on the foreign investment provisions that are found in other Canadian statutes and regulations, including the Investment Canada Act and the Income Tax Act. If one's going to question the validity of those levels in terms of investment, you have to question that not in just in Bill C-55 but in the entire Canadian investment regime.

Finally, an overarching objective has long been to ensure that we have our own channels of communication in order to provide vehicles for Canadian expression and to allow us to see and hear each other.

Secondly, we have to look at what the challenges are that face Canadian creators and Canadian cultural industries. I think there are two kinds of challenges.

The first has to do with addressing the economic realities in our cultural markets and for our cultural industries so as to understand what policies and measures are necessary and justifiable to pursue our cultural policy objectives. It's fine for people to agree, and most do, that it is important to maintain a distinct cultural identity and to be able to maintain the kinds of cultural policies that we have had for a long time. But unless the means are available to achieve those objectives as a practical matter, then frankly the cultural policy framework becomes an empty vessel.

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The second kind of challenge concerns the more direct and literal challenge from the United States against our cultural policies, which will be central, as Professor Bernier has said, to any agenda the U.S. will have in future negotiations. Let's start with the second of those challenges.

Here we need to bear in mind a few key realities. The first is that the huge multinational publishing houses of New York and the television, movie and recording studios of California are the new U.S. export growth engines. They now outstrip aerospace and are the largest U.S. export sector. They, with the support of the U.S. government, are pursuing a conscious strategy to secure a world mandate for what they themselves term “entertainment products”.

The U.S. advocates a rather unique view in the world of what culture is to justify what is a frankly mercantilist approach. They see the concept of culture as being essentially limited to the fine arts. Everything else is entertainment and business. Moreover, entertainment goods are commodities like any other and should be subject to market forces.

The U.S. therefore rejects cultural policies like ours that are based on the belief that cultural goods are in fact unique. Canadian policy is being targeted by the United States in an effort to demonstrate to other countries, particularly developing countries, that they need not bother to emulate the Canadian model.

The U.S. perspective on cultural policy fails to recognize, or even openly rejects, the realities and likely effects of the market forces they say they think should prevail. Here I think we need to respond to some of the tenets of the U.S. view and to explode a number of myths in order to fully understand the challenges that Canadian cultural industries face in the marketplace.

The first tenet, which has been mentioned before, is that cultural products are commodities like any others. I don't think there are many countries in the world that take that view. I think the more typical view is that cultural goods in fact are vehicles that convey intangibles. They convey ideas, values, heritage and culture. As such, they have a different place in society and should have a different place in the international trade system from widgets. They're not simply widgets.

Another point—and this I think, Chairman, is one that you were particularly interested in—is that the U.S. advocates that culture can and must be divorced from commerce. The governments can support the former, meaning primarily the fine arts, but must not intervene in the latter. My view is that culture and commerce are in fact inextricably linked and there need be no apology for that fact. I see no reason to think that it is somehow inappropriate or even faintly embarrassing to be concerned about the commercial viability of Canadian cultural industries that bring Canadian cultural goods to the marketplace.

The reality is that if Canadian cultural industries cannot be commercially viable, then they will not be able to continue to exist to bring cultural goods to Canadians. The U.S. and some others suggest that the way to support cultural industries is through subsidies. I think the simple reality there is that there is simply not enough money to sustain cultural industries, even at the fairly modest level they exist at in this country today. Secondly, government shouldn't be in the business of creating culture; that's for the creative community and for the private sector to do.

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Therefore, the crux of the issue is that to remain commercially viable, Canadian cultural industries have to have access to revenue streams that allow them to be able to produce the cultural products that Canadians want and that are the subject of Canadian cultural policies.

We don't protect against imports of cultural goods, but what Canadian policy does seek to do is provide some space in our services markets, like distribution, advertising, and retail, for cultural industries so that they can have a fighting chance to survive against the huge economies of scale and unbeatable competitive advantages of the U.S. entertainment industries, if they could dominate those services markets and those income streams the way they dominate the goods markets in Canada.

Another tenet, and I think myth, is that if there is market demand for Canadian cultural goods, then our cultural industries will prosper. Unfortunately, the classic supply-demand model simply doesn't work in the cultural industries. The reason is that cultural industries operate in several markets. They provide cultural goods to consumers, but rarely does that provide sufficient income to allow them to be economically viable.

They also have to be able to exist in advertising markets, in distribution markets, and so on. So if they get pushed out of those markets, they're going to die on the vine and they're not going to be able to continue to provide cultural goods, even if there is demand on the part of Canadians for those goods.

A final point is that Canadian cultural policies and programs are unfairly protectionist. I think I've already touched on that. I'm hard-pressed to see how Canadian policies can be called protectionist, nor do I see why we should be apologetic for taking steps to ensure the viability of our cultural industries, when others, like the United States, don't hesitate to take protectionist measures against lumber, or wheat, or fish, or whatever else might be on the current hit list.

I think the bottom line is that there are a lot of economic realities that often get ignored or swept under the carpet in this discussion that really need to be addressed, and we really need to come to grips with them. We need to find a basis internationally for reaching an understanding and consensus on what are valid cultural policy objectives and what measures should be available to governments to be able to pursue those policies. I think the best place for that discussion to happen is in fact amongst cultural ministers working towards the very kind of new instrument on cultural diversity that the SAGIT report recommends.

Thank you.

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

Thank you to everybody who came on the panel. It was very informative and there is a lot to digest.

Members, we'll start with Mr. Penson, or should I start with Mrs. Finestone, since you're...

Mr. Charlie Penson (Peace River, Ref.): Mrs. Finestone may want to move. She may not feel that comfortable here.

The Chairman: I thought maybe she had joined the Reform Party and so she would go first.

Mr. Charlie Penson: Mr. Chairman, thank you for the opportunity.

I'd like to welcome the panel here this morning. I thought there was a good variety of views, which will help us focus on whether or not Canada should be talking about culture at the next round of the World Trade Organization.

I was sitting here trying to think about how this affects my constituents and many others across the country. When I hear the view that culture is under siege in this country...how does that rank in importance with some of my constituents' concerns?

We talked about oilseeds earlier. People in the farming industry are facing grave difficulties because they do not have market access to places like the European Union. There are $60 billion of subsidies because we can't get liberalization of tariffs and subsidies this current year alone. And people are losing their farms. Where does this rank in terms of the Canadian population when we talk about culture under siege? I don't think it ranks very high with a lot of people. They wouldn't see that their culture is under siege.

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I just throw out the idea of the steelworkers in Hamilton who may lose their jobs as a result of a retaliation against our split-run magazine bill. Are they going to be more concerned about their jobs, or are they going to be more concerned about Canadian cultural policy that maintains a status quo for a company like Rogers, the company that owns Maclean's? Through its cable television network, that company probably imports more American culture into this country than any other. How do steelworkers rate that?

I do say that I'm pleased to see a major turn, a difference in the point of view of a lot of cultural people in the last year, in terms of the fact that we should probably not be seeking exemptions that invite retaliation in the areas I've just talked about. I think that's a major turning point, and one that needs to be explored.

When we talk about reality, we also have to talk about the reality of our next door neighbour, the United States. I think it was you who pointed out that culture, the entertainment industry, is their biggest export, Ms. McCaskill. It's a commercial industry down there, and that's how they see it. In any future negotiations, whether they be at the World Trade Organization or a separate negotiation leading it out, how are we going to deal with that reality? They obviously have to be at the table.

I know the Americans weren't invited to one of the conferences this summer. Ms. Williams suggested that they probably should be there. I would suggest that it's a pretty good idea that they be at the table. If there's a threat to Canadian culture, what I'm hearing is that it's coming from United States. We have that reality. They're right across the line from us, and they have a big entertainment industry that is a commercial industry.

I would just put the question to you: How are we going to deal with that? Whether it's in the forum of World Trade Organization negotiations in a millennium round, or whether we remove it entirely, we still have that very big fact to face.

The Chairman: Mr. Stein.

Mr. Ken Stein: I don't know how you want us to respond, Mr. Chairman, but I can't resist responding to some of this. I think the—

Mr. Charlie Penson: If you can't resist, that's an excellent sign that you should be the first one. That's one of our cultural values in this place.

Mr. Ken Stein: As a kid raised in western Manitoba, I know a little bit about wheat and those kinds of issues. I don't think any of us in a cultural industry want to say that our industry is more important than other industries. I think we recognize that whether you're a steelworker or somebody engaged or investing in the agricultural industry, those are equally important occupations. We don't want to say they are more important or whatever, but they are different.

I think of some of the examples. A satellite signal is one. One instantaneous transaction could lead to multiple products, so the rules of trade, the balancing of trade in a cultural area, are much more difficult to deal with. In other areas, whether it's steel or agriculture or whatever, I think we can look at ways to balance it. We haven't been able to find the ways of doing that in the cultural sector.

I think the other thing that's important, at least from the perspective of the people and the industries I represent here, is the fact that we have generally moved from a world that has goods to a world that has services. All the trade rules have been developed around goods, and the magazine thing got caught up in the whole definition of a good or a service.

In services, the cultural thing is almost the most important part of it. When you look at the kinds of industries we're talking about, whether it's advertising or broadcasting or music, as Anne said, this is why they are now the largest exports of the United States. They revolve around these kinds of industries, but we have spent decades ignoring all of that as a country, because we essentially say it's exempt.

That goes to your second point, which concerns why we felt we had to get away from that. We think it's crucially important to recognize that we can't be naive about the United States in these circumstances. But let's also understand that if we don't put down some measures that we can support, the whole new economy that's based on this kind of an area is going to slip away from us.

The Americans do whatever they can do to achieve world domination in these sectors. I've listened to FCC commissioners stand up at conferences to say they are going to support the U.S. industry in certain measures because that will make it world-dominant. I've never heard anybody from the CRTC stand up and say that in Canada. I think that kind of imbalance in a situation is something we have to deal with. In the future, that will be a very important part of the economy of our country, and we will need to have measures that support it.

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Mr. Charlie Penson: Mr. Stein, would you agree that whether it's a service or a good, it's still a commercial transaction?

Mr. Ken Stein: There's a significant amount of commerce involved in this and it's one of the tricky issues we had to deal with at SAGIT.

I thought Mr. Graham put it quite well when he asked what the difference was between a commercial interest and a cultural interest. We tried to deal with it by saying there are precedents. We didn't have a total solution, but there are areas where we have explored different ways of achieving our objectives without going to the trade route. Intellectual property is one good example where we have moved ahead and done things to protect creators and artists, and that is recognized world-wide.

The Americans are hugely strong in protecting the rights of their creators and artists anywhere in the world—dealing with China or the Far East in terms of pirating copies. They're extremely vigorous in protecting the rights of their artists and creators, and we're just saying we should be just as vigorous.

Mr. Charlie Penson: My question to you, though, is how do we get them to the table? It takes two to negotiate, and if they really don't have any interest in our point of view in terms of what our negotiations are, how do you resolve that? We're dealing with the world's largest economy here, and entertainment is, as was said, their largest export.

Mr. Ken Stein: I would say three things. First, we can't deal with them head-to-head. I'm more an expert in terms of policies in the communication and broadcasting area than on the trade side, but multilateral agreements always seem to be the best way to deal with this issue in terms of coming to some agreements with the United States, so we're very much in support of that.

Second, in each of our own areas we have working relationships with Americans. For example, in my company we were able to work out a very satisfactory arrangement with respect to the dumping of Country Music Television. It's been beneficial to our company. We now own Country Music Television network in Canada, but we were able to come to an agreement, finally, with the U.S. network in terms of how we worked with them—and they're not carried in Canada; we never came to that test.

We find in our industries and in our committee that we have working relationships with the United States where we just have to continue to hammer away at those kinds of things. So a combination of those things will not be easy, you're right, but I don't think that should stop us from trying.

Mr. Charlie Penson: I sort of get the impression that most panellists would favour not having culture as a negotiation in the expanded WTO round, but would rather have it as a separate conference or negotiation outside of the WTO process. Is that accurate or not?

Mr. Ivan Bernier: I guess it would be the ideal solution, in a sense, if we could do that, but the problem remains of what impact that will have on the existing rules. If it doesn't change anything in the rules it's fine, but it has no impact. The real problem we have here is with the application of the existing rules in terms of trying to maintain some of the policies we have in place.

My feeling is it would be useful and should be pursued as an objective to have a separate agreement that would look at all the various aspects of the cultural problem. There are a number of aspects to this. I was mentioning, for instance, the problem of abuse of dominant position. In the U.S. now they have a claim against the distributors of films under the Competition Act. They were pursued before in the 1940s, and now the United States government is coming against them again.

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I think there is a problem there in general. It is widely recognized that in the field of distribution of cultural products there is quite a degree of concentration, which is a big problem. So we should look at things like that and perhaps include such problems in agreements. We have serious reasons to complain about a number of things against the United States.

But on the basic things, such as the relationship between this distinct agreement and the existing agreements, it will be quite a task to bring the U.S. and some other governments to accept that the new agreement prevails over the existing one. I have a problem with that.

The Chairman: I have to stop that line here because we're well over the time limit of 10 minutes.

Monsieur Sauvageau.

[Translation]

Mr. Benoît Sauvageau (Repentigny, BQ): I would also like to thank you very much. This meeting has given us the opportunity to grasp the complexity of future negotiations in the cultural area and—

The Chairman: Mr. Sauvageau, we know it's a complex matter, but have we understood its complexities?

Mr. Benoît Sauvageau: No. There has been a major shift regarding cultural exemption in the discussions and negotiations of an international trade agreement. You may remember Mr. Marchi and Ms. Copps' position until the Multilateral Agreement on Investment. So there has been a major change.

What kinds of risks would Canada and France, as well as Canada's allies, face if we held on to our current position of maintaining an exemption for culture at the next round, not necessarily the WTO round since the issue is not on the agenda, but at future negotiations on international agreements?

Mr. Daniel Schwanen: First, let me refer to the magazine industry. Certain sectors believed they were exempted. Incidentally, I also disagree with Bill C-55. We thought we had a cultural exemption, when, in reality, we did not, since the U.S. appealed under other international trade rules. As Mr. Bernier said, the issue is not to know which exemption applies where. You can't let fate decide, when there are contradictory rules in place, or when you are under the false impression that you are exempt.

Obviously, there's a danger that the other country—and it is often the United States, but I recently heard that we should also be protected against French and Belgian magazines—which disagrees with our policies may say: "You have an exemption, but in reality you are not really protecting your culture, but rather something else. We do not agree and there are no rules for interpreting all this. We will therefore attack your other industries. You are stealing a market from us, so we will steal a market from you." That is the danger of the uncertainty we are facing; it is the result of a lack of rules in cultural industries. I would prefer we have rules rather than an exemption which does not mean the same thing to everyone.

The Chairman: Thank you.

Mr. Yvan Bernier: If the Multilateral Agreement on Investment goes back to the WTO for discussion purposes, the matter of the cultural exemption will immediately come up again. Whatever we do, the question will clearly be whether we are taking over where France left off on the matter of this cultural exemption clause? Are we going to pick up the discussion on the basis of reservations, or will we drop all that on the assumption that there will be a side agreement? All these things are going to be happening at the same time and they will be extremely difficult to manage. That is why I was saying earlier that we could not separate all these matters; they are going to be happening simultaneously.

[English]

The Chairman: Ms. McCaskill.

Ms. Anne McCaskill: I wonder if I might just add something here. I think there's a little bit of confusion about the cultural exemption in NAFTA—where we are today and what kinds of issues we will face on the WTO side. I think the practical reality is that so far Canada and other countries have simply not assumed obligations under NAFTA or under any of the WTO agreements that limit our ability to pursue cultural policies.

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The magazine case was a big exception because it was the only instance in which cultural policy measures actually applied to goods. They applied to magazines as goods, even though the underlying issue these measures aimed to address had to do with unfair competition in the advertising services market. So it was a services issue, but the measures applied to goods.

It's interesting to remember that the Americans didn't challenge our magazine measures under NAFTA. In fact, the reality that we have never had a trade dispute under NAFTA on any of our cultural policies demonstrates that the cultural exemption is doing something. The Americans didn't go to NAFTA on magazines; they went to the WTO because they saw an opening to challenge those measures under the GATT, the goods agreement. All of our other cultural policies don't apply to goods. They apply to services and are based on intellectual property rights, and the Americans have never challenged any of those other measures. They complain about content requirements. They don't like our CRTC rules. There are lots of things they have taken issue with, such as copyright legislation, but have they challenged any of those or taken action against any of those under NAFTA or the WTO? No. The reason for that is that we have assumed no obligations that would provide a basis for the United States, or any other country, to challenge these measures.

If we look ahead to the next round in the WTO, I don't think the culture issue will emerge as a separate agenda item. In fact, I don't see how it really could, in any kind of useful way, because the underlying issues have to do with cultural policy, and I don't think you're going to have a very satisfactory discussion of those cultural policy issues in the WTO.

What will happen, without a doubt, is that the United States will seek concessions from Canada in all of those areas in the services agreement and the intellectual property agreement, where we so far have made no commitments. You can be sure the Americans will want us to include our advertising services market in the magazine and broadcast sectors in our GATT commitments in the next round of services negotiations. You can be sure they'll come back on copyright issues under the intellectual property agreement. The position they'll take there—because they took it the last time around, you can expect them to come back on it—would render completely illegal all of our Canadian content regulations and a number of our other cultural policies.

So far Canada, a lot of European countries, and a lot of developing countries—we're far from being alone in this—have said “Our cultural policies aren't on the table in these trade negotiations and we're not going to assume obligations that would interfere with our ability to maintain those policies”. Going into the next round, what will the Canadian position be when you know the United States will say “We want you to put your advertising services market in the magazine sector and in the broadcast sector on the table and provide access in the next round of services negotiations”; how will Canada respond?

The Chairman: I have some trouble with your bald assertion that the only area of goods where they could get us is magazines. What about books? Unless you're in a situation, as Mr. Stein described, where you're selling the copyright and therefore you're just transferring the right to print them somewhere else, but if books are traded presumably they would be... What about films?

We'll have to get our researchers to look at this because it's quite an important point. If you're saying the only area that would be a product under the traditional goods definition in GATT is magazines, that would make it a very different situation for us to be concerned about. I'm concerned it might be too simple, but maybe some of the other members of the panel might have some—

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Ms. Anne McCaskill: Actually, Mr. Chairman, I think it is quite simple and straightforward.

The Chairman: I think it's very helpful, if you're right.

Ms. Anne McCaskill: I was involved in the negotiations, and I had a mandate that was delivered to me personally by the trade minister of the day. That mandate was that absolutely nothing could be accepted by Canada in the context of the intellectual property rights negotiation that would have the effect of undermining or rendering illegal any of Canada's existing cultural policies or—

The Chairman: Its existing cultural policies, because you don't know what you're going to do in the future.

Ms. Anne McCaskill: Well, once again, we haven't taken on obligations in these services and intellectual property areas.

The Chairman: Thank you very much.

Mr. Sauvageau.

[Translation]

Mr. Benoît Sauvageau: There's clearly opposition from our neighbour to the South, but there is also another potential source of opposition—namely, public opinion or civil society. We saw how civil society mobilize against the Multilateral Agreement on Investment and had demonstrated its aversion to the agreement, which had been negotiated without its participation and seemed to jeopardize many things. If we were to decide to put forward a position of that type at the upcoming WTO and other negotiations, what would be the public reaction?

I would also like you to answer Mr. Daniel Schwanen's questions, who spoke, if I understood him correctly, about quotas and subsidies. When I think about the testimony we heard at the first round table and the position taken by other lobby groups, I think the first public opinion reaction will be—even though it's not true in my view—that Canada is ready to sell out its culture to the Americans and to the whole world.

What is your position on quotas, subsidies and public opinion?

Mr. Yvan Bernier: I will start by answering the question about the impact of civil society.

A new phenomenon is occurring at the moment, because various civil society groups are in contact with each other throughout the world through the Internet. They communicate quickly and organize very quickly as a result of these contacts. A group of Canadians, Quebeckers or Ontarians may easily communicate with people in Germany and France who are working in the same area and develop plans and actions to oppose this or that. That is a phenomenon we are now facing. We do not know yet how far this may go, but having surfed the Internet a little myself, I can tell you that that is happening, and we are waiting to see what the future holds.

As you know, there is a court case at the moment in Montreal against a group of young people who tried to take action during a meeting on the Multilateral Agreement on Investment that was held in Montreal. They are charged with disturbing the peace, and so on. However, behind all of that, there is the fundamental principle of freedom of expression. This will all be picked up and applied again in the context of the negotiations. I think this is something we should be monitoring.

You raised two other points—about quotas and subsidies. There is no doubt that this is the type of obstacle that may likely come up again. The United States had threatened Europe with court action regarding television or films. It mentioned not only the GATT, pointing out, for example, that television programs could be considered goods, but also that... The issue was never resolved; it is still pending. Is a film or a television video a good or a service? These are some of the problems that will have to be solved; we are far from having all the answers. You can imagine the complexity of questions such as "is a CD-ROM a good, a service or a multimedia program?".

The Chairman: Thank you.

[English]

Mr. Blaikie.

Mr. Bill Blaikie (Winnipeg—Transcona, NDP): Thank you, Mr. Chairman.

It seems to me that a lot of this—just to begin with a comment—begs the question of whether there should be such a round, whether we should be at such a table. Certainly we've had witnesses here before urging us that Canada not be at the table, or that we reject the idea of having this whole round of negotiations. Frankly, there isn't anything anybody has said here today that has shaken my view that the WTO is an instrument for the imposition of the American model of economic activity on the entire world. Whether you call it making them world dominant or whether you call it world domination, it's splitting hairs as far as I'm concerned. So that's a larger question. I don't know whether anybody on this panel is willing to say that perhaps we shouldn't be at the table at all.

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I have a question for you, Mr. Bernier. It's quite common now for people to refer to “civil society”. Yet if we put a whole bunch of people in the same room—as we now have a whole bunch of people in the same room—I don't think we could all agree on what civil society means. What is the difference between consulting civil society and having due political process and consulting the people as opposed to civil society? Who is civil society?

It seems to me that this sort of phrase emerged out of the end of the Cold War, as civil society was given the credit for bringing down the Soviet Union. I think I understood what it meant in that context, but I don't understand what Sergio Marchi means when he talks about Canada trying to create room for civil society in the free trade area of the Americas consultations or all the other ways in which it's now used. It seems to me that it's a great phrase and everybody is into it, but what the hell does it mean? Maybe you could give us a hand with that.

Mr. Ivan Bernier: It means not government, not business, but other groups that have other agendas and are trying to have a different viewpoint conveyed on these discussions. Basically, they work together at the ground level. Very often they are small organizations, and they try to influence the views of the public on various aspects. They are organized along lines of interest, such as women's interests or environmental interests or various aspects like that. It's not usually ordinary citizens. It's citizens organizing in small organizations in order to convey other views.

Mr. Bill Blaikie: So what is the place of, for instance, labour in the definition of civil society? Is it an interest group? Is it civil society? You say it's not government or business. It seems to me that this separates out business as not being an interest group. I often get a kick out of the idea that business isn't an interest group while the rest of us are somehow, business not having any interests except making money, of course.

Mr. Ivan Bernier: I would simply say civil society, as it is understand generally, refers to other things than governments and business. It could possibly refer to labour, but I'm not sure about big organized labour because it has its own ways of communicating its views. These are smaller organizations, people who generally have the feeling they are not listened to, that they have views that are never taken into consideration.

This has built up gradually. I'm not saying the process set up by government of consulting civil society excludes labour groups or other groups, or even business. But among the people who consider themselves part of this civil society, I am just saying they are different.

Mr. Daniel Schwanen: I think what we've been discussing today is actually how developing trade rules with our trading partners actually affects the way we pursue certain domestic objectives—environmental, labour, culture—and how that development may even affect these objectives themselves. I think this is perhaps the feeling in terms of involving the groups that Mr. Bernier has been describing: we want your inputs as to how the rules we are going to be developing in these sectors are going to affect the things you care about.

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Obviously business cares a lot about trade rules, because that's what business does. But what about the impact of trade rules on other sectors? That's why I think we're involved in this so-called civil society.

Mr. Bill Blaikie: I still don't understand how that's different. I was on this committee when we studied the FTA in 1987. We went around the country and we heard from all kinds of people. We're going to do the same thing this time around, only this time around we're going to call them “civil society”. Last time, we just called them the public. It's the same group, and probably even a bunch of the same people, so I still think there's some room for a clearer definition of what civil society means.

I would certainly want to quarrel with the view that civil society is a group of people who normally feel they aren't listened to, unlike labour. Certainly when it comes to these kinds of negotiations, I can't think of a group whose views have had less impact on the outcome of negotiations than the labour movement, which has consistently held views contrary to what the outcome of a lot of these negotiations have been.

The Chairman: Mr. Browne, do you want to take a cut at that?

Mr. Dennis Browne: No, I don't, as a matter of fact.

The Chairman: I didn't think you were going that way.

Mr. Dennis Browne: I want to go back to your first point, and that is whether or not there should be a round, whether or not Canada should be at the table.

I'm sure your researchers will tell you that we have a contractual obligation to begin renegotiating the agriculture agreement next year and to renegotiate the services agreement. That's already built into the WTO agreements. Clearly these are both issues of great importance to Canada, and the second one, the services agreement, is very much what we're talking about here, as Ms. McCaskill has pointed out.

I think this brings us back to the theme of where we should address culture. There's no question that whatever we ultimately agree on internationally in regard to culture, it has to be incorporated into the WTO. The dispute settlement mechanisms of the WTO can then be used to enforce it, it will be an integral part, and it will be sustainable. How we get there is another question.

If we take agriculture as an example, prior to the Uruguay Round there was initially a great deal of work done in the OECD, for example, to build a basis of negotiation for agriculture. There was also a great deal of work done by a group called the Cairns Group, the smaller countries with agricultural interests, to try to influence the agenda. I think there are lessons there that we can follow in culture.

We should find a non-negotiating forum for initial discussion—and that's happening through these informal discussions that are going on—so that we can build a common understanding among a significant number of players. The U.S. doesn't have to be at the table. In fact, the U.S. should not be at the table for those discussions. Then the role of the smaller players in any trade negotiations is to influence the agenda early on, because the final decision, the eleventh-hour decision, is going to be made by the United States, Europe, and maybe Japan.

If we get in early with a clearly developed understanding of where we want to go and with a consensus among a number of players that this is a good direction, then we'll have the opportunity of influencing the negotiations. As Professor Bernier said, we may be already too late to have a comprehensive approach in the millennium round. Nonetheless, that shouldn't divert us from our ultimate objective of getting some clear rules so that we can maintain cultural diversity in Canada and other countries.

The Chairman: Thank you very much.

Ms. Bulte.

Ms. Sarmite Bulte (Parkdale—High Park, Lib.): Thank you, Mr. Chairman.

I would like to thank you all for coming here today. I'm going to move a little away from the WTO and go to the FTAA, because I understand that while the ultimate negotiating decisions will happen at the WTO, technical discussions are going to take place at the FTAA.

I've read the SAGIT report, and I commend its recommendations and the idea of the international agreements. But we have upon us imminently the FTAA, which some people see as an extension of NAFTA. Heaven forbid, but it is seen as that. We have the cultural exemption in there. We had discussions on the MAI, in which we produced a new cultural definition that SOCAN put forward. What are we going to do now as we approach the FTAA? I can't believe that we ignore culture completely in that and just build on the NAFTA. What should our negotiators be doing? I'd like you to address what we do with culture right now while we're waiting to get this international agreement together.

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Mr. Dennis Browne: With respect to the FTAA, I think you've characterized it very well. I think the process that's going on is really a learning process for countries in the hemisphere in terms of what their WTO obligations are and what they want to add to those. By definition, an FTAA has the WTO as a base, and it then adds a layer to the WTO.

My own view is that the FTAA probably will not result in a hemispheric trade agreement, because ultimately the issues will be subsumed in the millennium round in the WTO. Meanwhile, however, you're quite right, issues are going to be raised in that context that will have an impact on our cultural objectives. My own view is that rather than trying to use that as a forum for a cultural instrument per se, which probably wouldn't work to our advantage—the right people aren't at the table—our negotiators should be very careful that, whatever undertakings are discussed or negotiated in the FTAA context, they don't go down the path that Ms. McCaskill was referring to. They should not draw out of us obligations or commitments that would later hamper our objectives in securing a cultural element in a broader trade agreement.

Does that make sense?

Ms. Sarmite Bulte: Yes, but at the same time, we're talking about what Mr. Penson said: how we bring them to the table. It would seem to me to be an advantage to bring the players—especially those from Central and Latin America, who have their own cultural policies—to the table and to bring the United States to the table at that point.

Speaking of that, Professor Bernier was speaking about U.S. dominance. One of the things being advocated by the Caribbean countries right now is a vulnerability index in the FTAA negotiations. How can we use that vulnerability index? Are there lessons to be learned there for us, being next to the Americans?

As a final question, there is the other question that Mr. Penson asked: how to bring them to the table? A week to ten days ago, I believe I read an article in the Wall Street Journal about the WTO and the bananas, and the EU and the United States. One of the issues raised in that article was that perhaps the United States trade sanction laws were contrary to the WTO. Is this a way we can bring them to the table, then?

That question is addressed to anyone and everyone.

Ms. Anne McCaskill: I'd like to address that, because I think there are two things there. First, unless and until there has been an international consultation on the underlying cultural policy issues, it is very likely that we will continue to be at a complete impasse in trade negotiations on the issue of culture, just as we came to a complete impasse in the MAI discussions. I'll tell you what I think the situation will be.

We will go into this next round of negotiations at some point next year. The Americans will ask for access to our advertising services market in the magazine sector and in the broadcast sector. They will ask for us to make commitments in terms of our broadcast sector more generally—meaning our broadcasting services—and also in terms of audio-visual. In the TRIPS negotiation, they will also seek national treatment on copyright right across the board.

Canada will not be in a position to accede to any of those demands unless it is prepared to effectively abandon most of the cultural policies that we have today. No government has been prepared to do that so far. We were having this debate over ten years ago in the negotiation of the FTA with the United States. The reality is that the net effect of the demands the U.S. will make in the services and intellectual property rights areas in the next round would be to effectively jettison our existing cultural policy framework.

I don't think we're ever going to have a meeting of minds on this until we address the underlying cultural issues. The Americans say it isn't culture, it's commerce. We say it is culture. That is the basic dialogue of the deaf that has been going on on this issue for a very long time. I don't see it ending in the next round. I don't see it ending at all until we have crunched the underlying cultural policy issues—what are legitimate policy objectives and what means can be used to pursue them.

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Mr. Sandy Crawley: So the FTAA will be a Mexican standoff, if I can use another metaphor. So nothing will happen, but a lot can be learned. I agree with what your question implies. A lot can be learned and relationships can be forged with Caribbean nations, with Latin American nations, etc., preparing us for the possibility of getting the Americans to the table at such a new instrument, which is rather a bold leadership role for Canada.

Sometimes we're comfortable with these things. Did they sign the landmines thing? No, not yet. But maybe it has made a difference in the world. I really think there's a political challenge here. I'm particularly happy that you're asking these questions, because the political leaders will have to forge these relationships.

When American commercial interests—nothing to do with culture, according to their definition—are threatened in any way, they'll be at the table. It's not a problem. I think would have to build up a momentum with your strategic allies. As Anne has said, we have to identify our objectives very clearly for ourselves in domestic policy so we'll know how to deal with other sets of negotiations that aren't appropriate for us. It'll be a standoff.

The Chairman: All of us agree that we do have to find strategic allies. There has to be a sort of Cairns Group around this culture, if we want, and clearly the United States is not going to be there.

Most of the members of this committee travel a great deal in the process of our work. I personally have sounded out every single person in Europe on a committee chair or a foreign affairs chair of anything, and I have not found an enormously responsive whirr. There is not a group out there as large as I thought it was going to be supporting us on this. I don't think there's a perception of the danger. As I said to the chair of the foreign affairs committee of the Argentinian legislature, once all their television stations are owned by Americans and all they see are reruns of translated American sitcoms, perhaps they'll realize they have a problem. At the moment, particularly countries that have another language do not see the problem in the same light as we do.

How are we going to build this strategic alliance between now and next November, or at least during the course of it?

I'm sorry to interrupt your question, Ms. Bulte, but I think you've been trying to deal with the same issue wherever you've travelled to.

Mr. Ken Stein: I was just going to comment that you really do have to go on two fronts. I don't think you can ignore the trade issues or say we're not going to participate or we're going to continue, because you're getting too close in the new discussions to service arrangements that are going to have, as Anne pointed out, an impact in the cultural areas, in the cultural industries. But at the same time, I do think there has to be more emphasis in dealing with governments from the cultural point of view.

You're right, Mr. Chairman, if you sat down with trade ministers from other countries, you probably would not get a lot of sensitivity to the cultural issue. However, I think Ms. Copps has taken the right initiative in terms of trying to discuss how we can proceed on this with other ministers in other governments. Just hammering away at the issue rather than saying it's exempt, as was the case with the past policy, may finally start to get some attention in terms of saying this is important.

Most importantly, we think diversity is important. Just having one homogeneous product... I think we have to take the leadership and just hammer away at it, as Sandy and others have said, to make those points and see where it goes.

The Chairman: Mr. Bernier.

Mr. Ivan Bernier: I looked at the situation in Latin America on the FTAA and I found some quite interesting things there. There is a real development of interest in this question of the place of culture in the integration process. For instance, in the context of the MERCOSUR, they now have a group of parliamentarians meeting on culture, they have a council of ministers on culture, they have a committee on culture—all that in the context of the MERCOSUR. They're meeting now on a regular basis and they are developing views on how to deal with culture.

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The problem is they start from a different perspective than we do very often. For them, in many instances, government control over television and audio-visual services was a problem, so what they wanted was cultural diversity. But now they're getting another type of problem. They have too much of the same—no longer governmental intervention and viewpoints, but rather, basically foreign viewpoints, in most of the Latin American countries.

Ms. Sarmite Bulte: Perhaps, Professor Bernier, you could also expand on this vulnerability index that's being proposed by the Caribbean. How does that fit into dominance? Is it going to have to do with implementation? How can we bring that into our relationship with the United States, if we can?

Mr. Ivan Bernier: That's a difficult question. It's a new concept. It should perhaps be looked at more closely. Certainly in the Latin American context what I've realized is that there are some powers in Brazil, in Argentina to some extent, and obviously in Mexico that have interests in exporting their cultural goods in films and television programs. In most of the other states they are completely overwhelmed. In terms of vulnerability they are at the bottom. There is really quite a fight for them to get more cultural products from their home countries. If you look at Uruguay, for instance, only about 7% of the programming on TV is from national product.

Mr. Ken Stein: Perhaps I can make a further comment on that. One can also get more specific. The U.S. does support copyright in intellectual property agreements. The U.S. does support in many cases, but not in all cases, certain kinds of ownership limits in terms of its own particular sectors.

When I worked with Gérard Pelletier 25 years ago, we found numerous instances where the U.S. used commercial deletion to protect Americans against tobacco advertising. They used simultaneous substitution to black out their own broadcasters, called, I guess, SYNDEX. They have controls on their own satellite broadcasting services that are putting the U.S. satellite industry at some risk right at the moment.

So the Americans do have it. I don't think we should go into these with any pretension that the Americans go along and say it's a free market. Ted Turner used to always say that the great magic of the American policy-makers was they sold the rest of the world on the separation of carriage and content and blithely ignored it themselves.

So the Americans do this, right?

The Chairman: That's what they do.

Mr. Ken Stein: Exactly, that's my point; they do it. I've met with the U.S. commerce secretary's people on a number of issues on a corporate basis, and they all say let the free market reign, and I can think of 10 different instances where it doesn't. I sit there and ask them how many Canadian programming services are carried by U.S. cable systems, and they can never tell me. I say we have dozens of American systems that we carry.

The other side of this, though, is when Anne says nothing has become an issue in terms of the free trade agreement. Yes, but try to get your product into the States, try to talk to Michael MacMillan, Robert Lantos or Jim Shaw about the kind of barriers that exist.

The Chairman: The film producers.

Mr. Ken Stein: Exactly, so the thing is let's not be naive with them. There are specifics in terms on intellectual properties, distribution rights, and ownership where you can really go at them and say there are things we can look at that are just as bad on their side.

The Chairman: We found that. Thank you.

Mr. Penson, you're next. I'm going to ask you if you'd be good enough to let Mr. Speller go first, because he has to go to a meeting.

Mr. Bob Speller (Haldimand—Norfolk—Brant, Lib.): Mr. Chair, I want to follow up on Mr. Blaikie's comments on whether we should be at the table or not. I'm not sure if it's the position of the NDP that we should or shouldn't be at the table, but I want to give the other members of the panel an opportunity to answer that. I know Mr. Brown has already. How important is it for Canada to be there?

Ms. Anne McCaskill: Canada has to be at the table. There is a built-in agenda of further negotiations that is called for under the existing agreements, and those negotiations are going to take place. It's still not clear exactly what the scope or the format of the next round will be, but there will be negotiations. Canada needs to be at the table just to pursue and defend our own interests. The question perhaps is whether Canada should be advocating an ambitious round that would be broad in scope or somewhat more moderate in scope. That's an issue, but I don't think the negotiations can be avoided.

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The Chairman: Does any member of the panel think Canada should not participate in the negotiations? Maybe we should start from there.

Mr. Sandy Crawley: I would qualify it just by saying you don't sit down to gamble without making sure you know how many chips you have and which ones you can lose. It can cut both ways. We can't just go naively to the table and say the riverboat gambler will win again. We need to have very clear objectives going to the table and a very clear signal about when we should back away, as we did at the MAI. If we hadn't been at the MAI table, we might have been forced into an agreement that, in the end, we didn't have input on. So I think it would be naive to suggest we can't be there.

The Chairman: Mr. Bernier.

Mr. Ivan Bernier: There is a big difference between the MAI and the WTO. The WTO...

[Inaudible—Editor]

...OECD it was nothing. You could get out of this agreement and there would be almost no repercussions. But if you get out of an agreement or even out of the negotiations themselves, you're out of the WTO, more or less, and where do you stand? You are completely out. There are 134 members of the WTO, and if you find yourself out of that, it may be a big problem.

Mr. Ken Stein: Just to add something to that, when looking at the impact of trade policies and where we've been successful or not successful, we've found that when Canadian trade officials get in early enough with other countries, we tend to be more successful in dealing with those issues.

Canadian trade officials have won a substantial number of victories in a whole range of sectors, but they have to be in early. In my view, it's not a matter of whether they should be at the table, but what the hell are they doing now. The work should be going on now, so we're prepared and when we go to the table we will know exactly how many chips we have, exactly what the positions will be, and we'll have worked out some of these things in advance of going to that table.

The Chairman: Thank you.

Mr. Penson.

Mr. Charlie Penson: We're talking about the possibility of a broad negotiation—expanding this WTO round to a millennium round, which would put a lot of different things on the table. That really goes back to the point I was trying to make about agriculture. There is a significant sector that needs some trade liberalization and would like to see a lot of things on the table, not just from Canada's point of view but from the point of view of the European Union, which may have to give up significant amounts in agriculture. If things like international competition law and intellectual property rights for their services were on the table, it might make for a more significant round. That is essentially the point I was trying to make as well.

Mr. Stein, you identified barriers to the U.S. market. We know they exist in all other sectors as well and they're very tough traders. They like to play the game where we give free access into our markets and it's tough for us to get access into their markets. Agriculture is another sector where they have all kinds of different programs in that area.

I think it would be helpful if you could supply information to the committee on what we are facing in the cultural area and where we have a lack of access. Our negotiators can talk about those things and try to use that imbalance to help us in our position.

There was also a comment earlier about the dominance of the U.S. market in film distribution, I think, where their competition law can be used to try to break that down. A better approach might be to try to use their own law against them to some extent to help our own industry here to better our situation. Could your group supply that? I think it would be helpful.

The Chairman: Thank you. That would be helpful. As I said, if anybody else has any ideas about other countries they're familiar with—Mr. Bernier was good enough to talk about the MERCOSUR experience—where we should be looking when we travel or when we're trying to build associations with other countries, it would be very helpful for us too.

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Let me ask a couple of questions as well.

Ms. McCaskill, you put quite well in your paper the domestic problem of what we have to try to do to survive. But when we were having our hearings on Canadian cultural policy when we were doing our foreign policy review some years ago, as you may know, in the foreign policy review document that this joint committee prepared was a chapter on culture and learning. Anne Medina, John Ralston Saul, and a whole host of others came before the committee and we discussed this issue extensively. The point they made was that we are now big exporters of culture ourselves, and if we're going to have a vibrant Canadian cultural existence in a modern integrated world, we can't assume we're going to exist in isolation. Therefore, we have to look at a way in which we can get our culture out.

It seems to me that when we go to the table, what we're going to be looking for are policies where we can not only make sure we're able to survive...because I agree with you, if we don't have a Canadian culture, how are we going to protect medicare and gun control and everything else that comes out of our own Canadian values? That's politics, but it's also culture. We're going to have to find a way whereby we can be in and part of the world as well. So it's going to be a very difficult balancing act.

That would be my question to you. I'll ask all my questions and maybe we can get them seriatim.

Mr. Browne, you talked about culture and the WTO. I agree with you, but we've heard a lot of evidence in the committee so far about how the WTO is the only game in town, or in the world, because, unlike the UN, which is not effective, it has the only effective dispute resolution mechanism. As a result, the environment, labour, and culture and everything will eventually end up in the WTO because that's the place where, if agreement is made, it's enforceable and can be done. Will the strains on that system then become so great that it won't be able to deal with it? That is the concern we've heard.

I'd be interested in your comment on that, and then I'd be interested in the comments of all the panellists about a little violon d'Ingres of my own. When we talk about civil society, and if the WTO is going to be perhaps the only game on the globe for some period to come, why is nobody talking about a parliamentary association around the WTO, where these issues we are talking about today can be discussed and shared, where somebody from Uruguay can talk to us and we can talk to somebody from China when they eventually come in, etc.? That's what civil society presumably would be, by elected representatives who are there as well as governmental. But few or any people raised that as an issue.

When we were in Geneva at the 50th anniversary, Mr. Blaikie and Mr. Speller, who have now both left, and I, the three of us, went to a panel that was organized by an NGO on that subject, and of all the politicians in town for that, we were the only three who bothered to go, which is kind of a typical Canadian thing. Canadians want to be in on everything somehow.

Those would be my three questions, starting with Ms. McCaskill and then Mr. Browne, and then there's the question of whether anybody thinks a parliamentary assembly would be a good idea.

Ms. Anne McCaskill: It is an important question you raise, and it's one that people often express concern about and argue that there's a tension between our export interests, which we'd like to pursue, and this protectionist cultural policy we want to maintain. I think there are a couple of faulty assumptions there that need to be cleared up.

The first is that when it comes to our cultural goods markets, they are completely open. We don't restrict imports of cultural goods. Therefore, I don't think we need to apologize or feel that we are not carrying our share of the freight when we look to export markets for our cultural goods. We should be so lucky as to be able to occupy 86% of prime time television in the United States or 50% of total magazine sales in the United States. I don't think we need to make any apologies there. I don't think there is any tension there. The measures that we do make—

The Chairman: How are we going to break into their market?

Ms. Anne McCaskill: That will vary from sector to sector. There are some cultural sectors in which we have export potential and in which we already do quite well—not anything even remotely approaching how well the Americans do in our market, but respectable nevertheless. And there are other cultural sectors in which exporting is simply not an option. For example, magazines are not export products anywhere in the world; it's not just Canadian magazines that aren't export products. The only exception to that is those of the United States.

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Obviously, when it comes to breaking into cable distribution systems and broadcast systems in the U.S., there are real impediments. They aren't necessarily regulatory, but they are systemic. I'm not sure you can get at those kinds of impediments via trade negotiations. They're not necessarily the result of actual barriers to market access, although the Americans do some of the same things as we do on the services side and on the investment side.

I do think this is a very valid issue to look at and to understand for two reasons. First of all, there's the idea of just being in a responsive mode when the U.S. complains about some CRTC rule or regulation. The Americans have 86% of prime time English-language programming on television in Canada. It might be rather interesting to be able to point out the virtual impossibility of getting onto major broadcast networks in the United States. Secondly, if there is in fact some possibility of addressing some of those kinds of practical access issues bilaterally with the United States, I see no reason why we shouldn't do that.

The Chairman: Thank you.

Mr. Acheson.

Mr. Keith Acheson: There are just a couple of things that I wanted to say, and they relate to the comments that I can interact with from the previous speaker.

I think we need to look at our own policies. We are not an open market for content from the rest of the world. In the magazine sector, it may not be that any magazine is prevented from coming into Canada, but it's more costly. They don't receive the subsidies for mailing. Therefore, if I'm sitting at home, two of the three magazines that I get come from England, so they are exportable. One is The Economist, one is The Times Literary Supplement. I don't think their content is going to make me a bad Canadian. Maybe it's superior if I read Chatelaine, but I don't think so, so I don't see why I should have to pay for my “not entertainment”. I don't know why I read all these different things that I do, but I'm interested in them. Why should they be more expensive? There are products from abroad that can't be brought into this country. We don't receive HBO, etc., although I'm not saying that's a loss. Much of that product can come in through other routes.

When we look at the United States, I think we're in danger of presenting a picture that the United States is tough. I'm sure it does a lot of mean stuff in trade negotiations and perhaps in trade policy, but it's also a very open market and it's a great opportunity for our cultural industries.

We are very fortunate in having a small contingent of clever people in two major language markets in the world. We are not going to be able to afford the same budgets and hire and keep the same people in our country if they can't participate in the broader markets. Right now they are doing that.

In the film program production sector, if you look at the growth companies in that sector, much of the revenue they earn from actual sales is coming from abroad. That's clear for CINAR, it's clear for Atlantis, Alliance, Coscient, all of the... They are supporting creative activity here that's going abroad.

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When we look at foreign magazines, a Canadian can't possibly publish in foreign magazines because they're not interested in Canadian stories. But then you go and read Alice Munro or Mavis Gallant. Maybe Mavis Gallant has lived in Paris for years and maybe that's tainted expatriate culture, but she writes about parts of Montreal in a way that no one else in the world can write.

I don't think we should paint this picture that the foreign product is all poor product, that the Canadian consumer who wants access to product of that quality is somehow being fooled. I'm not being fooled when I purchase those magazines. The quality is there. I don't know of any Canadian equivalent. Personally, I don't see why I should be denied that, or that our kids who are creative and other people who are creative should be denied access to participating in a broad sector. There is no reason why Canadian magazines in environment, in technology, etc., couldn't have a broad world market.

Mr. Anne McCaskill: Mr. Chairman, may I respond? There are factual—

The Chairman: I'll tell you that we're now past 12 o'clock. It's unfortunate, but this always happens with all our panels. We just get into the interesting part and then it's over. It seems to be the nature of these things. It's all formal at the beginning and—

Ms. Anne McCaskill: Could I quickly correct a factual error in what Mr. Acheson has just said?

The Chairman: If you have a factual error, yes, but if the other's going to be opinion, we're going—

Ms. Anne McCaskill: The statistical reality is that the average level of export of magazines in every single country around the world, except the United States, is 1% of domestic production. Magazines are local content. They're like newspapers or your local news. That's simply the fact. Again, the average level of export is 1%. The United States exports about 5% of its domestic production, and almost all of that comes to Canada.

Secondly, you are not precluded in any way, shape or form from buying any magazine you want from anywhere in the world.

The Chairman: Mr. Acheson didn't say that.

Mr. Keith Acheson: I didn't claim that.

Ms. Anne McCaskill: But he's suggesting—

Mr. Keith Acheson: I suggested that it's more expensive.

Ms. Anne McCaskill: Yes, Canada provides some subsidies to Canadian publishers. We are consistent with the WTO. We are fully within our rights to do so, and lots of countries provide subsidies.

The Chairman: That's the domestic argument, but it's very interesting. Thank you very much for having it. We should really set up more panels at which people have an opportunity to discuss things.

I want to thank all of you very much for coming. I appreciate it. It was a very interesting, very stimulating morning. Believe me, these are issues that we'll be continuing to grapple with. Please don't hesitate to write us if you have any further observations.

Members of the committee, we have a small matter of our own business. We were planning to travel out west during the week of April 19. We're going to have to put that off until the week of April 26.

We're adjourned until Thursday morning at 9 o'clock.