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37th PARLIAMENT, 1st SESSION

Standing Committee on Foreign Affairs and International Trade

EVIDENCE

CONTENTS

Wednesday, May 8, 2002

0905

The Acting Chair (Mr. John Harvard (Charleswood St. James--Assiniboia, Lib.))

0910

Mr. Aaron Cosbey (Associate and Senior Adviser, Trade and Investment, International Institute for Sustainable Development)

0915

0920

0925

The Acting Chair (Mr. John Harvard)

Mr. Keith Martin (Esquimalt--Juan de Fuca, Canadian Alliance)

Mr. Aaron Cosbey

0930

Mr. Keith Martin

Mr. Aaron Cosbey

Mr. Keith Martin

Mr. Aaron Cosbey

Mr. Keith Martin

Mr. Aaron Cosbey

0935

The Acting Chair (Mr. John Harvard)

Mr. Yves Rocheleau (Trois-Rivières, BQ)

Mr. Aaron Cosbey

0940

The Acting Chair (Mr. John Harvard)

0945

Mr. Aaron Cosbey

0950

The Acting Chair (Mr. John Harvard)

Mr. Randy Rudolph (Co-Chair, G6B Conference, Education Session)

0955

1000

The Acting Chair (Mr. John Harvard)

Mr. Randy Rudolph

The Acting Chair (Mr. John Harvard)

Mr. Randy Rudolph

The Acting Chair (Mr. John Harvard)

Mr. Randy Rudolph

The Acting Chair (Mr. John Harvard)

Mr. Keith Martin

1005

Mr. Randy Rudolph

Mr. Keith Martin

Mr. Randy Rudolph

Mr. Keith Martin

1010

Mr. Randy Rudolph

Mr. Keith Martin

Mr. Randy Rudolph

The Acting Chair (Mr. John Harvard)

Mr. Yves Rocheleau

1015

Mr. Randy Rudolph

1020

Mr. John Harvard)

Mr. Randy Rudolph

Mr. John Harvard

Mr. Randy Rudolph

The Acting Chair (Mr. John Harvard)

1025

Mr. Randy Rudolph

The Acting Chair (Mr. John Harvard)

Mr. Randy Rudolph

The Acting Chair (Mr. John Harvard)

Mr. Randy Rudolph

The Acting Chair (Mr. John Harvard)

Mr. Randy Rudolph

The Acting Chair (Mr. John Harvard)

Mr. Randy Rudolph

The Acting Chair (Mr. John Harvard)

1030

Mr. Randy Rudolph

The Acting Chair (Mr. John Harvard)

Mr. Randy Rudolph

The Acting Chair (Mr. John Harvard)

Mr. Randy Rudolph

The Acting Chair (Mr. John Harvard)

1040

Professor Don Barry (Canadian Foreign Policy and International Relations, University of Calgary)

1045

The Acting Chair (Mr. John Harvard)

Mr. Keith Martin

1050

Mr. Keith Martin

Prof. Don Barry

Mr. Keith Martin

Prof. Don Barry

Mr. Keith Martin

1055

The Acting Chair (Mr. John Harvard)

Mr. Keith Martin

Prof. Don Barry

The Acting Chair (Mr. John Harvard)

Prof. Don Barry

The Acting Chair (Mr. John Harvard)

Mr. Yves Rocheleau

Prof. Don Barry

1100

Mr. Yves Rocheleau

Prof. Don Barry

The Acting Chair (Mr. John Harvard)

1105

Prof. Don Barry

The Acting Chair (Mr. John Harvard)

Prof. Don Barry

The Acting Chair (Mr. John Harvard)

Prof. Don Barry

The Acting Chair (Mr. John Harvard)

Prof. Don Barry

The Acting Chair (Mr. John Harvard)

Prof. Don Barry

The Acting Chair (Mr. John Harvard)

1110

Prof. Don Barry

The Acting Chair (Mr. John Harvard)

Prof. Don Barry

The Acting Chair (Mr. John Harvard)

Prof. Don Barry

The Acting Chair (Mr. John Harvard)

Prof. Don Barry

The Acting Chair (Mr. John Harvard)

Prof. Don Barry

1115

The Acting Chair (Mr. John Harvard)

Mr. Keith Martin

Prof. Don Barry

Mr. Keith Martin

Prof. Don Barry

The Acting Chair (Mr. John Harvard)

Reverend Clint Mooney (Representative, Churches and Corporate Social Responsibility, Calgary Group)

The Acting Chair (Mr. John Harvard)

Rev. Mooney

1120

1125

1130

The Acting Chair (Mr. John Harvard)

Ms. Kerry Duncan McCartney (Program Coordinator, Project Ploughshares Calgary)

Mr. John Harvard

Mr. Keith Martin

Rev. Mooney

Mr. Keith Martin

Rev. Mooney

1135

Mr. Keith Martin

Rev. Mooney

The Acting Chair (Mr. John Harvard)

Mr. Yves Rocheleau

Rev. Mooney

1140

The Acting Chair (Mr. John Harvard)

Rev. Mooney

The Acting Chair (Mr. John Harvard)

Ms. Kerry Duncan McCartney

1145

1150

The Acting Chair (Mr. John Harvard)

Mr. Keith Martin

The Acting Chair (Mr. John Harvard)

Ms. Kerry Duncan McCartney

Dr. Janet Sisson (Representative, Project Ploughshares Calgary)

1155

Mr. Keith Martin

Dr. Janet Sisson

Mr. Keith Martin

Ms. Kerry Duncan McCartney

The Acting Chair (Mr. John Harvard)

Dr. Janet Sisson

Rev. Mooney

Mr. Keith Martin

Rev. Mooney

The Acting Chair (Mr. John Harvard)

Mr. Yves Rocheleau

1200

Ms. Kerry Duncan McCartney

Dr. Janet Sisson

1205

The Acting Chair (Mr. John Harvard)

Ms. Kerry Duncan McCartney

The Acting Chair (Mr. John Harvard)

Dr. Janet Sisson

The Acting Chair (Mr. John Harvard)

Ms. Kerry Duncan McCartney

The Acting Chair (Mr. John Harvard)

Ms. Kerry Duncan McCartney

The Acting Chair (Mr. John Harvard)

1210

Ms. Kerry Duncan McCartney

The Acting Chair (Mr. John Harvard)

Dr. Janet Sisson

The Acting Chair (Mr. John Harvard)

Dr. Janet Sisson

The Acting Chair (Mr. John Harvard)

1335

Ms. Catherine Little (National Manager, Results Canada)

1340

The Acting Chair (Mr. John Harvard)

Ms. Catherine Little

1345

1350

1355

Mr. John Harvard

Mr. Yves Rocheleau

1400

Ms. Catherine Little

1405

The Acting Chair (Mr. John Harvard)

Ms. Catherine Little

The Acting Chair (Mr. John Harvard)

Ms. Catherine Little

The Acting Chair (Mr. John Harvard)

Ms. Catherine Little

1410

The Acting Chair (Mr. John Harvard)

Ms. Catherine Little

The Acting Chair (Mr. John Harvard)

Ms. Catherine Little

1415

The Acting Chair (Mr. John Harvard)

Ms. Catherine Little

The Acting Chair (Mr. John Harvard)

Ms. Catherine Little

The Acting Chair (Mr. John Harvard)

1420

Mr. Larry Morrison (Manager of Oil Sands, Canadian Association of Petroleum Producers)

1425

The Acting Chair (Mr. John Harvard)

Mr. Larry Morrison

The Acting Chair (Mr. John Harvard)

Mr. Larry Morrison

1430

The Acting Chair (Mr. John Harvard)

Mr. Larry Morrison

1435

The Acting Chair (Mr. John Harvard)

Mr. Keith Martin

Mr. Larry Morrison

Mr. Keith Martin

1440

Mr. Larry Morrison

Mr. Keith Martin

Mr. Larry Morrison

Mr. Keith Martin

The Acting Chair (Mr. John Harvard)

Mr. Yves Rocheleau

Mr. Larry Morrison

1445

The Acting Chair (Mr. John Harvard)

Mr. Larry Morrison

1450

Mr. John Harvard

Mr. Larry Morrison

Mr. John Harvard

Mr. Larry Morrison

The Acting Chair (Mr. John Harvard)

Mr. Larry Morrison

The Acting Chair (Mr. John Harvard)

Mr. Larry Morrison

Mr. John Harvard

Mr. Larry Morrison

1455

The Acting Chair (Mr. John Harvard)

Mr. Larry Morrison

The Acting Chair (Mr. John Harvard)

Mr. Larry Morrison

The Acting Chair (Mr. John Harvard)

Mr. Larry Morrison

The Acting Chair (Mr. John Harvard)

Mr. Larry Morrison

The Acting Chair (Mr. John Harvard)

Mr. Larry Morrison

The Acting Chair (Mr. John Harvard)

1500

Mr. Robert Huebert (Associate Director, Centre for Military and Strategic Studies, University of Calgary)

The Acting Chair (Mr. John Harvard)

Mr. Robert Huebert

1505

The Acting Chair (Mr. John Harvard)

Mr. Robert Huebert

1510

The Acting Chair (Mr. John Harvard)

Mr. Keith Martin

Mr. Robert Huebert

1515

Mr. Keith Martin

Mr. Robert Huebert

1520

The Acting Chair (Mr. John Harvard)

Mr. Yves Rocheleau

Mr. Robert Huebert

1525

1530

The Acting Chair (Mr. John Harvard)

Mr. Yves Rocheleau

Mr. Robert Huebert

The Acting Chair (Mr. John Harvard)

1535

Mr. Robert Huebert

The Acting Chair (Mr. John Harvard)

Mr. Robert Huebert

The Acting Chair (Mr. John Harvard)

Mr. Robert Huebert

1540

The Acting Chair (Mr. John Harvard)

Mr. Robert Huebert

The Acting Chair (Mr. John Harvard)

Mr. Robert Huebert

The Acting Chair (Mr. John Harvard)

1545

Mr. Robert Huebert

The Acting Chair (Mr. John Harvard)

Mr. Robert Huebert

The Acting Chair (Mr. John Harvard)

Mr. Robert Huebert

The Acting Chair (Mr. John Harvard)

Mr. Robert Huebert

The Acting Chair (Mr. John Harvard)

CANADA

Standing Committee on Foreign Affairs and International Trade

NUMBER 080

1st SESSION

37th PARLIAMENT

EVIDENCE

Wednesday, May 8, 2002

[Recorded by Electronic Apparatus]

¿ (0905)

[English]

The Acting Chair (Mr. John Harvard (Charleswood St. James--Assiniboia, Lib.)): Members, I'd like to bring this meeting to order under Standing Order 108(2). First, I want to welcome the witnesses as the committee continues with its study of the very important agendas facing Canada involving its role in the world and in North America.

We as a committee feel it's essential right now to hear directly from citizens across Canada on key foreign policy challenges, especially those arising in the context of the group of eight countries and in regard to relations with our neighbours on the North American continent.

As many of you will know, Canada is president of the G-8 during this year and will be hosting a summit at the end of June here in Alberta. In addition to addressing the global economic situation and the international fight against terrorism, Canada is putting particular emphasis on advancing an action plan for Africa, based on the African initiative for a new development partnership.

The committee's hearings on both the G-8 summit agenda and on how our North American relationships should evolve are being done concurrently, given time and budget considerations. We've already held hearings in Atlantic Canada and in Quebec, as well as in Ottawa. This week, in order to complete a national process, one group of committee members is in Manitoba and Ontario, and the other--that's us--is here in the westernmost provinces. We were in Vancouver yesterday and the day before; today and tomorrow we're in Alberta; and on Friday we wind up our trip in Saskatchewan.

In regard to G-8 issues, the committee will be tabling its report by the end of this month in advance of final preparatory meetings for the summit. In the case of the North American study, all aspects of Canada-US., Canada-Mexico, and trilateral ties are open for examination, with a final report expected sometime this fall.

We want to thank witnesses who come before us today for taking the time to share in our deliberations. We hope this is just part of our ongoing dialogue. To begin today, we want to welcome a well-known gentleman, Aaron Cosbey, an associate and senior adviser for trade and investment from the International Institute for Sustainable Development. We have roughly 45 minutes, Mr. Cosbey. I gather you'll have some prefatory remarks to begin with, and then we'll open it up to questions.

¿ (0910)

Mr. Aaron Cosbey (Associate and Senior Adviser, Trade and Investment, International Institute for Sustainable Development): Thank you very much. I understand I'm the only witness formally scheduled to speak. I can assure you, in the first place, that is no reflection on the timeliness and relevance of your mission here, and I can also assure you that should you want me to, I could speak for the entire morning to take up the space of the other speakers who are not here.

The Acting Chair (Mr. John Harvard): We'll kick you out at a quarter to ten.

Mr. Aaron Cosbey: Very good.

I'd like to first thank you for the opportunity to appear and again assure you of the timeliness and relevance of your mission here. I'll give you a little bit of background about my institute. The other members appearing in Winnipeg are being treated to a presentation from members of my institute, the International Institute for Sustainable Development.

The area of that institute in which I work focuses on trade and investment, most specifically on GATT and NAFTA, but also most recently on FTAA, trying to reconcile the most important policy objectives of trade and economic advancement with the objectives of sustainable development. It's in that context that I'll address two of the questions that appear in the background material for this committee.

The first is the issue number two for the G-8 agenda. One of the questions there asks: “Does a growth agenda sufficiently capture the approach that is needed to global economic management? What else should the G8 consider, for example, in terms of sustainable development initiatives?”

I won't dwell on this overly, because I'm sure it's something that has not escaped the notice of this committee, but David Anderson, the Minister of the Environment, is chairing a UNEP-led process on international environmental governance, the results of which came out of the most recent global ministerial environmental forum meetings and are to be forwarded to the WSSD, the World Summit on Sustainable Development, meetings scheduled to take place in Johannesburg.

For someone who has worked in the area of international environmental governance and UN processes for a number of years, this is a refreshing approach to the issues of international environmental governance--ambitious--and those of us who are involved in this area not only wish it well, but are busily promoting it in any areas we can.

This seems an apt area in which to promote it, given that Canada is, in the person of David Anderson, chairing the process that produced these results and Canada is hosting the summit of the G-8. It seems to me it should be one of Canada's priorities to be pushing strongly for G-8 support for the international environmental governance process as a way to strengthen governance internationally.

Some of the elements of that process that came out were a more secure and stable funding base for the United Nations environmental program and a sharing of the tasks and roles of the various scattered multilateral environmental agreements. The kind of strengthening that was recommended for those agreements would of course also have side benefits in terms of the trade and environment problems that we see coming up, or that I see so often in my work.

You have a unified institution on the trade side--that is, the WTO--but on the environment side you have an incredibly complex web of scattered national, bilateral, international, multilateral agreements on different aspects of the environment. It's very hard for the two to engage, very hard for the two sets of objectives to come to some sort of an agreement, and you have to sympathize with the WTO in this regard.

A strengthening and a better coordination of the multilateral environmental agreements in the forums recommended by the international environmental governance process would go a long way toward diffusing some of the trade and environment debate that we've seen to date, and it is of note, of course, that the trade and environment debates have in no small part fueled the kind of process that we can expect to see in the G-8 meetings this summer in Banff.

As I say, I won't dwell on that, because I'm sure the significance of those coincidental processes for Canada has not escaped your notice.

The second question I wish to devote a little more attention to is in the very useful set of background papers produced on North American integration. Specifically, it's a question that takes as its starting point Robert Pastor's suggestion that we have a North American court for trade and investment as part of the institution-building for North American integration.

It's a valid starting point to note that we have some economic integration taking place under the NAFTA, but that it is an extremely institutionally weak sort of integration.

Pastor's points are well taken. The sorts of disputes we've seen coming up, that range from softwood lumber and all across the board, have not been managed well because they have not been foreseen, and having not been foreseen, they have not been prevented. Neither can we take lessons from them in any sort of a meaningful institutional manner, because we do not have the institutions specifically devoted to managing the North American commercial integration.

We have crisis management tools in dispute settlement bodies, but to give you an example, there isn't a free trade commission secretariat. It does not exist.

It's inconceivable, when one compares the European Union model and the North American model, to imagine that out of a scattered process like that we would get a managed sort of integration and one that would take into account the various policy objectives we have, not just economic but non-commercial as well, and shepherd them into some sort of a beneficial outcome.

¿ (0915)

The specific instance I can give you that illustrates that deficiency--to my mind, the best of any--relates exactly to this suggestion for a court on trade and investment. It is the controversy surrounding NAFTA's chapter 11 and the cases that have arisen under it.

Chapter 11, as you all know, is the set of provisions in NAFTA that protect investors in the NAFTA countries against such things as expropriation, unfair performance requirements, undue process, a standard of treatment below what could be expected at an international level--a basic set of investor protections, a very sensible-sounding set of provisions. However, those provisions have been interpreted in ways that were never intended or predicted by the drafters of the agreement.

To give you a quick example that sheds light on the kind of example or instance I'm talking about, a Canadian company, Methanex, is suing the United States over a regulation propounded by the government in California that bans a gasoline additive that the government has reason to believe is a carcinogen and has been found to be leaking in great quantities into California's groundwater.

That sort of regulation would normally be thought of as undertaken in the proper domestic capacity of government, and would not normally, according to the international tradition, be thought of as an expropriation. It's what's called at the international legal level a police powers measure. However, there is no explicit carve-out in the NAFTA chapter 11 for police powers; therefore, Methanex as well as several other companies have decided to try the system and assert that this sort of regulatory measure, which has a visible, palpable impact on their investment, is an expropriation and is compensable. In this case, they're asking for just under $1 billion Canadian compensation. The money itself is not really the big problem here. The problem is their objective to try to freeze that sort of regulatory action, not only in California, but in the other states in the United States that are proposing it.

As I said, this is not the sort of thing that was previsaged by the drafters of the chapter 11 protection agreements, and expropriation is only one of the four provisions under which we've seen problematic rulings or arguments in chapter 11. Really, they go to the heart of government's ability to regulate in the public interest, not only on environment but on other non-commercial policy objectives as well.

But the problem is not only in the interpretation of the provisions. The problem is in the process we use to deal with sorting out the kinds of cases that Methanex has presented us with. We have under chapter 11 recourse to two sets of investor proceedings under the ICSID and UNCITRAL conventions. These, by the standards of any normal, domestic judiciary anywhere in the world, are insufficient to the task. They are closed. There is no openness to participation in the proceedings. There's no transparency in court documents. There is hardly even a requirement to tell anyone what happened in a case after it has been finished. There is no provision for submissions from third parties. This is an entirely closed mechanism.

As well as being closed, it is presided over by experts in commercial arbitration. One is chosen by the proponent, one by the defendant, and a third is chosen collaboratively. This is a strange sort of selection procedure, and it has been shown to be such. Obviously biased arbitrators have been chosen by the proponents, those who support their views. There is no permanent roster of panellists, as you would find, say, in the WTO. There is no right of appeal under either of these, so some of the troubling judgments we've seen, which would have been, I believe, easily fixed up by an appeal process, have had to stand. There is no way to take them away.

¿ (0920)

Let me go back to make my fundamental assertion here.

In a process that is dealing with not just commercial values--this is not just commercial arbitration any more--the issues being tried under the investment provisions of NAFTA chapter 11 go much more deeply to public policy objectives. In the Methanex case we're talking about a balancing of the right of the investor to an expected return on his investment against the rights of the public to a clean environment and to health and safety. This is the kind of balancing that goes on every day in normal government bodies, and we have a number of complex institutions set up to do that kind of balancing in every government in every industrialized country in the world.

But that kind of balancing cannot be done adequately by an institution that has no legitimacy, no transparency, and no accountability. I'm certain that this is what we have now in the arbitration procedures under NAFTA chapter 11. They are fundamentally unsuited to do a balancing of anything other than commercial objectives, and therefore I applaud Robert Pastor's suggestion that we need a court specifically set up in the North American context to do that kind of balancing. It's obvious that we're going to get into these problems in the chapter 11 provisions.

I will leave it at that, but I'll just reiterate that when we are dealing with questions beyond simple commercial arbitration, which we find ourselves doing over and over again under chapter 11, it is not sufficient to have an institution without legitimacy, accountability, or transparency dealing with those.

¿ (0925)

The Acting Chair (Mr. John Harvard): I'm sure that will raise a number of questions.

Mr. Cosbey, we have roughly 25 minutes to have some questions, and we'll start with Dr. Martin.

Mr. Keith Martin (Esquimalt--Juan de Fuca, Canadian Alliance): Thank you, Mr. Cosbey, for being here today.

My first question really relates to how we can engage the Americans on this, and perhaps you can give us some guidance on how we can engage the Americans in a North American court. The status quo appears to be fundamentally in favour of the Americans, as our recent trade problem has demonstrated very, very clearly.

On the second issue, you mentioned UNEP and a plethora of environmental agreements. I would argue that one of the fundamental problems with these agreements is that they don't have teeth, that is, enforcement mechanisms. They're fine on paper, they have beautiful words, but from a practical perspective the key to back up those words is simply not there.

How do you suggest we actually deal with that so there is a mechanism to put teeth, accountability, and transparency into the organizations that have signed on to these agreements but are simply not living up to them?

Mr. Aaron Cosbey: I'll start with your last question.

I recently organized for DFAIT an experts round table on enforcing international environmental obligations. I looked at just this question: how do you make them effective? They're out there, there are plenty of them, and they have lots of obligations. Are those obligations being met, and if not, how do you make them effective?

While it is tempting to go after a model like, say, the World Trade Organization, where you have legally binding, compulsory arbitration with real teeth in it, in a number of respects it's not an appropriate model to use in the environmental arena. In the first place, a country that is not meeting its obligations or not meeting its obligations under an MEA is not, as is the case in a bilateral trade dispute, doing harm to just one other country. In fact, it's falling down on its obligations to all the other parties, so bilateral binding arbitration would seem unsuitable in that respect. What is normally done under the MEAs is that you'll find solutions being sought by the conference of the parties as opposed to a bilateral sort of complaint mechanism. That's one thing.

There are two basic reasons why a country would not be meeting its obligations. One is because it intentionally does not meet them and intends to get a free ride on the obligations of others. The other is because it doesn't have the capacity to do so. In many of the developing countries this is really the problem, if you have a complex agreement such as the Biosafety Protocol that calls for judicial, administrative, and technical human resources capacity that is absolutely not there.

So how do you deal with that? I would submit that an agreement with teeth--a punitive measure--isn't the proper way to deal with that. If it's a problem of capacity, you have to build the capacity. It should be done within the MEA itself or under the auspices of ODA.

But to come back to the instance where it really is a flagrant, strategic violation of the country's obligations, yes, the UNEP international environmental governance procedure does have some recommendations for mandatory non-compliance mechanisms within all of the multilateral environmental agreements.

I think those kinds of mechanisms would go a long way toward answering the question of how you make them more effective in achieving the aims they've set out.

¿ (0930)

Mr. Keith Martin: Has that worked?

Mr. Aaron Cosbey: Sure. The Montreal Protocol to the Vienna Convention is an agreement that seeks to reduce the ozone-depleting chemicals being emitted. Here you have a non-compliance mechanism that is separate from the secretariat, that can be triggered by the reporting under the Montreal Protocol. When it is triggered, the secretariat conducts an investigation. When it's clear that the obligation has been breached, they do an assessment of whether it has been a deliberate breach or whether it's a capacity-related breach.

If it is a deliberate breach, there are penalties that can be put in place--trade penalties under the protocol--that actually are punitive in nature. They have never been resorted to. Usually, in the history of the Montreal Protocol, it has always been able to be resolved between the non-compliance mechanism and the parties. For me, it's one more piece of evidence that with regard to an agreement with teeth, the teeth should be there but never have to be exercised. In an environmental context that's particularly true.

Mr. Keith Martin: Getting the U.S. interested or getting the U.S. to the table and trying to deal with our trade issues with them....

Mr. Aaron Cosbey: Yes, this is obviously a problem if you're dealing with a country that is used to unilateralism and is comfortable with unilateralism.

The difference in this particular case is that the United States itself is subject to a number of these cases. The United States has been sued under chapter 11 in the Methanex case I described. They've been sued under chapter 11 in a case by a Canadian funeral company operator called Loewen in a case that challenges the basics of the U.S. judiciary.

There have been a number of cases against the U.S. to date that have caused an unprecedented uproar, both public and political. I think in light of these cases, and certainly in light of the findings, which I think are going to come down the pipeline in the next year or so, we will find, and indeed you can see it now, a willingness on the part of the U.S. public officials to consider alternatives to the current system.

Mr. Keith Martin: Mr. Cosbey, you deal with sustainable development, and I have a huge interest in this internationally. For the record, do you believe that for us to help a country's sustainable development mechanisms, one of the models we're set is the model where the profits from the development of an area have to be shared by the surrounding people if they're going to have buy-in? I draw your attention, for example, particularly to conservation measures that have been used in places such as KwaZulu-Natal Nature Conservation Service in the province of KwaZulu-Natal, what was the CAMPFIRE program in eastern Zimbabwe, and some of the programs in Namibia and Botswana where they've used their wild spaces to generate farms either through hunting or culling and ecotourism.

But the key to their success was that the surrounding people benefited directly from that through jobs and also through primary health and education. It was not only a division of the spoils, if you will, to the people but also reinvestment into those areas that preserved them.

Mr. Aaron Cosbey: Absolutely, that type of mechanism in the context of a conservation initiative.

If you're contemplating any kind of a conservation initiative internationally these days and you don't do that, you're a decade or two behind the current thinking, there's no question.

You don't get sustainable development in the context of conservation unless you have buy-in from the local population, because in so many cases they are not only stewards, but also guardians of the resources you're trying to protect. If they're not part of the process, then they're sabotaging the process.

¿ (0935)

The Acting Chair (Mr. John Harvard): Thank you very much.

Mr. Rocheleau.

[Translation]

Mr. Yves Rocheleau (Trois-Rivières, BQ): Thank you, Mr. Chairman.

Welcome, Mr. Cosbey, and thank you for your presentation. I would like to ask you three questions.

The first has to do with the overall behaviour of Americans on environmental issues, especially when it does not affect them directly. How do you assess their behaviour and their resistance to the Kyoto accord? How do you regard their behaviour, given their power and the fact that they are everywhere? One need only think of commercial fishing, which is increasingly devastating, or the exploitation of Amazon forests, where, according to a Quebec expert, the exploitation occurs at a rate of seven football fields per minute in that area. That is my first question.

My second question has to do with chapter 11 of NAFTA. There is reason to think, is there not, that the basic aspect or problem, depending on your point of view, is that private interest takes precedence over the public interest, the common good, in that a private company can disregard a government that has legislated to protect the environment, but in a way that cuts into profits. Does that not significantly undermine the common good?

My third question is more pragmatic. I would like you to tell us what exactly is the International Institute for Sustainable Development. For example, what are its goals and where does its funding come from, etc.?

[English]

Mr. Aaron Cosbey: Thank you.

Again, I'll start with the last question and work my way back to the first.

The goals of the International Institute for Sustainable Development are to foster a vision of sustainable development internationally. So our focus is Canada, but very much Canada and the rest of the world.

Our program operations are in the areas of trade and investment, sustainable business, knowledge communications--new information technologies--poverty alleviation, and measurements and indicators of sustainable development.

Our funding is somewhat less than half core funding, which comes as a mix from the Government of Manitoba, where we're based, CIDA and Environment Canada; and somewhat more than half in project funding, which comes from other governments, UN agencies, foundations, whomever chooses to contract us to do work. We are a not-for-profit organization founded in 1992 in response to the Brundtland organization's call for centres of excellence on sustainable development, set up with the assistance of the federal government and the Government of Manitoba.

To go back to your second question, I think you've hit the nail on the head. The problem with chapter 11, and certainly the problem with the instruments for adjudication as I've outlined them, is that we have a conflict of private interest and public interest. The problem with the instruments we are using at this point to deal with that conflict is that they are incapable of making that balance. In other words, we make that kind of balance every day in our domestic commercial arbitration and in our policy setting at all levels of government. We have complex institutions established for making that kind of assessment. There are institutions of public participation and transparency, impact assessment, and accountability. There's a huge and complex web of institutions designed to address exactly this problem. You are always facing conflicts of those types of interests.

In comparison with that established web of institutions, what we have in chapter 11 is distressingly weak. It is a commercial arbitration system that was only intended for that and only serves to do that. In my view, there's no alternative to reform. The types of judgments we are getting, as I told Dr. Martin, are alarming enough that I'm sure we will see the opportunity for reform soon. We're just trying to shepherd him in the right direction.

On U.S. environmental behaviour, it's interesting that when we talk about failure to achieve obligations in multilateral environmental agreements, we automatically assume a reference to developing countries that don't have the capacity to meet those obligations. In fact, an objective assessment of who is complying with what leads us to the United States as the real culprit over and over again, and it's not just in the area of environment. It's on nuclear weapons testing, on chemical weapons proliferation, on land mines, on the International Court.

The U.S. is a unilateralist. We have to deal with that. The way we deal with it in the environmental context is to try to make the case to the United States that they are suffering as a result of their policies. I think in the long run it will be clear that they are suffering as a result of their policies on Kyoto. It's certainly clear immediately that they're suffering as a result of their policies on fisheries.

But the long run may be too late on Kyoto. In the short term it's necessary for us to take action even in the face of inaction by the United States. This presents us with a problem in the Canadian context, because we are so fundamentally linked to the U.S. economy that the U.S. taking a free ride on this particular issue will cause us economic pain.

That sort of pain is not unprecedented. We're living with it at the moment. United States energy prices are subsidized, I would maintain, at an incredible level--far beyond what we have here--such that U.S. industry is already enjoying a comparative advantage over Canadian industry and over industry anywhere in the world as a result. So, as I say, we are living with it and we are managing with it now. That is not to say that trying to manage with a carbon-constrained future in the absence of U.S. action will not cause us more pain, but just to say that this is not a unique situation; it's something we've been dealing with for a long time.

As to recommendations on how to deal with the situation, there are few ways to push a superpower unilateralist. One of them is to isolate it in the world community, and that's certainly what we've done on Kyoto. I think that scenario will eventually bring the U.S. around to some sort of collaborative action. But I fear that really we are going to have to wait at least until a change in administration before we see any real collaboration on the issues of climate change and others.

¿ (0940)

The Acting Chair (Mr. John Harvard): Thank you, Mr. Rocheleau.

You were pointing out, Mr. Cosbey, that you're headquartered in my home town of Winnipeg. I just want to say for the record that we're proud to have you. It certainly is a world-class institute you have in our city, and we wish you the very best.

But we're not going to let you go yet, because I have a couple of questions. We have five or six minutes to go.

The commercial arbitration process you have outlined--the process that is used to settle these disputes under chapter 11--the way you describe it is quite disturbing. It's anything but democratic. It's hard to believe in this day and age that where not only our commercial interests are involved but also the public good, questions that arise under chapter 11 would be settled behind closed doors--a process that's anything but transparent.

My first question would be, though, that having to deal with this mechanism, the people who dreamed it up are still around--and if they're not around, I'm sure their offspring are, who probably share the same kind of, shall we say, ideology--and I'm just wondering, if they're still around, what would cause them to change their minds to come up with something a bit more transparent and something more democratic. You may want to answer that.

If Canada were, as a country, to seek some changes under chapter 11, I assume our adversary or main competitor would be the Americans. The Americans don't seem to be, at least under the Bush administration, in any great multilateral mood these days; they're more unilateral. What kind of strategy would we pursue to get any change we might want? Would the Mexicans be a natural ally?

Of course, the other thing is that chapter 11 is a part of NAFTA. If you open up NAFTA, where does it end? Can you just seal it off at chapter 11, or does it open up a whole can of worms? Given that the Americans are in an increasingly protectionist mood these days, does that augur well for the opening up of NAFTA? That's what I want to ask you.

¿ (0945)

Mr. Aaron Cosbey: I should say, at the outset, thank you for your kind words. We're proud to be in Winnipeg. We think it gives us an outsider's perspective on what happens in Ottawa, and the fact that I'm here in Calgary casts no reflection on my love of the city of Winnipeg, I want to assure you.

The chapter 11 problem sneaked up on everybody. The institutions that are in place for dealing with chapter 11 disputes are the same institutions that have been in place in bilateral investment treaties since the 1970s, and functioning, as far as we know, without any real problem.

The problem is a combination of the existing institution and the broadened interpretation of the provisions. With the broad interpretation that has been given to some of the provisions by arguments we have heard, all of a sudden you do have a public interest in the case, whereas it used to be purely commercial arbitration.

As I say, this sneaked up on everybody. Perceived as a snapshot, it is inconceivable; perceived as an historical progression, it is understandable, but certainly not excusable. We do need to fix it.

How do we fix it? We basically have to open the NAFTA to fix this process. There is a provision in the NAFTA under which the Free Trade Commission has a mandate to issue interpretations of the NAFTA, and they are binding on all future panels. Indeed, the Free Trade Commission did that last year in July with respect to the minimum international standards of treatment.

However, that's not a solution we can use to fix the process of arbitration. The process of arbitration is governed by the rules of ICSID and UNCITRAL. There is reference in the NAFTA to those rules. The Free Trade Commission does not have any jurisdiction over those rules or over the conduct of the arbitrations that occur under them. Although the notes of interpretation last July did attempt to make a stab at transparency, it's arguable that the FTC had no jurisdiction under which to do so. We have yet to see what the results will be.

If you want to fix the process, you have to open the NAFTA.

Let me back up a moment to address your concern that those who put these things in place are still around and there will be a great deal of opposition from them to any kind of tinkering. My institute organized this spring a set of trinational policy workshops in Mexico, Ottawa, and Washington, D.C., on chapter 11 and brought together small groups of experts--government officials in each case--to try to hash out in a rational, open debate what the problems were and what some of the solutions might be.

We had no pretences at achieving consensus, because this is a particularly divisive sort of debate, but we did achieve an incredible amount of consensus even from the diehard trade community stalwarts on the need for the fixing of the process. We did not pursue that to its logical conclusion.

As I say, if you want to fix the process, you have to open the NAFTA, but there is consensus on the need to do that in almost all sectors. Opening the NAFTA, of course, does present problems. You can open the NAFTA with the explicit agreement to amend only a particular section of it, but it's arguable how binding such an agreement would be.

It presents problems in all respects. Mexico is particularly reluctant to open the NAFTA because it's being pursued by its other trade partners to reopen agreements it has with them. If it opens the NAFTA, there is a precedent. So it's not an easy solution, but I submit that the kinds of pressures that will be brought to bear by the public reaction to the rulings we're going to see and have seen--and this is the same public reaction that fueled the fires at the barricades in Quebec City, in Washington at the World Bank-IMF meetings, and that will be fueling fires here in Banff this summer--that level of public opposition, will be enough to force even difficult political changes.

This is the one area in which I have worked over the last ten years in this policy arena where I can see solid prospects for immediate improvement. It's encouraging in that way.

¿ (0950)

The Acting Chair (Mr. John Harvard): Mr. Cosbey, I want to thank you for sharing your thoughts with us. We very much appreciate it.

Now we're going to call our second witness, a gentleman named Randy Rudolph. He is the co-chair of the G6B Conference, Education Session.

Welcome, Mr. Rudolph. We have until 10:15 a.m., roughly a half hour, to hear what you have to say. I'm sure that after your opening remarks we will have enough time to ask you a couple of questions.

You may proceed.

Mr. Randy Rudolph (Co-Chair, G6B Conference, Education Session): Thank you, Mr. Harvard. Good morning.

Linda McKay-Panos and I--Linda is not here today; she's out of town--are co-chairs of the education session at the G-6B summit. For your information, the summit is being held June 21 to 24 here in Calgary. It attempts to cover similar areas that the G-8 is covering. So the theme areas are trade and economy, human security, health, education, the environment, and democracy and government. The education session, as it's currently planned, will have, for example, speakers, senior educators from Africa, one from Bangladesh, senior people from Oxfam in Washington, UNICEF in Italy, and we have an aboriginal educator here as well from Alberta. The theme of our session is the right to an education and education for all.

My remarks are as follows.

At the April 2000 world education forum in Dakar, 180 countries, including Canada, reaffirmed the right to education for all and created two concrete millennium goals. The first was free and compulsory basic education for all and the halving of adult illiteracy by 2015. The second was the elimination of gender disparities by 2005.

Two years after Dakar, we have almost no progress to show in those areas. More than 110 million primary-aged children, two-thirds of them girls, remain out of school. In sub-Saharan Africa, unlike other developing regions, the number of children out of school is actually increasing rather than decreasing.

Currently, one-third of all the world's children not in school live in sub-Saharan Africa. If trends continue--that is, of decreasing enrolment in sub-Saharan Africa and increasing enrolment elsewhere--by 2015 about two-thirds of children not in school will live in sub-Saharan Africa. That is a region that will comprise only 10% of the world's population. There's a very great imbalance there.

I guess the question is what it would take to get education in Africa back on track. UNICEF last year published a study on the cost of achieving education for all. They set the price tag. First of all, they identified that right now approximately $82 billion a year is spent by developing countries on basic education--that's U.S. dollars--and an additional minimum of $9 billion U.S. from donor and developing-country governments is required to achieve basic education for all--an additional $9 billion. When you include capital costs and some other training expenses, that number is probably closer to $10 billion to $15 billion. That amount, $10 billion to $15 billion, is approximately one-third of the increase in the U.S. military budget announced last year.

I think it's clear to Linda and me that for educational development to be sustained up to and beyond 2015, countries must develop the capacity to finance basic education over the long term from domestic revenues. But at the same time, we think education holds the key.

One of the speakers at the Africa-Canada conference sponsored by CIDA last week in Montreal suggested that development in other countries really only took off after the average education was five to six years--a primary school education. Africa, he said, was not in a position to achieve that because they average only three years of education. His comment was, “We have to educate or perish.”

As hosts of the G-8, we have an opportunity to really influence the agenda. Linda and I have a couple of specific requests to make for this committee.

The first is we would like to see education spending have outcome goals attached to it. I'll give you an example. Within CIDA right now they have a health action plan. As part of it, they have aligned the action plan with the millennium development goals. They've set a target of 500,000 lives saved each year from their basic health spending. That focuses on programs like immunization.

I think we need a similar outcome-based strategy for education spending, whether it's within CIDA and their contribution to education all around the world and in Africa, or whether it's part of the Africa fund spending on health education or education. We'd like to see some specific targets set.

I'll give you an example of what we would like to see for Canada. Typically our contribution to foreign aid is around 5% of the global total. We would like to see Canada take on 5% of the additional 110 million children out of school--say, 5 million or 6 million--and commit as an outcome goal to provide education for those children before 2015.

¿ (0955)

It just seems to me that without having these outcome-based goals, it's very easy to have spending targets from CIDA's quadruple education budget and not focus them with the end in mind. That's a key recommendation.

À (1000)

The Acting Chair (Mr. John Harvard): I just want to get that clear. You want Canada to take on 5% of...?

Mr. Randy Rudolph: Yes, 5% of the 110 million kids currently not at school--to take on the commitment to educate them as part of its programs by the year 2015.

The Acting Chair (Mr. John Harvard): And that cost would be what?

Mr. Randy Rudolph: It would be 5% of, say, $10 billion.

The Acting Chair (Mr. John Harvard): So that would be about $500 million?

Mr. Randy Rudolph: Yes, approximately. We should recognize as well that that's not necessarily Canada's share of the money. The $10 billion is shared between donor countries and developing countries, so whatever share that is, perhaps the developing countries' share is only 20% of it.

I think the “education for all” ideal needs to have a focal point as well. After the Okinawa summit, the Global Health Fund was set up. That provides a vehicle to tailor or direct at least multilateral funding for infectious disease: TB, AIDS, and malaria. I think a similar sort of mechanism is required to advance the “education for all” action as well.

I don't have a sense right now of what the structure should be, whether it's as bureaucratic or as organized as the Global Health Fund or whether it's simply a secretariat that monitors. But I believe that education for all, because it's so important, needs a cheerleader and a structure around which to set itself up.

Finally, I'd like to suggest that at the G-8 Canada should be encouraging and leading in getting better alignment between, say, IMF policies such as structural adjustment and the mandate to reduce or end global poverty. An example, I think, is user fees that need to be eliminated. Everybody seems to be in favour of eliminating them, but they seem to be hanging on.

The example is, the government in Tanzania just in the last four months--I guess in January--eliminated user fees for education. For quite a long time they had been charging user fees, and in the last four months now, the enrollment of primary school kids has jumped by about 1.5 million. That shows you, I think, the impact of user fees on access to education, especially in the poorest countries.

In summary, I think education for all is certainly achievable. It's affordable. I think what is lacking is some political direction. I'd like to see that coming out of Canada's contribution to the G-8.

The Acting Chair (Mr. John Harvard): Thank you, Mr. Rudolph.

Members, we actually have more time than I stated we had. There was a misprint. If we want, we can go to the bottom of the clock, if we need to, with Mr. Rudolph.

We'll start with you, Mr. Martin.

Mr. Keith Martin: With the groups we have here, Mr. Harvard, we are never short of questions.

Mr. Randy Rudolph: I'll probably be short of answers, though.

Mr. Keith Martin: I think you'll just educate us, Mr. Rudolph.

Thank you for being here.

Billions of dollars have been spent on aid and development in developing countries, particularly sub-Saharan Africa, as you well know. Yet, as you articulately mentioned, the situation is arguably worse today than it has been, and there's no sign it's improving.

I would argue--and I wonder what you'd consider about this statement--the reason why this is happening is that brutal kleptocrats masquerading as leaders of countries are the ones who are largely responsible for the disastrous social and economic situation of the people and their countries, when you have individuals like Daniel Arap Moi, Robert Mugabe, the late Mobuto Sese Seko, Jonas Savimbi, and a litany of other leaders in sub-Saharan Africa driving around in a fleet of Mercedes-Benz cars while their people starve on the sides of the street.

If the G-8 is going to do something, they have to put a very firm but a reasonable bar of conditionality on countries for them and for us to actually engage in them with aid money. Otherwise we'll be throwing good money after bad.

The second question is on the issue of CIDA. I would ask you, in analysing CIDA's budgets and spending habits, what do you think CIDA ought to do to refocus its efforts? I particularly draw your attention to the fact that I'd ask you this question: how much money do you think CIDA is spending onshore here in Canada versus abroad? Do you not think that more of the money--and from what I've seen it's about 70% of CIDA's budget--is actually spent here in Canada and doesn't get to the sharp edges of development in developing countries? What do you think we ought to do about that?

And lastly, eight leaders of the G-8 are going to be there. They're not going to be able to come up with a massive plan of action, but we wanted them to come out with three or four things they're going to do, where there's going to be follow-up and they're going to implement. Otherwise we're just talking around in big circles, again and again. What would you like to see the G-8 leaders come out with that they make a firm obligation to implement, with follow-up, after the meeting in Kananaskis?

As an aside, thank you for bringing up the issue of the elimination of user fees in developing countries.

À (1005)

Mr. Randy Rudolph: I'll try to answer those questions.

I agree that corrupt or incompetent leadership is partly to blame for the problems in Africa. I don't believe it's the only cause; they are very complex. I think some of the tribal issues are a concern as well. That's reflected partly in the actions of the leaders. But I would say our approach to aid has been not well advised. We've expected, in many ways, there to be a trickle-down effect from the aid we've provided, and it numbers in the billions. But I think the renewed interest and renewed commitment from the leaders of Africa, as demonstrated in NEPAD--and NEPAD, obviously, is a work in progress--demonstrates the commitment to go forward, and there is hope for improved outcomes of our aid spending.

I will also go back to a point about outcome targeting. If you don't know what you want to achieve at the end of the day with your spending, if the goals of your spending or aid aren't aligned with other donor countries' goals, if your programs are not aligned with the wishes as well of the recipient countries, then you're fortunate to have some effect from your aid. I think you need to do all of those things: make sure there's alignment between, for example, Canada's spending and the millennium goals that have been established and agreed to; you need to work on alignment between the African leaders' goals and Canada's goals as well, or the G-8 goals; and again, I say use outcome targets to help you manage your money and achieve the goals you've set out to achieve.

Mr. Keith Martin: May I take issue with two of the statements, Mr. Rudolph?

Mr. Randy Rudolph: Please.

Mr. Keith Martin: First you mentioned the tribal issues. I grant you, historically there's no question that's been a mitigating fact. But I would suggest to you--I wonder what your view of this is--that no more are there tribal issues. The conflicts you're seeing right now are largely economic conflicts where leaders are actually using their positions for garnering worth for themselves and their cronies.

I draw your attention to the situation in Congo: two million people dead, mostly over diamond and mineral rights; it's a war fought on securing those rights. Similarly, in Sierra Leone it's for diamonds, and in Angola it's with respect to diamonds and oil. These people are fighting over money. They don't give a care about tribal issues or for the backside of a rat, thank you. That is what has more to do with this than whether you're a Kalenjin, a Masai, a Luo, a Kikuyu, or whoever.

Also, there's the issue of the NEPAD, a beautiful paper with wonderful words. But I would ask what you think the commitment of the NEPAD is, given that some of the primary authors of that were falling over themselves to congratulate Mr. Mugabe on his so-called win in the election, a man who through his actions has utterly violated every basic pillar intended for the NEPAD. Yet you have the major authors falling over themselves, from Mr. Mbeki to Mr. Obasanjo, to Mr. Museveni, congratulating him on his win, a man who murdered 16,000 Ndebele in the early 1980s.

How do we, sitting here in Canada, reconcile those two issues? We want the NEPAD to go through, yet you have a situation where the authors of the NEPAD could have said something very strongly on a person who is fundamentally violating what they just put down on paper.

À (1010)

Mr. Randy Rudolph: It's difficult to find a question in that statement.

Mr. Keith Martin: The question really is, what faith do we have in the commitment of the authors of the NEPAD, given the fact that they didn't live up to the NEPAD with respect to Zimbabwe?

Mr. Randy Rudolph: And I appreciate it as well, but this is not the first NEPAD-like document or plan to come forward. The comment has been made as well that this requires greater input from civil society to make this document a workable document and a plan entire populations of Africans can buy into.

With respect to the support of Mr. Mugabe, I would agree with some of your statements. However, if the African leaders are trying to advance a program such as NEPAD, they do need to show a degree of solidarity amongst themselves. I suggest that is part of the rationale for that lack of condemnation of some of the things that have gone on there. At the same time, I recognize that for donor buy-in it would be wise on their part to stand up, as you say, for some of the principles of NEPAD.

The Acting Chair (Mr. John Harvard): Thank you, Mr. Rudolph.

Mr. Rocheleau.

[Translation]

Mr. Yves Rocheleau: Thank you, Mr. Chairman. Good morning, Mr. Rudolph. I have a few questions.

Can we realistically entertain the idea that there are any African leaders, elected or not, who have risen to power, other than under the watchful eye or with the complicity of western countries that are all connected, the colonial countries in particular, but also the Americans, who are everywhere, and that there is no direct link between the interests of western countries and the political existence of any particular African government? That is my first question.

I would like to know what your understanding is of the historical role played in recent years by the International Monetary Fund and the World Bank in the overall development of Africa.

I would also like to hear what you have to say on the validity of African debt, given that Africa was systematically exploited over the last century by the west and that today, not only is it dominated and exploited, but it is also stuck with a debt towards the west. Can we not question the morality and logic of that?

There is another thing that astounds me. What with the thousands and thousands of excellent African students who have studied in London, Paris, Montreal and the United States, and who have returned to their countries, the situation apparently remains at a standstill.

How is it that there is still such a gulf between education and its payoff and that the situation appears at a standstill, if not worse at times?

Finally, there is a major event on the rights of children. I heard it on the news earlier. There is a huge congress, a large assembly that is to begin soon, if I understood correctly, at which heads of state will not be participating like they did the last time. That is all I heard, because I was busy doing something else. So the event will be smaller this year, apparently, following the events of September 11th, and the associated shift in values.

First of all, how can the rights of children be discussed in isolation?

Secondly, given that private interests use children—I am thinking of Nike, which is a case in point—how are we to imagine that one day, if private enterprise is not reigned in, children will no longer be left on their own and encouraged or forced to work under conditions we know about, simply to benefit private interests?

À (1015)

[English]

Mr. Randy Rudolph: I will try to answer, perhaps not all of those questions but certainly some of them.

You spoke of Africa's debt and how it can be justified, and I don't know the answer to that. What I will say, though, is that Jeff Sachs, the Harvard economist for the World Health Organization, recently published a report on macroeconomics and health. His recommendation, or one of the commission's recommendations, was that debt reduction was at the top of the list to improve health and education possibilities in Africa. Health and education, he believes, or the commission believes, are very closely linked, as is the opportunity for jobs and the availability of additional funds to improve health and education systems.

You mentioned the effect of IMF policy--and there is no question that they have had a detrimental effect--and that the IMF policies have not been aligned with World Bank policies and other policies, and the goals of developing countries and in fact all countries, to reduce or eliminate poverty around the world, including Africa.

I was pleased to note, though, that there was a recent announcement, I think from Malawi, where the IMF is attempting to get the government there to reduce its government spending, but they have made a specific request that this reduction in spending not come from education or health budgets. That's the first time I can recall, frankly, where the IMF has made that sort of conditionality on its request.

While I think a lot of harm has been done in the past, there seems to be a growing awareness. Again, I think that Canada and the G-8 can help to maintain that momentum away from policies that harm the poorest, and at the same time contribute to responsible governance and economic improvement.

You mentioned the upcoming conference on child rights in Washington. You're right, I don't have an answer to it. Certainly, we have encouraged Jean Chrétien to attend--at this time, he is not; Mr. Whelan is going in his place--so that there is high-level representation there, and this will help to focus the attention of the world on that issue. I do believe he was scheduled to go prior to September 11, and since then has decided not to attend. You are right. The issue of child rights, including access to basic health and education, is important.

You mentioned sweat shops and Nike in particular. I agree that corporations need to have a social conscience when they operate in developing countries. I think, though, the underlying issue is not western corporations taking unfair advantage, necessarily, of child labour, but the general poverty in these countries. One hundred and ten million children not in school means many of them are staying at home working to help their parents survive. Most of these people live on less than a dollar a day. Again, it behooves corporations to act responsibly in these situations. I think the underlying concern is poverty, and they simply need the money.

Our approach to improving education clearly has to include opportunities for these kids to be in school, whether that means there are programs considering subsidizing parents to have their kids go to school so that the family income doesn't decrease; or there are programs that talk about providing micro-loans to people, again so that their children don't have to go to school; or an approach in which user fees are reduced again, which just provides another cushion that encourages children to be able to attend school.

À (1020)

The Acting Chair (Mr. John Harvard): Thank you, Mr. Rocheleau.

I'd like to ask you a couple of questions, Mr. Rudolph. I think your theme “education for all” is an extremely noble one and certainly deserves support.

I want to ask you, with respect to that and Canada's participation in any kind of program like it, a question around what I might call “the western values” and whether we should insist that some of our own western values--be it democracy, pluralism, respect for women, whatever--should be respected in the programs of support we might provide. I, for one, would be somewhat reluctant to give a helping hand to governments that have, say, no respect for women and who perhaps preach some other kinds of values we find inimical. Our society is anything but perfect--far from it; I'm not suggesting that--and I know there's reluctance on the part of all of us to just take a holier-than-thou attitude and impose our values. But I do think at the same time that we have our baseline, and we don't like to go below it.

What is your thought on that?

Mr. Randy Rudolph: That's a thorny question. I'm not really sure how to answer it clearly. I also personally believe in some form of conditionality on the aid. I don't know if that extends to....

The Acting Chair (Mr. John Harvard): Would you give money to a government, for example, that would say, “We'll take it for our boys but not for our girls, as we don't think our girls should receive much, if any, education”? Would you be prepared to help that kind of government?

Mr. Randy Rudolph: I'm not sure. I think the answer is yes. Certainly our goal is to have equal opportunity for girls' and boys' education, but if we consider that we're not going to do it today or tomorrow and that we need to have priorities set, we're better, I think, to educate boys than nobody at all. That would certainly not be the end goal, but it might be an acceptable interim strategy while other factors serve to encourage them to have their girls educated.

The Acting Chair (Mr. John Harvard) In some areas of the world, even slavery is not that well controlled. It may not be openly condoned, but it's not been wiped out. Would you be prepared to give a helping hand to a government that perhaps is not doing enough in the area of slavery? I know these are touchy questions.

À (1025)

Mr. Randy Rudolph: I know, and I don't know what the answer is. There are obviously other factors you could throw in as conditions as well, and you've mentioned some of them--democracy and--

The Acting Chair (Mr. John Harvard): Let me ask you, why is it not easy? Why should we perhaps look the other way when we see something we would object to quite strongly? Why should we look the other way? Why shouldn't we insist that if you want our help this is a condition of our assistance?

Mr. Randy Rudolph: Again, if the principle truly is to provide education for all, then I think we need to at some point overlook these issues.

It is a real issue. Dr. Martin gave the example of Mugabe or Mbeki. If there are leaders who provide bad direction or bad counselling for their people, do we say the people themselves don't need to have or don't deserve assistance? I think the answer is you do need to provide assistance. To a degree, we're not saying it's all aid; obviously private investment or domestic economic growth is part of it as well, and the investment will flow to countries that are well managed, where corporations feel they have a reasonable chance of making safely a profit. So I think, yes, aid then has an obligation to go to those countries where conditions aren't so favourable. We do what we can.

The Acting Chair (Mr. John Harvard): Let me just ask you a couple of other questions, maybe not so touchy. The $500 million fund we announced for Africa: what sort of accountability should we have around that fund, and how do we ensure that the money is spent relatively effectively?

Mr. Randy Rudolph: I would say, first of all, the priority to that fund ought to be given to programs that support social programs; I'll say health and education, and as a wild figure I'll say 50% of the Africa fund ought to be put to those two areas. I think you need to be accountable. Among the strategies that have been discussed that do provide some degree of accountability, I'd like to see a system in which both donor and recipient countries--this is aid we're talking about--set outcome targets for their spending; we then provide money on that basis. There are examples of approaches where you can provide 50% up front, and 50% when you show you've increased enrolment to the point you've committed to.

The creation of action plans is part of the terminology: there has to be outcome goal-setting; there has to be interim goal-setting, so that we see if we're on track or not; there have to be mechanisms to get back on track; and there has to be monitoring as well. That's the kind of approach I'd like to see.

The Acting Chair (Mr. John Harvard): Finally, for any resolutions you may adopt at your own G-6 conference or summit, do you have a formal channel to have those resolutions fed into the G-8 and to determine how they may be treated or processed at the G-8?

Mr. Randy Rudolph: We do have a mechanism. We've been talking to Mr. Fowler, and we have a mechanism to present our findings, our conference summaries, and our recommendations to him.

The Acting Chair (Mr. John Harvard): And have you been given any assurance they will be...?

Mr. Randy Rudolph: I don't think “assurance” is the word; “encouragement”.

The Acting Chair (Mr. John Harvard): Encouragement that what?

À (1030)

Mr. Randy Rudolph: That we will be allowed to present them to him and that they'll be considered as part of the G-8. The summit is a few days before it starts. To what degree they would influence the agenda, it's hard to say.

The Acting Chair (Mr. John Harvard): Or whether they would just listen to them in any serious way.

Mr. Randy Rudolph: Again, I'm led to believe that they will listen.

The Acting Chair (Mr. John Harvard): I see.

Mr. Rudolph, thank you very much. We very much appreciate your coming here today and sharing your thoughts.

Mr. Randy Rudolph: Thank you. It's a pleasure.

The Acting Chair (Mr. John Harvard): Thank you.

We're going to suspend this meeting for about two or three minutes, and then we will call forward Professor Donald Barry.

(1025)

(1035)

The Acting Chair (Mr. John Harvard): We're going to resume, Members.

Now we have the pleasure of welcoming Donald Barry. He's a professor of political science at the University of Calgary. Thank you for coming, Mr. Barry.

We have until 11:15 a.m., so we have a good 40 minutes to be with you. You may proceed.

À (1040)

Professor Don Barry (Canadian Foreign Policy and International Relations, University of Calgary): Thank you, Mr. Chairman. Thank you and the members of the committee for giving me the opportunity to speak with you about the North American relationship today.

The rapid pace of Canadian-American economic integration, combined with the security implications of the September 11 terrorist attacks upon the United States, have brought the management of the relationship into sharp focus. The most important challenge facing Canadian decision-makers is how to respond to the new security environment while ensuring the uninterrupted flow of commerce across the Canada-U.S. border.

One recent study that has received considerable attention calls on Ottawa to take a big-idea approach to strike a strategic bargain with Washington that would see Canada support U.S. objectives on border security, immigration, and defence in return for enhanced access to the American market through a customs union or common market arrangements.

The strategic bargain approach is not new. It represents an extension and formalization of the partnership paradigm that provided the basis for the management of Canada-U.S. relations during the Cold War era. Conceived of as a partnership generated by the Soviet threat, the relationship was managed by government elites who had compatible world views, were in firm control of their own governmental processes, and were in a position to sustain trade-offs that were critical to the relationship's stability. The U.S. gave Canada favourable economic treatment in return for Canada's willingness to maintain an open investment climate and to provide support for continental and North Atlantic defence.

By the end of the 1960s, the conditions sustaining the partnership consensus were eroding. The decline of the Cold War led Canada and the U.S. to adopt more self-centred approaches. Canadian provinces, and especially the U.S. Congress, both of which were highly responsive to their own constituencies, became increasingly visible players in Canadian-American issues. As a result, it became increasingly difficult to continue the trade-offs that were central to the partnership approach.

Prime Minister Brian Mulroney discovered this when he came to power in 1984. Seeing closer trade and investment ties with the U.S. as the key to Canada's economic recovery from the recession of the early 1980s, he sought to revive the partnership paradigm, offering the U.S. foreign policy and defence support and liberal investment laws, in the expectation that the Reagan administration would give Canada a sympathetic hearing on economic issues.

A dramatic improvement in Soviet-American relations made it relatively easy for Mulroney's government to support American policies, but with U.S. protectionism on the rise, Reagan, though a strong President, was not able to provide the favourable treatment Mulroney hoped for. As a result, the Mulroney government focused its efforts on finding ways of exploiting interdependence with the United States while subjecting American power to legal constraint. The results of this could be seen in the Canada-U.S. and North American free trade agreements, which improved Canada's access to the U.S. and Mexican markets and established dispute settlement processes to check the whimsical application of American trade remedy laws.

The Chrétien government built upon this approach by promoting regional and interregional free trade in the hemisphere and between NAFTA countries and the European Union. But these efforts bore little fruit, largely because the U.S., its role constrained by the fracturing of the domestic trade consensus over NAFTA, was not able to play its critical leadership role in these undertakings. I think, ironically, this suggests that in some ways Canada's ability to distinguish itself from the United States depends upon American support.

Meanwhile, Canadian-American integration continued to grow. The events of September 11 have brought to the fore, in a very dramatic and tragic way, the security structure within which Canada-U.S. economic transactions take place.

How should Canada approach the U.S. in the post-September 11 setting? In my view, the strategic bargain concept should be approached with great caution. Apart from the formidable problem of managing trade-offs, integrative arrangements, once arrived at, are rarely reversible, create pressures for more integration, and have long-term consequences, many of which cannot be foreseen. As Denis Stairs observed in his presentation to the committee: “Making long-term policy in circumstances of short-term high drama will produce mistakes.”

At the same time, it is virtually certain that Canada-U.S. economic interdependence will continue to expand. It is in our interests that as much of our interaction as possible takes place within a framework of rules in which issues are settled on the basis of agreed standards rather than sheer power. Moreover, Canada should not hesitate to use these rules to challenge unfair U.S. trade policies.

It is also very likely increased Canada-U.S. security cooperation will be required to ensure the border remains as open as possible. The key question, of course, is what form will security cooperation take? It could take a number of forms, ranging from parallel measures to institutionalized cooperation. Whatever form it takes, it is important that Canada engage U.S. policy-makers at an early stage so that we can get in on the ground floor when decisions are made.

We also need to provide the resources to meet whatever obligations we agree to assume if we are to retain the confidence of our American allies and maintain access to U.S. decision-making. But we should avoid entering into open-ended security arrangements with the U.S., which can lead to exaggerated expectations about policy concurrence and commitments that can lead to future policy conflicts.

Finally, we should realize that the more we integrate with the United States, the less visible we become elsewhere. But Canada has important global interests. Hence we must maintain and enhance our other relationships, including those in Europe, where Prime Minister Chrétien is meeting with European Union leaders today.

It is also important, though, that these relationships grow out of our national interests and that they not be used simply to demonstrate our independence from the United States.

Thank you, Mr. Chairman.

À (1045)

The Acting Chair (Mr. John Harvard): Thank you very much, Professor Barry, for those thoughts.

We'll now go to a round of questioning.

Mr. Martin.

Mr. Keith Martin: Thank you, Mr. Chairman, and thank you, again, Mr. Barry.

Maintaining our independence while at the same time maintaining some interdependence with the U.S. is somehow the balancing act that we seek to engage in.

I would ask you this question, sir. Is the problem of trade disputes we're seeing now with the United States rooted in the lackadaisical approach on our part as people in government, or is it a result of a fundamentally flawed dispute resolution mechanism that needs to be rewritten and renegotiated?

My second question is on the issue of our foreign policy interests. Would you, an individual who has spent so much of your life studying this, say that Canada's foreign policy interests are well defined and well articulated, or, in your view, do we need a new foreign policy white paper that clearly defines Canada's interests in the 21st century vis-à-vis the new stresses we have? And should that foreign policy white paper be done in conjunction, in fact in lockstep, with the defence white paper so that our defence forces will be able to have the tools to do what our foreign policy dictates?

Thank you.

And I have a follow-up question after that.

Prof. Don Barry: On the issue of trade disputes, I think the fundamental difficulty we have is not with the dispute settlement mechanism itself, but rather with the lack of uniform trade and investment laws. As you know, we tried to negotiate these in the Canada-U.S. Free Trade Agreement but made no progress. We gave ourselves seven years to do it. Nothing was achieved. In 1993, as a condition for signing the NAFTA agreement, the government sought a commitment to achieving uniform trade laws within two years. It still hasn't happened. That is a fundamental difficulty.

The dispute settlement process itself seems to be working reasonably well. I guess one problem we have in using it, when we think about it in the context of the trade disputes we have today over softwood lumber and now the Farm Bill and possibly energy, is that it takes some time for decisions to be arrived at within these dispute settlement arrangements. Meantime, we can pay a fairly heavy price; we're certainly seeing that in softwood lumber. But at the end of the day I don't think we have any choice but to exploit those dispute settlement arrangements to the extent we possibly can.

For the decisions that are arrived at there, we stand a better chance of getting some kind of equitable resolution of the issues than we do through diplomatic bargaining, where we don't hold the cards--in the short term, certainly.

À (1050)

Mr. Keith Martin: Quite so, and this brings me to the point of the increasing unilateralism this United States administration is particularly fond of engaging now, post-September 11. Given that the war on terrorism simply will not be won and lost on Afghanistan soil, because the issue of the war on terrorism has much broader implications, in your view is there a way of actually drawing the Americans to the table to have a quid pro quo situation, where we're going to help them on the broader war on terrorism but the benefits to Canada will be a renegotiation or access to trade opportunities with the United States? In your analysis of this administration's behaviour, is that a reasonable possibility, or is it simply going to do what it wants to do, whether it's on trade issues or in the new security relationship we have with the U.S.? Some would suggest we should do whatever we can to get within the envelope. Others would say, as you mentioned in your paper, no, the devil's in the details; beware.

Prof. Don Barry: This is an administration that seems to define its interests, and then other countries have to find ways of relating to them. If we want to have an impact upon them, the best way to do it is to try to get in on the ground floor as policies are being developed, to see if we can influence them in that way.

On the question of trade-offs, I think the possibilities are very limited. It is really U.S. domestic politics that will determine the outcome of a whole range of economic issues that are on the table between Canada and the U.S. at this time. I don't know whether the administration has the interest--but whether it does or not, I don't think it has the capacity--to try to effect any kind of trade-offs between foreign policy and defence support and economic concessions on their side. It used to be possible during the Cold War period, when there was an overwhelming consensus within the United States on containment and so on. It's not there now. In fact, simultaneously you're getting this interest in the war on terrorism, but a very narrow and circumscribed view of American interests exists side by side with that view. I wouldn't think there are any opportunities for trade-offs at this time, and it's not going to get any better through this year.

Mr. Keith Martin: What do we do?

Prof. Don Barry: Again, I think the only thing we can do is keep trying to get our view across in Washington and use, if we have to, those dispute settlement arrangements to try to get the best deal we can on these trade complaints.

Mr. Keith Martin: Do I have any more time?

À (1055)

The Acting Chair (Mr. John Harvard): Yes, you can take a minute.

Mr. Keith Martin: An interesting comment was made--and it's very clear when you go to Washington--that the U.S. consumer is not a lobby group and therefore has little power with respect to what goes on in Washington. Would you suggest that Canada needs to rethink the way in which we actually pressure the Americans; rather than what we've traditionally done, that we start to deal with U.S. lobby groups that would advocate for our position because it's in the self-interest of groups within the U.S.--in other words, identifying and targeting U.S. special interest groups and lobbyists who would actually advocate for our point of view because it's in their special interest?

The last one relates to the question I originally asked on a Canadian white paper on foreign policy: whether you felt our national interests and our objectives are clearly defined in our current foreign policy. If not, should we do a white paper? And if so, should it be done in lockstep with a defence white paper?

Prof. Don Barry: On the question of Canada and its approach to dealing with the United States, one problem in dealing with the Americans is there's no real Canadian constituency as such in the United States. Our impact upon the U.S. is sectoral and regional, and this forces a certain kind of approach upon us. Because the impact is sectoral or regional, U.S. perceptions of Canada are very rarely aggregated at the national level. In fact, some presidents have even described Japan as the leading trade partner of the United States. Reagan and Nixon both did that. And Condoleesa Rice, the President's National Security Advisor, didn't know that Canada is the leading trading partner of the United States.

We have this pattern of diplomacy forced upon us by the nature of our impact upon the United States. What it forces us to do is to almost start over again every time an issue arises, because we have to find the appropriate allies on each issue. You can't rely on the same group all the time.

Our situation is even different from the situation Mexico faces in approaching the Untied States. There, you've got a high level of presidential interest; you've got some pretty serious problems on the border that need to be dealt with; and you've also got a very sizeable Spanish-speaking constituency in the United States. Canada doesn't have that profile.

The Acting Chair (Mr. John Harvard): Thank you, Mr. Martin.

Prof. Don Barry: Do you want me to deal with this other question of the foreign policy interests?

The Acting chair (Mr. John Harvard): Oh, I'm sorry. Yes, please.

Prof. Don Barry: Yes, I think we do need a foreign policy white paper. I think it should precede, rather than be done in tandem with, defence, because defence must be set in the context of foreign policy, it seems to me.

The Acting Chair (Mr. John Harvard): Thank you, Professor.

Mr. Rocheleau, you may begin.

[Translation]

Mr. Yves Rocheleau: Thank you, Mr. Chairman. Good morning, Mr. Barry, and thank you for your presentation. I have three rather general questions.

In terms of the softwood lumber issue and the steel issue, where we see an American attitude that is somewhat aggressive, not to say outright aggressive, do you think this is the beginning or the end of a process in Canada-U.S. trade relations in terms of the American perception or conception of Canada? That is my first question.

Secondly, when it comes to military cooperation, knowing how huge American power is relative to Canada's modest means, can we truly talk in terms of Canadian sovereignty? I would make a connection here with the sin of omission when President Bush took office and chose Mexico City over Ottawa. Even if the fact that he is from Texas might explain why he departed from American tradition, as the story goes, he should have come to Ottawa first, before Mexico City. Is that also significant?

I would also like you to talk to us about an idea that is apparently back in fashion in the United States, and it is called manifest destiny. That idea had fallen out of fashion, but it is now regaining currency. How does that fit into the evolution of American thinking?

[English]

Prof. Don Barry: To start with, softwood lumber is not, of course, a new issue. It's been around for a very long time. In the post-war period, it arose during the 1960s, but then of course you had a very strong President who was able to help Canada with that issue. It was Lyndon Johnson at the time.

In 1982 the issue came up with the first of the recent series of spats we've had with the United States about softwood lumber. We won our original case, but the lumber groups and their friends in Congress kept pressing the issue. As a result, it's gone on with periodic short-term solutions, without any long-term solution arrived at. So there we are. Is there another aspect of this that you want me to...? I didn't get all the aspects of the questions you asked about softwood.

Á (1100)

[Translation]

Mr. Yves Rocheleau: In your opinion, is this aggressive attitude the end of a process, or the beginning of something else?

[English]

Prof. Don Barry: I think it's the result of a country and an administration that operates on a fairly narrow definition of what its interests are. I don't think Canada is being especially singled out. Britain is a very strong ally of the United States on the issue of terrorism. They, of course, have been hit with a 30% steel tariff. Pakistan has been hit with a textile tariff, even though they're cooperating very closely with the United States these days.

I think a lot of this has to do with U.S. domestic politics. It's an election year in the United States. The President is also seeking fast-track authority. Deals are being made, trade-offs are being made, in order to win the election and to get fast-track authority. As a result, what you're finding is that American policy is being severely constrained. But I don't see that as being especially directed to Canada. If you look at it in broader terms, it has a wider application.

On the question of sovereignty and defence, there are always limitations on sovereignty. Sovereignty is a term that has taken on a very elastic meaning these days. There almost seem to be as many definitions of sovereignty as there are people. But a traditional definition of sovereignty is your capacity to make your own decisions, to make decisions on the basis of your interests.

In the case of defence, the fundamental reality is we can't defend ourselves by ourselves against a major external attack, and we do have a basic security bargain with the United States that dates all the way back to 1938. It says the following. The essence of it is that the United States will defend us, and we agree not to become a source of military weakness to the United States. How to work out that bargain, of course, is the question. We have to provide the necessary assurance to the Americans that we will not become a security liability to them. We don't have the option, really, of acting unilaterally in the circumstances, given the nature of the threat we face, so we almost have to do it in a cooperative way.

This doesn't mean you've sacrificed your interests; in fact, it might be a way of maximizing them. When you participate with the United States, you try to maximize the security of your own country and you also gain access to the U.S. strategic decision-making process.

That is a capability for influencing American policy that cannot and should not be lightly dismissed. It doesn't mean we're going to be influential all the time, or as influential as the United States, of course, in the making of these decisions. The influence we have is probably proportional to the contribution we make. But we adapt to the situation in which we find ourselves, and that's the situation we find ourselves in and have found ourselves in for quite a long time. It ebbs and flows depending on the nature of the threat.

The Acting Chair (Mr. John Harvard): I have a couple of questions, Professor Barry.

I think you're certainly right that we Canadians rarely, if ever, have a national constituency in the United States on any given issue. Perhaps it goes to the kind of political system they have there. I think of, say, the American foreign policy vis-à-vis Cuba. It's decided really not by Washington but by domestic politics in the state of Florida, and I guess to some extent maybe in the state of New Jersey.

As a result of that, when it comes to Canada, we find ourselves held hostage by certain sectoral interests in the United States. I come from the province of Manitoba. Agriculture is a fairly important issue. The Americans have had nine investigations of the Canadian Wheat Board, and I'm sure it will go to 10 or 15 or 20, until perhaps some day there will be no more Wheat Board and there will be hand-clapping south of the border, and I guess even to some extent in the great province of Alberta.

It just seems to be our fate that especially in an election year--softwood lumber is not so much, I think, an election year issue, but when it comes to the Wheat Board and some of these other sectoral issues, they come up with regularity.

Does that analysis make sense to you?

Á (1105)

Prof. Don Barry: Yes, you're right, and I think the only way to deal with it effectively is to use the instruments we have--

The Acting Chair (Mr. John Harvard): Which seem to be quite limited.

Prof. Don Barry: Well, I think NAFTA, and particularly the WTO in this case, are the most appropriate vehicles for dealing with these pressures.

The Acting Chair (Mr. John Harvard): Let's talk about mechanisms or institutions for a moment. We had Mr. Cosbey here, from the International Institute for Sustainable Development. I don't know whether you heard him or not, but he was talking about chapter 11 under NAFTA and the kind of dispute settlement mechanism there is under chapter 11, which sounds to me--if his analysis is correct--anything but democratic. It's not an open court at all; it's more of a commercial arbitration process.

He's suggesting that we have instead, in its place, an international trade court. Does that make sense to you?

Prof. Don Barry: We do have one in the WTO--

The Acting Chair (Mr. John Harvard): Yes, but we don't under--

Prof. Don Barry: --which we can access.

The trouble with chapter 11, it seems, is it's really not very transparent. It has to be reformed. We think of it in Canadian terms, but Canada also has substantial investments in the United States. We may have to avail ourselves of some similar provision to chapter 11 too, but I think it has to be reformed to make it more transparent. I think the rules have to be more clearly specified. Not only corporations but certain interest groups should have access to that process as well.

The Acting Chair (Mr. John Harvard): Just so I'm clear, you're not suggesting that disputes arising from chapter 11 be adjudicated by the WTO?

Prof. Don Barry: No, I'm sorry. I was speaking with reference to the Wheat Board situation.

The Acting Chair (Mr. John Harvard): But you would favour some kind of court to deal with some of these chapter 11 issues?

Prof. Don Barry: We have a court right now to deal with chapter 11 matters.

The Acting Chair (Mr. John Harvard: But it's not open.

Prof. Don Barry: It's not open. The point is, I think it needs to be updated. It needs to be made transparent, and more people have to have access to it.

The Acting Chair (Mr. John Harvard): The other thing, as Mr. Cosbey points out, is this commercial arbitration process. It might work in cases between, say, two commercial interests, but when it comes to chapter 11 issues, very often the public good is there, front and centre. I'm not too sure whether a commercial arbitration process can really respect the public good part of it.

Prof. Don Barry: Yes, that's of course the issue with respect to allowing privatization of certain kinds of widely perceived public goods--health care and water and all the rest of it.

The Acting Chair (Mr. John Harvard): Let me ask you one more thing. You made a comment about getting in on the ground floor. Would that apply at all to this proposal by the Americans--well, it's not a proposal--about their Northern Command reorganization, which in the first instance is an internal matter? Of course, they want us Canadians to adjust some of our policies so our mechanisms can fit with theirs. How would getting in on the ground floor apply to the Northern Command?

Á (1110)

Prof. Don Barry: First of all, it puts us in touch with American thinking. It puts us in touch with American expectations. It gives us the opportunity to alert them to Canadian realities and what we can and are prepared to contribute to that structure.

The Acting Chair (Mr. John Harvard): Would you agree, though--and Mr. Axworthy and others have suggested this--that when it comes to the Northern Command we really should have a good, long, public debate and answer some--not some, perhaps all--of the serious questions arising from the Northern Command?

Prof. Don Barry: Sure, we need a public debate. And what you're doing here is encouraging a debate about the way in which we manage our relations with the United States. We haven't often had them.

The Acting Chair (Mr. John Harvard): One of the problems we have, though, Professor Barry, is that in the case of the Northern Command, as I understand it, the Americans would like to have some kind of response from us in a couple of weeks. If we, in effect, say to the Americans, “Well, we have some pretty serious questions, we would like to have a public debate, we're not in a position to answer in a couple of weeks, and we may take a year”, the trouble with that is we then would be seen, even by a lot of Canadians, as being uncooperative, that that's not being the friendly neighbour, that we're sort of dragging our feet. How do you deal with that when there is this kind of sentiment on both sides of the border? Or do you just simply take that criticism?

Prof. Don Barry: Well, my guess is we'll have to take it. I didn't realize the timetable was so short.

The Acting Chair (Mr. John Harvard): That's what we understand: they want the thing up and running by the fall, but they want some kind of response from us in a couple of weeks.

Prof. Don Barry: You'll have to ask the defence experts about the timetabling and the nature of the consultations, but I don't think we should be rushed into anything. At the same time, we have to know what American thinking is so that we can formulate an appropriate response when we're ready to do it.

The comment an earlier witness--I think it was Professor Stairs--made to you about making a long-term policy in response to short-term, highly dramatic issues was you can make mistakes. We don't want to make mistakes, because the consequences will be long term and they can be very serious.

I do think it's important to think through what we want to do before we actually do it. But it's important also that we know what American thinking is, so it can form part of our thinking and our response.

The Acting Chair (Mr. John Harvard): Just one more thing. In your opening remarks you made reference to Wendy Dobson and her big-idea approach. You seemed to be somewhat cool to that. When we were in Vancouver, we heard from Professor Reg Whittaker. He's not an embracer of the big idea. He uses words like “incrementalism” and “piecemeal”; in other words, let's do this cautiously and methodically, always keeping Canadian interests first and foremost. Are you closer to Whittaker than you are to Dobson?

Prof. Don Barry: I haven't read his testimony, but my own view is we ought to take a very cautious approach. There are a number of problems. The first problem, of course, is just the mechanical one of how you could put these trade-offs into effect, particularly when you have an administration and a country that's defining its interests in such narrow terms. I think they would try to drive extremely hard bargains with us.

Secondly, there is the problem, of course, of expectations. Just what exactly would we be asked to deliver in terms of defence concurrence? There have to be limits on any arrangements that are reached.

The other problem, of course, is that integrative arrangements are hard to reverse once you put them into play. Remember that famous comment during the election debate in 1988, about the Canada-U.S. Free Trade Agreement being something that could be cancelled in six months? You can't do that.

It's very hard to reverse these arrangements once they've been put into place, and once they are in place they generate pressure for further integration. There are long-term consequences as a result of this that we can't foresee; therefore, we ought to be, in my view, extremely cautious.

I don't think we'd get a very good deal in the short term anyway. And I don't see any evidence that this administration is interested in a big idea. There are people who think it's a good idea, but I don't see much evidence that the administration does. President Fox went to the United States with a big idea for a North American economic community and he got absolutely nothing. He's gone out on a limb. He's frustrated and he's in trouble at home.

Á (1115)

The Acting Chair (Mr. John Harvard): I think Dr. Martin has one question, and then we'll wrap it up.

Mr. Keith Martin: It's an excellent example, but maybe the reason why Vicente Fox is not getting the audience he wants in Washington is that the Americans see no self-interest in pursuing the course he wants to take. There is security, security, security in Washington, so is there a role, in your view, for Canada to engage the Americans in their self-interest on the larger issue of security, bearing in mind that this war on terrorism has to take an international approach, that America can not do it on its own, and we have to, should, must, engage them in the fact that they have to deal with multilateral initiatives if they're going to ensure security of Americans at home and abroad? Or do you think the Americans are so far on a different planet that they're simply not going to listen to that?

Prof. Don Barry: I think basically what's happened is that this administration has redefined the way the U.S. relates to the rest of the world, and other countries have to define their interests and roles in relation to what those policies are. Having said this, I think we should try to engage them, to encourage them to the extent we can, in the direction of seeking cooperative solutions to these issues. I just don't know how successful we're going to be, but I think we have to try.

Mr. Keith Martin: Can we engage academia? Is there an adequate lobby group in that?

Prof. Don Barry: I don't think academics have much influence, myself included.

The Acting Chair (Mr. John Harvard): Oh, the modesty is always there.

Thank you, Professor Barry. Your coming and sharing your thoughts is much appreciated.

First, we have one more block of witnesses before the noon hour, and we would invite them to come forward now. We have Reverend Clint Mooney from Churches and Corporate Social Responsibility, Calgary Group. Also sharing their time will be Project Ploughshares Calgary, represented by Kerry Duncan McCartney, who is the program coordinator.

Reverend Mooney, you may begin. Thank you for coming. We're looking forward to what you have to say.

Reverend Clint Mooney (Representative, Churches and Corporate Social Responsibility, Calgary Group): Thanks for letting us come. The sharing of time is something I just found out about yesterday. I'll try to expedite what I was going to say.

The Acting Chair (Mr. John Harvard): We have a good 45 minutes, and we would like to have, let's say, 25 minutes for questions. Could you perhaps restrict your presentation to 20 minutes in the aggregate?

Rev. Mooney: Okay. We're both church organizations here, but we're here on different agenda items. So that's understood.

Thanks for inviting us and allowing us to be here.

To give background, since 1985, the churches in Canada, the United Kingdom, and the U.S. have been actively pursuing issues of corporate accountability. The initial motivation was to raise awareness within business and government circles of human rights violations in South Africa during the apartheid era, to emphasize the important role business plays in legitimizing and undergirding regimes by doing business with them, not to mention financing important activities of government.

Times have changed. Now, business and government acknowledge the impact corporations have for good or for ill in business arenas where disputed ethical practices prevail--practices of human rights concern, environmental concern, and labour practices in such areas. It used to be, and it has come to be, as a given of doing business, that there would be financial audits companies would need to produce. There are rules to govern bankruptcy procedures and to ensure fair competition. There are shareholders' rules of disclosure, and so on.

We are moving now into an area where not only are these things seen to be common practice within business, but also the need for environmental audits and human rights audits is important. The world is getting to be a smaller place. The Broadbent commission, in its recent report on corporate responsibility, says that in 1990, 80% of the transfers or interactions between northern developed countries and southern developing countries was government to government, whereas now, ten years later, 80% is corporation to government.

Corporations are taking a much greater role in the actual practice of what would count for development. There's a need for greater monitoring of that involvement, so that it can be seen to be, and actually be, for the benefit of all people.

Canada has formulated and is promoting within its business community an international code of ethics for Canadian business. This is very good. It was promulgated in September 1997. The churches have been interested in this for over 25 years. It is becoming an interest of government and corporations more and more today. The existence of this code is an excellent beginning, but the provisions of the code are minimal, adherence to it is voluntary, and it is unmonitored; it is unregulated.

We would like to see the G-8 leaders agree to promote within the international community an international code of ethics for business. We would like to see them take the Canadian initiative and broaden it to be a global concern, the aim being to establish such a code as part of international law. I'll leave the rest of that paragraph for you to read.

The last paragraph is about why this is of concern to the G-8 and to this meeting of the G-8. Before this meeting is the NEPAD, the new economic partnership for African development. The churches have always been motivated by the questions within the development sector: the questions of who benefits and who pays. Those are crucial questions. Of course, corporations want to benefit and they want to benefit their shareholders, and that's legitimate. The churches have never been anti-business. In fact, there are whole sections of the Bible.... The Davidic kingdom is all about prosperity; it's the story of prosperity within the land.

Prosperity is a concern. It's just that we also wonder who pays for the prosperity, whether the prosperity is inordinately paid for by the poor and the beneficiaries are primarily the rich. We would like to see equitable sharing, and I think that is the concern of the NEPAD paper. The NEPAD paper strives to put forward a program that would make Africa a partner and a player in international trade so that it wouldn't be an ongoing recipient of aid but could actually be a partner in trade. We think if that is actually ever going to happen, rules need to be made on the ground so that development can happen and be monitored and there can be transparency about how the development takes place and how corporations function in that arena. If it's going to be important for Africa, it's important for the whole world.

Á (1120)

Just to stay on the NEPAD paper for a moment, the critiques I've seen of the NEPAD paper have all come from civil society organizations that have not been involved in its formulation or promulgation. In fact, it's a very few countries and few people within those countries who have put forward the NEPAD proposal. It's a good initiative, but there needs to be more openness in its presentation and more inclusion of people of civil society organizations in Africa and elsewhere in its development and promulgation if it's ever going to succeed.

We think an international business code is essential to that. Agreeing to establish a global baseline standard of ethical behaviour for international business provides uniformity and hence predictability within which business decision-making can happen. It is good for business. In the presence of such a code, enforced by international agreement, no corporation would need fear that its competitors would be advantaged by adopting lower standards of practice with respect to human rights or environmental or labour provisions.

In Africa, as elsewhere in the world, such a code would model a commitment to best practice on the part of developed nations. It would assist African entrepreneurs and governments to build a business base that is just and sustainable. Such an enforced code would promote security by ensuring suspension of business operations in zones of conflict as well, where protection of human rights, for example, could not be guaranteed, but also where the benefits of business practice inordinately flow to one side in the conflict and may have repercussions of injustice and violation of human rights.

There's good material in Canada to help develop such a code. This international code of ethics for Canadian business is a good starting point. There's also the report of the Broadbent commission, the Canadian Democracy and Corporate Accountability Commission. There are OECD guidelines. For sure, the churches have done a lot of work on this topic over the last 25 years.

About the other thing that's attached there, I'd like to tell you a little story, and let it be the last thing. It's the ”Schedule A” taken from the notice to shareholders sent out by Talisman Corporation prior to its annual general meeting in the year 2000. The churches had put forward a shareholder resolution that's noted at the bottom of that first page. You notice that within our wording there's a call for an independently verified report on the company's compliance with the international code of ethics for Canadian business.

The company recommended that this resolution be defeated. Now it's interesting and significant that with all the power and proxy controls the company would have, 27% of voted shares voted for that church resolution. It's some measure of the concern that even shareholders of the company had with regard to these issues of human rights.

On page 3 you'll see the alternate resolution that Talisman put forward. They dropped three parts of our resolution--I don't really want to talk about that so much--but they retained our language about an independently verified report. Over the last two years, then, reports have been produced, in 2001 and 2002. But to the churches' mind we have not yet had an independent report.

What we wanted was an independent report. They took our language of independent verification, and this is what they did: Talisman set up the parameters and limits of a study and worked with PriceWaterhouseCoopers here in Calgary to flesh out a report within the parameters Talisman had assigned. Then they gave it to PriceWaterhouseCoopers London as an independent body to verify that the statements in the report were correct. Then they came to the shareholders and presented this report and said, “This is an independently verified report”. Strictly speaking, that was correct.

Á (1125)

At the annual meeting this year, the company--in the persons of the CEO, James Buckee, and the chairman of the board, David Powell--never used the word “independent”. They always used the phrase “independently verified”, “independently audited”. They were correct, but they were manipulating the language.

What we want is an independent report--an independent report on how human rights are affected, how labour standards are affected, how environmental protections are affected within the Sudan operation of Talisman Corporation. We have never gotten that from the company, and we never will, given their use of language. Someone else needs to be a player in the game to ensure that corporations do not do this sort of thing, do not manipulate the language.

The good of sustainable, just development requires a government role, and also an NGO role, a non-government role of civil society monitoring and encouraging the transparency and helping corporations do beneficial things. There are corporations in this city who take a very different tack from Talisman, and they're very honourable. Anyway, I just tell you this little story.

What I hope to encourage you to do--you as parliamentarians--is to see that there's a major area of concern here and you need to become knowledgeable and vigilant about it.

Thank you.

Á (1130)

The Acting Chair (Mr. John Harvard): Okay, thank you very much.

Should we proceed with questions now, or should we hear from Kerry Duncan?

Ms. Kerry Duncan McCartney (Program Coordinator, Project Ploughshares Calgary): I'd rather you dealt with this, because we're on different agendas.

The Acting Chair (Mr. John Harvard): Okay. We'll have, roughly, no more than ten minutes for questioning--about five minutes. Keith, go ahead. Be brief.

Mr. Keith Martin: Reverend Mooney and others, thank you all for coming here today.

Who or what, Reverend Mooney, would actually do the analysis and the enforcement of companies whose behaviour is less than acceptable? How would you enforce it? What would you do, and who's going to enforce it? Many of these companies, as you mentioned, are international. What would you do to rewrite SEMA, the Special Economic Measures Act, bearing in mind that the EDC and CIDA Inc. are engaging in egregious violations of our own basic environmental rules and regulations that they set down in this country and in their own documents?

Rev. Mooney: Those are good questions. I'm really not able to solve them.

The first questions you asked are really in that paragraph two that I skipped over. I think the code would require regular, comprehensive, public disclosure of corporate practices by corporations operating outside their country of origin and reporting with respect to compliance. But this would have to be monitored by national governments for corporations that are based in their own country. But if the process was transparent--if there was a requirement for filing and the information was available to NGOs--NGOs would help to monitor this information and get it into international awareness.

Mr. Keith Martin: I'm sorry to interrupt, but whether you're talking about human rights or environmental issues or legal practices, the bottom line is we have a plethora of agreements and declarations that have been signed--beautiful words on paper, but not worth the paper they're written on because there's no enforcement mechanism.

Rev. Mooney: Exactly. You're right.

Á (1135)

Mr. Keith Martin: We can't protect children's arms from being chopped off in Sierra Leone. If we can't do that, what are we going to do about a company that's destroying the environment and pillaging diamonds in the eastern Congo at the expense of two million lives?

Rev. Mooney: You're absolutely right. That reinforces, I think, my argument. This is not a sector that can be left simply to voluntary regulation, as many businesses would like it to be. It's too much subject to linguistic manipulation and obfuscation. SEMA needs to be stronger; that's right. In terms of imposing sanctions and fines and trade restrictions, there need to be powers to do these things.

I don't know. We stagger along, don't we? The International Criminal Court is going to be initiated this year. The chair of the Rights and Democracy group was at the Talisman annual meeting this year. It's Kathleen Mahoney from the law faculty here in Calgary. She has taught international law for 20 years. One of the things she said was, it'll take the International Criminal Court a while to get up and running and for the legal principles to be put in place, but in a few years there might be some retrospective visitation of what's happening in Sudan, for example, and what the company did or did not do in that context. Yes, we stagger forward.

The Acting Chair (Mr. John Harvard): Monsieur Rocheleau.

[Translation]

Mr. Yves Rocheleau: Thank you, Mr. Chairman. Thank you, Mr. Mooney.

I have just one question, but not necessarily [Editor's Note: Inaudible]. Regarding the establishment of a code of ethics, and how it is to be applied, it has to have teeth.

Would it be utopian for Canadian, American, French and British companies, when they expand abroad, to be subject to the same rules as when they operate in Canada, the United States, France and Great Britain? So if they went to Uganda, the Ivory Coast or Honolulu, they would be subject to the same rules the whole time, because the dangers to the ecosystem are the same everywhere.

Can we contemplate any real enforcement, without the United Nations being given powers it does not currently have to monitor, oversee and prosecute on behalf of the global interests? If we leave it up to private interests, boards of directors and lobby groups, we will remain at a standstill. If we find a forward-looking way to protect humanity and the environment, because we know the situation is dramatic...

On Earth Day, a week or two ago, I heard that the disaster forecast for 100 years from now will instead occur in 50 years, based on the rate of activities harmful to nature.

So is it utopian to think that the same rules could apply to operations here and abroad?

[English]

Rev. Mooney: I think in asking the question the way you do, your answer would be yes and my answer would be yes. Is it Utopian? No. What else have we to do? We have to work for a better world on all these fronts. We have to seek to advance, because there will be other forces that will drag us back. And yes, if we don't go here--we have no other choice--the environment is degraded consistently.

In terms of the same standards for human rights and for labour practices and so forth, if this NEPAD thing is actually ever going to succeed--and its goal is to get Africa into the world trade partnership or game as a player, not as a drain--then there has to be the same set of rules. We have to move more and more to a global set of standards that apply to everyone, that treat everyone as a human being, of equal merit, worth, and respect with every other human being.

So you know my answer to that is going to be yes, and I'm really glad to hear you, because I think your answer is yes too. Thank you.

Á (1140)

The Acting Chair (Mr. John Harvard): Before we go to Kerry Duncan McCartney, I have one observation and one question for you, Reverend Mooney. There is a subcommittee on human rights of this committee, and it will soon be starting a study of the situation in the Sudan. We'll make sure your testimony is shared with the subcommittee, okay?

Rev. Mooney: Thank you very much. I wasn't aware of that and I really appreciate it.

The Acting Chair (Mr. John Harvard): In our discussions, very often the issue of conditionality has come up. You've mentioned NEPAD. Would you suggest that countries agreeing to it agree to a set of conditions with respect to enforcing it and agree to a code of ethics?

Rev. Mooney: Yes. I think if NEPAD gets off the ground, right at its inception is the time to set rules of the game. Actually, this could be advantageous for the whole world, not just for Africa. If we stood back and looked at how we can make the whole world more responsive, more responsible, more sustainable, more transparent with regard to human rights, with regard to environment, with regard to labour practice; if we did that and put it in at the base, it could be beneficial to the whole world.

The Acting Chair (Mr. John Harvard): Thank you very much.

Thank you, Kerry, for your patience. We'll turn to you now.

Ms. Kerry Duncan McCartney: I would like to address one issue right at the beginning. There seems to be some confusion that TCCR and Ploughshares are somehow interrelated. They're entirely independent; we will be addressing different aspects.

[Translation]

Mr. Rocheleau, welcome to Calgary. I am an anglophone and I apologize, but my French will be of no help today. If you do not mind, I am going to speak in English. Thank you.

[English]

I think part of the confusion came from our last e-mail to Mr. Knowles saying we would be addressing the G-8 agenda. This is not so. The document from us shows that we will be addressing what in our question document was section 4: Canada-U.S. joint defence cooperation.

Project Ploughshares is Canada's largest peace organization. We are one of 20 branches across the country. I have literature out of the national office that says there are 10,000 supporters across the country. The Calgary branch, of course, is only part of that, but I mail out 350 monthly newsletters. That's some indication of our size.

We here in Calgary have been active since 1982, the national organization since 1976. We promote a four-branched policy for Canadian international relations. It's in front of you: reduction of global reliance on military action in addressing international and regional conflict; support for non-violent means of dissolving such conflict; the transparency and reduction of the international arms trade; and finally--number four--the abolition of nuclear weapons. We need to stress that this is not a radical agenda. It falls clearly into line with policies held by Canadian governments over the decades, regardless of their political stripe.

When we approached the question document we realized that first we had to articulate for ourselves the values we believe Canadian foreign policy have been based on. We found them to include, but not be limited by, the five you see there: commitment to international rule of law; to democratic governance; to peace-building; to universal civil and human rights; and to support for multilateral efforts toward a better world, including the United Nations and its charter.

We feel these principles provide standards by which to judge current and future decisions regarding Canadian foreign policy. We feel that Canada is approaching a dangerous juncture in its international affairs right now in considering drawing closer to the United States. In our experience, Canadian foreign policy is significantly different from and more conducive to peace than American policy. Time after time, Canada has accepted a limitation of national sovereignty for the benefit of the world as a whole. This is something we don't see reflected in current American foreign policy.

On the question about the continental security perimeter, we believe there is a danger the plans will evolve into a fortress America that encourages isolationism and arouses international aggression toward Canada. If we can hold back from that, yes, there are probably very useful things that a joint perimeter would involve. A suggestion would be the Canadian Arctic. With global warming, we may soon see the Northwest Passage become navigable. Is Canada able to defend such an incredible shoreline? We might have to reach out to our partners for that.

We feel it crucial that the principles we mentioned before not be undermined in approaching any defence policy. In the areas of foreign affairs, Canadian policies have been established and maintained despite opposition from U.S. administration after U.S. administration. We ask that you please not forget that.

On increased military spending, we feel it's likely the Canadian public could accept a small increase in spending to better achieve civil defence priorities, particularly as they have been identified since September 11. We do want to stress that increases to defence spending are one thing; funding that would support military aggression is quite another. Canada is not an imperialist power, gentlemen.

On ballistic missile defence, in the open literature the analysis of the situation in Asia regarding the Chinese versus the Pakistanis and the Indians is quite generally accepted. We do risk destabilizing the world by moving into a missile defence scheme. We note past public opinion polls that have shown Canadian support for missile defence has not gone into detail of what this plan involves. There's a tendency to say, “Do you think Canada would be safer under a shield of missile defence?” When we talk to people and mention a little bit about missile counts or environmental impacts and so on, we find people's opinions toward missile defence switch very quickly.

On the question of involvement in political structures, such as the Permanent Joint Board on Defence, whether our participation is a good thing has to be measured by our congruence with the fundamental principles we mentioned at the outset. We would encourage more open discussion of military issues. Right action for individuals and for government comes from time spent wrestling with issues, from hearing and considering the wisdom held by many different stakeholders.

To this point, we have this past weekend hosted a conference on ending terrorism for the G-8 summit management policy office. The seminar generated considerable public discussion that we feel directly links to today's presentation on Canadian defence. The major theme that emerged was pride in Canada's traditional foreign policy, with concern over the current direction of American foreign policy, which was seen as completely divergent from our own.

Now, I ask you to note this conference was not chock-full of pacifist nuts. We worked really hard to bring together a wide range of Canadian voices. The participants examined security issues like biochemical and radiological threats, and, yes, we considered root causes and long-term measures that Canada should take.

Á (1145)

I expect my time grows short, so perhaps if you have questions regarding the consensus and views that came out of our conference, you can direct them to my colleague, Dr. Janet Sisson, who is preparing the conference's final report.

In summary, Project Ploughshares is very grateful for this opportunity. This hearing is a fine example of the nation-building it will take to maintain Canada as a vibrant, vital state of which Canadians can continue to be proud.

Thank you, gentlemen.

Á (1150)

The Acting Chair (Mr. John Harvard): Thank you, Ms. Duncan McCartney.

I also want to welcome you, Ms. Sisson. Perhaps you will have an opportunity to answer one or two questions.

We have 15 or 20 minutes.

Dr. Martin.

Mr. Keith Martin: Thank you very much, all of you, for being here.

The first question is on the issue at the bottom of page 4. You stress that multilateral peacekeeping within a reformed United Nations structure would be acceptable. I would submit to you that the United Nations is utterly impotent to defend the lives of innocent civilians, with overwhelming evidence that you are going to see not a few people being killed, but the mass slaughter of vast numbers of individuals, and the United Nations is completely unable--maybe unwilling at times--to actually deal with that. How would you address that with respect to Canada's honourable desire to go to the help and aid of those people?

My second question is this. As you well know, given our commitment under treaties with the United States to be an ally with them in the protection of North America, how do we manage to be their ally with respect to a possible attack by missiles, on one hand, but not participating in the weapons missile defence? In other words, how do we work with the U.S. to protect the U.S.--and indeed us--from a missile attack, in your view, given the constraints you've implied in your comments?

My last question is a quick one for Reverend Mooney. Reverend Mooney, François Mitterand's son, as you know, is engaging in the vast destruction of the last hardwood forest in West Africa on a massive scale--a truly massive scale--and has been implicated legally in the trafficking of weapons into Sierra Leone and Liberia. How would you deal with that in your model, as you envision it in your mind, with a person who is the son of a former French President, who has a company that is based, presumably, in France, but that is engaging in these outrageous violations of environmental and humanitarian law in West Africa?

Thank you.

The Acting Chair (Mr. John Harvard): Ms. Duncan McCartney, do you want to start, or Janet Sisson?

Ms. Kerry Duncan McCartney: I prefer to let Dr. Sisson answer.

Dr. Janet Sisson (Representative, Project Ploughshares Calgary): There were two questions directed to us and one to Mr. Mooney. The first question was with respect to the United Nations and the perceived incapacity of the United Nations to achieve a great deal of success in preventing mass destruction--and I say perceived because what is not clear is to what extent it was actually given enough funding and enough responsibility to achieve the ends it was asked to achieve. Secondly, we don't know what would have happened if the UN had not been there in various of these cases, so I say perceived incapacity.

There are two ways to react. One is to wash our hands of the United Nations and say it's no longer an effective organization. The other is to say we need to work to provide a better world organization in terms of which we are able to put together responses from people of goodwill to deal with complicated situations involving two countries, or even within a country that involves a great deal of human distress and suffering. Project Ploughshares, in general, is in favour of pursuing, as far as possible, peaceful means that are international and involve shared goodwill from many countries, rather than making little private organizations that try to bring about peace without international consultation and consent.

That's my answer to your first question.

The second question was more specifically related to Canada's position with respect to the United States, because we have a great number of treaties with the United States.

The question was, how can we be their allies with respect to attacks, that is, sit under their shelter, but yet not participate in that attack ourselves? Of course, this is not a new situation historically. Many NATO countries do not possess nuclear weapons but during the Cold War were under the U.S. umbrella--for instance, Germany itself. So it's perfectly possible for people to do this.

The other question is--and we've raised this in fact in the documents from our conference--to what extent--

Á (1155)

Mr. Keith Martin: The major point of the treaty is that we cannot be a risk to the United States in our activities, and by not participating we would clearly be a risk to the U.S.'s ability to protect itself, because of our geographical proximity to their country.

Dr. Janet Sisson: I'm afraid I don't understand how not participating can be itself a risk, when you parallel it with the position of, for instance, Sweden, which was on the edge of Europe during the Cold War.

Mr. Keith Martin: It's our geographical proximity to the U.S. that actually changes everything. I don't think one can compare Sweden and Germany to Canada, because we're on the border. So a security threat coming to the U.S. through us is a threat to the U.S., and our desire not to participate in this would actually violate those treaties. We would be a security risk, in other words.

Ms. Kerry Duncan McCartney: I'm sorry, but I question where you're getting your risk assessment from. I don't see, in the modern world, who's about to bomb Canada.

Right now, to be accepting American risk assessment I feel is very dangerous to global security, because I really do believe the Americans are seeing enemies in every shadow, and this is an atypical way of looking at the world.

The Acting Chair (Mr. John Harvard): Reverend Mooney, do you have an answer to--

Dr. Janet Sisson: I haven't finished.

The Acting Chair (Mr. John Harvard): Oh, I'm sorry, Dr. Sisson.

Dr. Janet Sisson: I was interrupted when I was halfway through it.

It seems to us that from the point of view of the United States, to regard Canada as a tool or a lackey that could simply be used was much less in the long term an effective strategy. The United States will improve its position in the world much more if Canada is seen by the rest of the international community as an independent, allied friend of the United States. To be seen as somebody who's merely manoeuvred into locating military activity on its soil would not be good either for the U.S. or for Canada in the long run.

The Acting Chair (Mr. John Harvard): Do you have an answer?

Rev. Mooney: This comes back to your earlier comment. Your feelings about the UN kind of spill over into my presentation and also Ploughshares' presentation.

These are imperfect organizations, exactly--you're right--and the questions you raise are political questions, questions of political practicality.

The OECD guidelines have been signed onto by 22 countries. I was just looking to see if France was one of them, and in fact France was one of the initiators of it.

So, yes, I see the dilemma. We can only move forward. The International Criminal Court is an advance.

Yes, there are retarding dreams, but do you suggest that we suspend all attempts to improve the playing field because some bullies are going to play unfairly?

We need referees in the game, and if you can devise a better referee than the UN, or UN agencies, or spinoff agencies, great.

I hope I don't share your skepticism. I hope you also have the hope that I have.

Mr. Keith Martin: Very optimistic, but very pragmatic.

Rev. Mooney: Yes, and God knows, we need that.

The thing about the Talisman example is that you have to see through the shams. You have to see through the manipulation and the gamesmanship.

On the other side, yes, François Mitterrand's son is an exploiter, a parasite, and there are a lot of those.

The Acting Chair (Mr. John Harvard): Thank you.

My referee duties require me to call on Mr. Rocheleau. He has time with the ball now.

[Translation]

Mr. Yves Rocheleau: Thank you, Mr. Chairman.

My three questions are for Ms. Duncan McCartney.

First, you refer to the broad principles underlying Canada's foreign policy, and you say that among other things, Canada supports international efforts, including those of the United Nations and the Charter of the United Nations. What do you think of the American attitude toward the United Nations?

Secondly, with respect to question 4, i.e. the anti-ballistic missile defence, what choice does Canada really have? Do you believe the Americans when they say if you are not with us, you are against us?

Thirdly, in your view, why do the Americans feel so threatened that they want to set up an anti-ballistic missile defence and other defence mechanisms?

Â (1200)

[English]

Ms. Kerry Duncan McCartney: In our assessment, the U.S. is now being run wholly by economic self-interest at the expense of all other principles. Obviously, the full participation in the UN requires limiting your national sovereignty for the benefit of humanity. I do not see that the U.S. is willing to do that right now.

As a Canadian, it is hard to understand that perspective. As a member of a small country, it has always been in my best interest to be part of the larger community. I've never had the experience of being the biggest, meanest dog on the block, which does change your attitude to the point at which using force to get your will is the right thing to do. I'm very afraid that's what we're seeing in the U.S. right now.

Dr. Janet Sisson: Basically, Canada has room to manoeuvre with respect to the ballistic missile defence. This is obviously a question whose proper answer requires detailed knowledge of the relationship between the Canadian and the U.S. governments, which is probably by no means all available to private citizens and non-governmental organizations. So any remarks that I or Ploughshares were to make would obviously be under-informed.

We do not feel that you should conclude there is no room to manoeuvre until Canada has tried extremely hard to resist attempts to place Canada in a position where threats to the U.S. are automatically threats to Canada. Therefore, the question as to whether there's room to manoeuvre is a question of whether we should encourage everybody involved in the organizations to insist as much as possible that Canada be given an independent voice.

That doesn't exactly answer your question, because I don't know if I have enough information. The fact that you suggest there might not be suggests something rather worrying to most private citizens about the relationships between Canada and the U.S. nowadays; that our closest ally gives us no room to manoeuvre strikes us as an extraordinary situation in the world. That's the second one.

The third one was asking why Americans felt so threatened. Again, this is something that's extremely difficult to answer. I suspect a proper answer is going to require historians in 100 years to give us.... Again, any remarks I make should be taken to be no more than an expression of opinion. There seem to be a couple of things going on in the United States, of which one is the fact that governments always gather support if they fight wars. So for a government to raise the spectre of war and the spectre of the threat is a way in which political ends nationally can be secured by international action. And to the extent that an atmosphere of fear can be created, this is useful to existing governments.

I'm sorry, but again, this is not on behalf of Project Ploughshares directly, though I think there are people who would agree with me.

The second point is that because the media have created this as a threat internal to the United States, it is being widely so perceived. We all know that perceptions of what are threats in the United States can be false. I'm English, as you can tell by my accent, though I've lived in Canada for 15 years. I've worked also in the United States, and when I worked there they were very surprised to learn that terrorism in Ireland caused many fewer deaths than action by criminals in Chicago. The way the American news presents things to people exaggerates threats to them and does not exaggerate other kinds of threats that come from their own internal organizations. Again, I'm speaking for myself, because this is a question that seemed to ask for a response, one that nobody is in a position to give.

Thank you. I hope that's helpful.

Â (1205)

The Acting Chair (Mr. John Harvard): I have a couple of questions.

I'm glad you haven't lost your accent; I like it. Keep it.

Dr. Janet Sisson: I plan to.

The Acting Chair (Mr. John Harvard): Good for you.

A cynic might suggest that construing the threats the way they do in the States may have something to do with the best interests of the military/security industry as well. I didn't say that, but a cynic might say it.

Just for your information, Kerry and Janet--if I might call you by your first names--you may or may not know that the committee split into two this week, and some of the members met in Toronto just yesterday. David Albright, the president of the Institute for Science and International Security, made a presentation on behalf of your national office. So we're hearing from you twice.

I have a question. I must say, and perhaps this speaks to my ignorance, Kerry, I'm surprised you mentioned in your text that Project Ploughshares would support--you didn't use the word “support”, but I take it you support--a small increase in military spending in Canada; perhaps for domestic purposes, but you do. I didn't think I'd ever hear that from Project Ploughshares.

Ms. Kerry Duncan McCartney: No, you're right, and it could be because I'm trying to speak on behalf of Calgary members, who I find are realists, not necessarily pacifists. There's a wide range of viewpoints among Calgary Ploughshares members, and I may have over-spoken the case. However, military spending did come out at our weekend conference, and not one person of the 90 who were registered questioned the speaker on the validity of a small military increase. So I used that as the basis for my statement.

The Acting Chair (Mr. John Harvard): There is no doubt that our military apparatus is stretched to the limit.

Dr. Janet Sisson: May I point out that what we actually said was it is likely “the Canadian public could accept”, not that Project Ploughshares was actually recommending it. And that's what emerged from our conference.

The Acting Chair (Mr. John Harvard): When you use that language, I take it as code that you wouldn't go hiding under a bed if it happened, or something like that.

I have a question. You say the supporters--you used the word “proponents”.... I'll just read it: “Proponents of NORTHCOM believe that subsuming ourselves into the American military system will increase our voice in American policy-making.” You, Ploughshares, say that's unlikely. So how would you increase our voice, if not by subsuming ourselves? How would you do it?

Ms. Kerry Duncan McCartney: To speak as an individual, I think you can use the analogy of a person with a lever. You get more push with a longer stick.

The Acting Chair (Mr. John Harvard): Assert your individuality--is that what you're saying?

Ms. Kerry Duncan McCartney: I just feel we're not drawing adequately on the international community here. We, right now, have so many of our eggs in the American basket that they take for granted we will follow their policies. And I think we can afford to assert ourselves a little more.

The Acting Chair (Mr. John Harvard): So “Ready, aye, ready, me too” doesn't work for us.

Â (1210)

Ms. Kerry Duncan McCartney: It doesn't seem to.

The Acting Chair (Mr. John Harvard): Just in closing, Ms. Sisson, with respect to the conference you hosted, would it be possible that you could share the findings from that conference with our committee clerk? It would be nice to enter it into our files.

Dr. Janet Sisson: I have brought a two-page draft summary. I want to emphasize that it's a draft and has only been viewed by one of the committee members. But this is the summary, and I can pass it over.

The Acting Chair (Mr. John Harvard): Thank you.

There's no big panic; you can always--

Dr. Janet Sisson: The event was held on Saturday. The report will, of course, be submitted to DFAIT as soon as it's produced, and we're in a very great hurry to support it immediately. So we will be able to hand over some summary to you extremely quickly.

The Acting Chair (Mr. John Harvard): Good. Thank you.

We in politics are used to all kinds of drafts, I can assure you. It comes from every direction.

Thanks to all of you. I appreciate your coming.

This meeting is suspended until 1:30 p.m.

Â (1206)

· (1330)

The Acting Chair (Mr. John Harvard): Okay, members, we're going to resume our session.

At the beginning of this afternoon's proceedings we have the pleasure of welcoming, from Results Canada, the national manager, Catherine Little. Thank you for coming.

You may begin. We have a total of 45 minutes.

· (1335)

Ms. Catherine Little (National Manager, Results Canada): I'm sorry that Keith's not here, but I'm sure he'll join us shortly. I was in Victoria with him this weekend enjoying the flowers, and then here we are back in the snow.

The Acting Chair (Mr. John Harvard): We won't ask any more questions.

Ms. Catherine Little: Results Canada, for those of you who don't know, is a grassroots citizen advocacy group creating the political will to end hunger and absolute poverty and demonstrating that individuals make a difference. The organization started in the U.S. in 1980, and it came to Canada in 1986. I myself got involved in 1989 and have been president and now part-time staff for the last six years.

We work across the country. We have groups across the country, where we educate ourselves on the issues, and then we do media pieces--400 last year; we visit our members of Parliament--I've met with Keith Martin and Ms. Augustine a number of times; and we visit our seated delegates in everything. That's some of what we are doing.

I have my own practice. I'm a physiotherapist. I do that part-time, and then as the national manager I'm part-time.

It's a great honour and privilege to be able to speak to you today on this important issue and this important opportunity we have in front of us with the G-8 coming to Canada.

I want to say a few more things on my background to give you some sense of where I'm speaking from. I have actually travelled to about thirty countries around the world. I lived in Africa, in Zimbabwe, for two and a half years from 1986-89, where I worked as a physiotherapist. I went over with CUSO. I was able to see first-hand the work that can be done.

Now, Mr. Martin and I may disagree a bit on Mr. Mugabe's past, but when I was there, health was hugely supported. Once the new government came in, where there was a commitment to immunization, I never saw a person over the age of five with polio, whereas I saw lots of people with polio. It was very clear to me that when there are commitments made, when there are stands taken and funds followed through on, you can make a huge difference with diseases in a short period of time.

I also saw educated women I worked with who had two children. I was in a rural area where many women had many more children, so I also saw the very concrete: what education, particularly girls' education, can do in altering the number of children we have and the health and welfare of those children.

I also returned to Zimbabwe just two years ago, in 2000, for the Microcredit Summit held in Harare, and I was able to meet with a colleague of mine I had worked with at the hospital, a pharmacist who was then working in the Ministry of Health. The same week I was there she was meeting with World Bank delegates, and she was meeting with some delegates from Danida, where she got some of her salary.

And also there are the dynamics that go on there, in a country where at that point in time certainly there was a level of corruption in a government she was trying to speak to. She was not invited to certain things by Danida because she was an outspoken critic of how our donor agencies are complicit in some of the corruption that is happening in these countries.

So I've seen it from a variety of angles. I've been a physiotherapist for 20 years. I've worked in the health system in this country as well, so health is near and dear to my heart. As someone who has been healthy all my life and who is well educated, I appreciate what my health and education has allowed me to do in this world.

I know I gave you a brief that I started from, and knowing that my colleagues Dr. Anna Fanning and Dr. Houston will be addressing you tomorrow, more particularly.... Results Canada is part of Stop TB--Halte à la Tuberculose Canada-- which was formed following Canada's commitment to the G-8 in reducing death from tuberculosis by 50% by 2010. We're a consortium. We've joined forces. They will be speaking more specifically to tuberculosis tomorrow in Edmonton.

I wanted to broaden my presentation. Given that Canada, as one of the G-8 countries, signed on in Okinawa to these promises, we would like to see some follow-up and action plan, particularly from the G-8.

The three largest killer infectious diseases--AIDS, tuberculosis, and malaria--are killing six million people every year. Following the G-8 promises--there were already some activities going on before that--the World Health Organization commissioned Jeffrey Sachs to do a report on macro-economics and health. You are getting a copy of the executive summary. It was produced in December last year. Then the official launching of the global fund for tuberculosis and malaria happened in January, and just two weeks ago we got the first proposals that came in--where the money was given out.

I wanted to speak a little bit more to this document. You may recognize some of the names of the people who put it together. We're talking about head economists from the world. We're talking about the designate leader for the World Trade Organization, people from the World Bank, advisers to the president in Japan, and people from the major bank in Japan. These are world-renowned leaders. They've all come together to acknowledge that it's not just about health, that the burden of disease in these countries, in particular Africa, is so overwhelming that you cannot get economic growth without addressing these diseases. It's not a matter of needing to do this sometimes, or waiting for trickle-down economics to do it. They're unequivocally saying you need to address the burden of health head-on.

In doing that, it's saving lives, and it's also reducing poverty and getting the economic generation happening again.

· (1340)

The Acting Chair (Mr. John Harvard): So it's more than humanitarian.

Ms. Catherine Little: Absolutely. This is macro-economics and health. Jeffrey Sachs comes from a macro-economics background. He spoke by video conferencing at our Stop TB conference last month. He's a man easily respected, well renowned, one of the top economists in the world--easily honoured.

In 1995 he was working with a bank project in Zambia, and eight of his 30 colleagues died of AIDS in a period of two and a half years. So he acknowledged that he has come late to this discussion, but it was in his face: eight of his colleagues died. So he got interested in looking at health in some of these countries. That's where he started his research, and then, with this commissioned report, over a couple of years did a much larger piece of research in these countries.

As to some of the pointers I wrote in my brief, the disease is not a blight just on our society. It poses tremendous barriers to economic progress. Particularly the disease of malaria, which doesn't necessarily kill, but the number of sick days, time off work, the economic burden, is in the hundreds of millions for these countries. So there's a direct correlation between health of the society, education of the society, and the economics.

Results Canada has also worked with our colleagues in the U.K., Germany, Japan, Australia, and the States to lobby the World Bank and the IMF.

I have actually had the pleasure of meeting Mr. Wolfensohn. We've been able to do this because we've generated letters from parliamentarians around the world requesting specific increases in funding towards basic health and education, and microcredits in dealing with labour laws and everything.

In our last letter to the heads of the institutions, we had half of the German Bundestag, half of the Japanese Diet, and half of the U.K. Parliament. We only had about 60 Canadian parliamentarians sign this letter. It had 1,300 parliamentarian signatures. Of course, the World Bank is accountable to the parliamentarians to fund them. It's what brought us in the door to see Mr. Wolfensohn.

I also want to speak to this document. It is very comprehensive and goes into the money and some of the details of working at the local level. They've looked at it from all different sides. They bring in the World Bank, and their poverty reduction strategy framework, saying it's good.

We need to clearly look at what they've been saying. On the strength of the papers, we need to look at deeper debt cancellation. We need to look at country leadership. We need to have civil society involved. We need to have a comprehensive approach to poverty reduction. They speak quite a bit on it. Along with health, they need to deal with water, sanitation, education, and the coordination in these countries.

I say this is a new strategy because it's really about a new global partnership. The Global Health Fund is housed at the World Health Organization, but it's a combination of the World Bank, donor agencies, other corporations, and others that are feeding into it. It's a new partnership involving all sectors, not only the traditional donors. So much of what has failed, I say, in the past is the coordination of our aid.

When Mr. Fowler was in town a couple of weeks ago, I was actually quite disturbed by some of his comments. He said that despite having poured a lot of money into aid right now, Africa is looking fairly dismal in lots of different ways when you look at what's happening over there. He was saying that in the past at CIDA we've been dealing with the poorest of the poor, and now we need to look at a new format.

I have to make a strong objection to that. I would not say, in any words, that CIDA has focused on the poorest of the poor. In many aspects, it's part of why there has been such a failure.

My concern is with the Africa action plan. It's looking for a new strategy and new conditions, and is not looking at making sure a certain amount of all the aid really does need to be targeted at the poorest.

The Acting Chair (Mr. John Harvard): It needs to be targeted at whom?

Ms. Catherine Little: It needs to be targeted at the poorest. It has certainly not been done in CIDA. In our credit program, we've been engaged in conversations with CIDA for a number of years, but there's no targeting of the poor. There are lots of studies that show that if you don't target it, it doesn't reach the poorest.

Another document from the World Health Organization that recently came out requires a huge “scaling up” to do the work Mr. Sachs' report speaks to. This is called “scaling up” the response to infectious diseases. They look at it from the intervention, services, and altering behaviour. They are all part of the puzzle.

This document, again, is signed by UNAs, the WHO, the World Trade Organization, and heads of state. Again, it's a UNICEF document that has brought partners together. It very systematically goes through where the burden of disease is.

· (1345)

When we look at the burden of disease for the infectious diseases, 70% of the people living with HIV/AIDS live in sub-Saharan Africa. Eighty percent of all tuberculosis is in 22 high-burdened countries. Nigeria is the third of those, behind China and India. So the actual greatest amount of tuberculosis is not in Africa, but there are a number of African countries in those 22 high-burdened countries. Ninety percent of the world's 300 million annual cases and 97% of the more than a million malarial deaths occur in sub-Sarahan Africa. So there's no question that Africa is very affected by these infectious diseases.

Then it goes into the effective interventions. For ten dollars worth of drugs, you can cure a tuberculosis case. It's completely curable, but presently only 25% of the people with that disease have access to the drugs. To me it's simply appalling. It's curable, and it's cheap. Everybody, including the World Bank studies, says it's a cost-effective intervention that will make a huge difference in that society and will contribute to an economic turnaround. Your anti-malarial drugs cost 12 cents a tablet. The insecticide-treated bed nets are $4 a net. Condoms, which is about the prevention of HIV/AIDS, have a U.S. price tag of $14 for a year's supply. So we have effective interventions that don't need any further research or agreement that they're effective. We just need to get them on the ground.

There are effective strategies, some of which I spoke about, such as the coordination of services dealing with debt reduction and civil society and listening to the poor. In all of these interventions, as I think Mr. Rudolph was saying this morning, the bulk of the money is coming from the countries themselves. It's just the additional scaling-up funds that are required. In Mr. Sachs' report a scaling up of funds from the developing countries as well is being requested, of course with our participation.

They go into the behavioural strategies of looking at the political will, consumer communication, marketing expertise, networks of people and organizations, and access to the media as ways to get the message out, which has been done successfully in a number of countries. So there are a number of country models and best practices we can draw from.

There are countries in Africa that have corrupt governments. A lot of countries have capacity that is ready to be filled, and they are waiting for us to take action over here to provide some more funding.

Over the last number of years a large number of partnerships and networks have started up: the Stop TB Initiative, Roll Back Malaria, International Partnership Against AIDS in Africa, the Global Health Fund, and the Global Business Council on HIV/AIDS. We're starting to realize that to get the job done, we have to work together. That is what's going to make a huge difference.

At the G- 8 summit we have an opportunity to scale up and really fund the Global Health Fund. Kofi Annan said it's going to cost $7 billion to $10 billion per year. So far we have about $2 billion in the pot. Over 300 proposals came in for the fund. A number of them were told ahead of time to scale it down, because you're not going to get everything you want; we don't have enough money in the pot yet. Still, there were requests for $1.5 billion in the first year and $4.5 billion over the next few years, and there's not even that much money in the pot.

So it's a crock to say there isn't the capacity in Africa to absorb some of these funds. That's not to say there isn't a lot of work to be done in getting some of the health structures in place and all of that, but there's a huge capacity that could be filled if we increased our money going into the Global Health Fund.

I heard some of your questions this morning about what is different about this program that will make it succeed where others haven't. Clearly, we need to do more outcome-based work. It's going to take courage on our part as well as on the part of individuals and the countries to do that.

· (1350)

It's like pulling teeth from CIDA to get them to target where some of their funds are going. In their health program they did target 500,000 lives to save. And at our Stop TB conference last month, around World-TB Days, Reid Levenson from CIDA was very proud to announce that from their new funding of $38 million 500,000 cases of tuberculosis would be cured and 100,000 deaths averted. That's the kind of stuff....

If you can go to people, whether it's in Africa or in Canada, and say “We've got a program that's going to save this many lives, it's going to get this many people off... For a dollar a day, when you're looking at the millennium gold, we're going to enroll this many girls in school, we're going to avert this many deaths due to infectious diseases...”, that's something people can get their hands on.

When Minister Minna made her announcement about the 500,000, there was all sorts of media and everything around it. That's something Canadians can hear. “This money is going to avert this many deaths”. That's something that's very clearly communicable and something that Canadians can get behind. But I get disturbed when it always looks like conditions have to evolve over there. The developing countries have to do all the work. We don't have to be culpable for anything. For me, it has to be a two-way street, and there's been a lot of hypocrisy that's gone on prior to some of what we say.

Some countries' donors...CIDA gets concerned that if we do more multilateral aid, giving to the multilateral agencies rather than through the bilaterals, then we can't claim the successes. But I say if we're in this game together and we have targets for what we're doing, if we put in 5% of the money, then we can claim 5% of the successes and 5% of the failures. I mean, it's not rocket science so that we can't put some of this together.

Maybe I'll leave it there but end with a quote from Sachs' report:

“…let me say that I hope we keep our voice clear and strong on the central task of raising the health of the poor. I can be ‘realistic’ and ‘cynical’ with the best of them—giving all the reasons why things are too hard to change. We must dream a bit, not beyond the feasible but to the limits of the feasible, so that we inspire. I think that we are an important voice speaking on behalf of the world’s most voiceless people today—the sick and dying among the poorest of the poor. The stakes are high. Let’s therefore speak boldly so that we can feel confident that we have fulfilled our task as well as possible.”

That was correspondence from Jeffery Sachs. Why that moved me is because there are so many things that are doable, that are curable, and it's hard to know that I sit and live a life of luxury while there are people dying in the world because they're poor, their governments are poor, and we are stingy with our aid.

· (1355)

The Acting Chair (Mr. John Harvard): We'll leave it there and we'll go to questions, Catherine.

We'll start with you, Mr. Rocheleau.

[Translation]

Mr. Yves Rocheleau: Thank you, Mr. Chairman.

Ms. Little, thank you for your excellent presentation. I have a few questions for you.

You had an experience in Zimbabwe, and I am sorry my colleague is not here, because he often asks questions about that. What conclusion do you draw on the current situation in Zimbabwe, first of all?

Secondly, if governments in general, in keeping with the wish expressed by the UN, were to devote 0.7% of their GDP to African development, would that be enough, in your opinion? Along the same lines, dealing more specifically with Canada, you said a lot about CIDA. Are there specific things you would like to see CIDA do in terms of its current activities?

Given the very dark and unfortunately very realistic portrait you paint of the situation in Africa, do you worry that because of current circumstances, the Kananaskis Summit will deal more with security issues, since the Americans are obsessed with those issues, and ignore the whole African issue, which is nonetheless supposed to be on the agenda?

Finally, the picture is very gloomy in Africa in terms of health, the environment and education. Are those not just effects, and do we not have to quickly and seriously get to the root causes of such a state of affairs?

¸ (1400)

Ms. Catherine Little: Thank you. I am going to answer in English.

[English]

Thank you for your questions. With regard to Zimbabwe, as I said, I lived there for two and a half years. I actually was married to an Ndebele and I returned in 2000 and I was able to speak to and visit with a lot of people.

I was quite excited that there was a lot of conversation, which is always healthy, and really a lot of anger against their previous election that hadn't ousted Mugabe. Unfortunately, we may have to wait till Mugabe dies.

He was initially very supportive in the country. As I said, when I was there I doubled my staff, I opened up two and a half new departments in my province. There was a lot of support by the government in the work that I did and there were resounding results out of that.

There are certainly leaders whom it is not appropriate to deal with. That doesn't mean there aren't NGOs or people in those societies and countries that you can deal with that are doing great work and that need our support. So that's all I'll say there.

On this 0.7%, if we were doing that, we would fund this no problem. Funding for this is asking for 0.1% of our GDP of donor countries. So 0.7% is enough money to reach our goals for developing the countries.

On concerns around CIDA, I have concerns around the amount of tied aid. We're an organization that very openly expresses that we have no interest in the amount of tied aid. Canada is one of the worst of the G-8 in the amount of our tied aid.

So I am quite in favour of a good chunk of our money going to these global funds and to the education for all global funds that will eventually be set up. It's a very good way to use our money, and certainly we can still do the bilateral--absolutely.

On the role in CIDA, our past minister, Minister Minna, who did the social development framework, showed leadership and courage. Whether we had more money in the pot or not, we were now going to be spending 40% of our aid dollars on basic human needs. Even this was a change.

This is not fully funded yet. This is not finished; it's not till 2005. She's no longer minister, so she isn't the one leading the way. That was a leadership role.

Having lived overseas and having travelled to Bangladesh and so on, we used to be viewed very highly for our stand on aid. Now we've dwindled. We're seventeenth now among the OECD countries.

The other aspect is the trade. Without the changes in trade, and Canada is the worst offender, with 60% of our trade having tariffs to the least developed countries.... I know Ambassador Fowler has that in part of the action plan, and that absolutely needs to be attended to. The difference that trade can make usually wipes out anything we're doing with our aid money, so that needs to be attended to.

There are aspects of Africa that are very black, and I would go back there in a moment. I loved working in Zimbabwe, and the work I was able to do was only because there was the support of the government and there were hard-working, industrious people who were doing the work.

I was at a speech with Stephen Lewis this weekend, and there was the same thing. There's despair, yet there are absolutely amazing and innovative things that are happening in the country, so we need to support the local and civil society in dealing with matters. We somehow have this image that we're the ones who have to save them over there. Things like oral rehydration and microcredit, a lot of the most amazing things that have helped the poorest, didn't come from our side of the world; they came from there. A lot of the new innovations are coming from there.

Uganda has changed itself drastically. There are amazing success rates in what's happened that came from the political will of their president--hugely. The AIDS rate has dropped 60%, even though neighbouring countries haven't changed very much, and that's come from those countries. Although there have been amazing corruption and problems in the past, there's way more democracy happening over there. If you involve the local folks, they're dealing with it day to day. They're dealing with the death in their face. They have amazing strengths and resilience and are doing the bulk of the work, and they need to be supported.

I think the whole G-8 is about this globalization program, and even Paul Martin absolutely acknowledges that globalization has failed the poor of the world. We need to address that, and dealing with health and education issues is what will make a huge dent in addressing the inequity that exists.

¸ (1405)

The Acting Chair (Mr. John Harvard): Thank you.

I suspect one of the reasons why globalization hasn't worked as well as all of us would have hoped is that it's really a commercially driven agenda. There's really no coherent social policy behind it.

I have a couple of questions. You say that the G-8 countries have not lived up to the promises they made back in Okinawa. Do you know why? Do you think they're just guilty of mouthing good intentions and that they never really had the intention of putting their money where their mouths were?

Ms. Catherine Little: Well, the whole G-8 process is an interesting process, in that each country gets to run the show for a year. We've had it for six months before Kananaskis and then we'll have it for six months after. At Okinawa the Japanese were the country that really put tuberculosis on the agenda.

It seems strange that although they all signed on the dotted line of that communiqué, an action plan seems to be missing. After that, Japan had another meeting, and they've kept pushing that agenda forward. Then we had the UN come onside, and things have moved forward, but there's still a place for the G-8 leaders to play their part. They're not going to be doing it all, but as we know, heads of state can have a huge impact, and those heads of state have a huge impact over the directions.

The Acting Chair (Mr. John Harvard): But how seriously can we take promises of this kind? It's not just in this particular area of health care and health funding. It happens so often inside and outside the G-8. How seriously can we take politicians when they make promises? If they're really serious, shouldn't they actually be putting the money on the table when they make the promise?

Ms. Catherine Little: Absolutely, and that's why it's very hypocritical that we keep talking about the corruption and stuff over there, where they have to abide by this conditionality, yet what are we doing to be held accountable?

The Acting Chair (Mr. John Harvard): Should we as a country insist, not only for the G-8 but for ourselves as well, on some kind of mechanism, a peer review, a report card, or some kind of a compliance system, so we live up to these promises?

Ms. Catherine Little: Yes, and a perfect example of that is when UNICEF and our organization were very involved in having the World Summit for Children occur. That was a milestone summit, one where they actually did say, “Reduction in the infant mortality rate by the year 2000”. They had seven key goals and they had the deadline, and then every year they put out a “Progress of Nations” report, which said what was happening.

If you are serious, and that's what can get rid of some of this--we have to make sure what they're doing.... If you have the countries aligned with the donors on what those goals are so everybody's behind them, if they're outcome-based goals, and if you do the year-by-year interim reporting, then you know where you're getting off track. You know what's working and what's not working, and you can follow things through.

If they're not doing something correctly, if they're not putting their money in the right way, then you agreed to this, and if they're not doing it, you have something to work with. It's not rocket science, but it's not being done on a regular basis.

The World Summit on Children was a very strong example of setting the goals and following them through and watching. That's what our organization is: it's a watchdog, a lot of times, with these promises. So we ask, where is your action plan to implement it?

¸ (1410)

The Acting Chair (Mr. John Harvard): What about this issue of conditionality? Do we--Canada or the G-8 countries, or any donor country--have the right to impose certain conditions on assistance? What do we do, for example, in countries where we have identified corruption, political corruption of one kind or another? We may like to help what you call “the poorest of the poor”, but we have this layer of corrupt people to go through. What do we do?

Ms. Catherine Little: I'll just use the example where we have a Canadian who has been at the International Union Against Tuberculosis and Lung Disease, Dr. Don Enarson. Their organization has tremendous success in implementing the DOT program, which is the comprehensive program for curing tuberculosis. They've gone into war-torn Congo, the DRC; they've been in Russia.

First of all, they get invited in, and then, after the invitation, they say okay, you set a date when you've arranged your committee, where you have somebody onside from the government, you have your Ministry of Health and those people are coming together with some plan of what you guys are going to do; then we'll come and talk. Nothing happens until then.

So it's like you have to work in partnership. But if you put down some guidelines that this is what needs to be in place, then we can start the discussion. When you have your government onside at some level, when you have your Ministry of Health, when you have some funds on the table, when you have some sense of structure so we know actually what the health structure is and how we are going to do the delivery of the pills and all that kind of stuff, then we can come in and play a game with you. If not, the conversation dies.

There are success stories out there of how they've dealt with worn-torn countries, corrupt countries, because there are layers you may need to work through, not involve, but maybe through the Ministry of Health or whatever, someone you can work with and have some access to the funds or whatever.

Again, with the tuberculosis stuff, the funds and the work is all being done in the country, but they need some support. But if you come to the table saying this is what I can provide, what can you provide, then it's a whole different thing from just talking about conditionality, as far as I'm concerned.

The Acting Chair (Mr. John Harvard): There's just one more thing. We'll take the example of AIDS. I guess certain scientific opinions have been reached on AIDS, and we know Mr. Mbeki from South Africa doesn't share in some of those scientific opinions. He is seen as problematic in the attack on AIDS. How widespread is that?

You mentioned, for example, the use of condoms. I guess that's also for AIDS. Is that a real problem, getting distribution of condoms, especially in perhaps some rural, very traditionalist areas?

Ms. Catherine Little: Actually, in Stephen Lewis's speech just on the weekend, he was relating a story. He was in Somalia, I think, and the World Food Program was distributing food. They had set up training for drivers of these trucks. These are guys who drive over land and don't have any fixed address and are having sex with whoever, so they did a training of these guys around AIDS and the use of condoms and stuff. Stephen said he was floored listening to this big, burly truck driver coming up in front of all these other men and saying “Yes, I wear a condom every time I have sex, and I know some of us think it's not as good, doesn't feel as good, but...”.

Those kinds of things are happening. When you get key people like that willing to stand up and talk, it has an influence. That's why a piece of this is definitely behavioural changes and gender things that have to be addressed.

¸ (1415)

The Acting Chair (Mr. John Harvard): You have been working in this field for a good many years. Given the daunting challenges, how do you keep your spirits high? You're optimistic.

Ms. Catherine Little: I am optimistic because I work with people, and people inspire me. I have great stories to tell and I have tragic stories to tell, but I get moved by people, and I know the innate....

Another colleague said, and it is true for me in a lot of my work.... When I worked in Zimbabwe, 50% of my caseload was children. Children just naturally want to give. They naturally want to love. They don't have to wait--

The Acting Chair (Mr. John Harvard): They haven't been politicized.

Ms. Catherine Little: Yes, they don't have to wait for the scientific.... They don't have to realize if it's a good or a bad thing to do.

I say inherently people want to.... Let me read a quote, if I can find it, from Dr. Albert Schweitzer. These are the kinds of things I have to look at sometimes to get re-inspired.

“Judging by what I have learned about men and women, I am convinced that far more idealistic aspiration exists than is ever evident. Just as the rivers we see are much less numerous than the underground streams, so the idealism that is visible is minor compared to what men and women carry in their hearts, unreleased or scarcely released. Mankind is waiting and longing for those who can accomplish the task of untying what is knotted and bringing the underground waters to the surface.”

I just know too many wonderful people and too many wonderful people doing a lot of hard work.

The Acting Chair (Mr. John Harvard): Thank you very much, Ms. Little. We appreciated your coming here. Thank you for both your passion and your compassion.

Is our next witness here, the Canadian Association of Petroleum Producers? We will start in a minute.

¸ (1415)

¸ (1419)

The Acting Chair (Mr. John Harvard): We will now restart our hearing.

We'll turn to the Canadian Association of Petroleum Producers, represented today by Larry Morrison, who is the manager of oil sands.

Welcome, Mr. Morrison. As usual, we're prepared to take some opening remarks, and then we'll have some questions.

¸ (1420)

Mr. Larry Morrison (Manager of Oil Sands, Canadian Association of Petroleum Producers): Great. I'll be speaking from the hard copy of some powerpoint slides. Does everyone have a copy in front of them?

The Acting Chair (Mr. John Harvard): Yes.

Mr. Larry Morrison: I will begin with just a couple of words about the Canadian Association of Petroleum Producers. We represent 140 member companies, which constitute about 97% of Canada's crude oil and natural gas production in Canada.

I have a few key statistics to give you a bit of an idea about our industry today. In terms of production, Canada produces 2.2 million barrels of oil per day. That makes us the 14th largest oil producer in the world. On the natural gas side, our production is 6.5 trillion cubic feet, which makes us the third largest in the world. So Canada is indeed a very big player, on the oil and natural gas side, on a global scale.

A fair bit of that production is destined for export. With crude oil, it's 1.4 million barrels per day, which is slightly more than half. With natural gas, it's 3.8 trillion cubic feet, which again is more than half.

On drilling, 18,000 wells were drilled last year in the country. The total depth of those wells was 19 million metres, which, as a sort of Trivial Pursuit matter, is five times through the diameter of the earth. So a lot of drilling is going on.

Of course, we're a major contributor to the economy, in terms of jobs and revenue to government. Last year we paid $14 billion in royalties and taxes.

So if we look a little more closely at the Canadian exports, virtually all of them go to the U.S. On the natural gas side, we are the largest exporter of natural gas to the U.S., at 3.7 trillion cubic feet, and make up 94% of the total U.S. natural gas imports.

¸ (1425)

The Acting Chair (Mr. John Harvard): Where does the other 6% go?

Mr. Larry Morrison: That's looking at it from a U.S. perspective. Virtually all of their gas imports come from Canada, except for that 6% from other countries. All of our exports go to the U.S.

The Acting Chair (Mr. John Harvard): So we have just the one source for exports.

Mr. Larry Morrison: That's right.

On the crude oil side, $1.3 million barrels a day go to the U.S. If you combine crude oil and refined products, that makes Canada the largest supplier to the U.S. market. We provide 15% of all their oil imports. So that puts us right up there. The major other suppliers to the U.S. market are Saudi Arabia, Venezuela, and Mexico. They are our competition.

On energy security, in the short term, diversity is a key point--the nature of the supply, the infrastructure, storage, and pipelines. You need to get products from the ground, through the refineries and natural gas plants, into pipelines, and to the final consumers.

Emergency preparedness and response are critical, as well as government and industry cooperation, particularly in terms of communication and data about supply and demand and movement of product.

In the medium term, it is key to bring on new supplies at lower cost. Oil sands potential and northern and offshore natural gas are very significant for Canada. Other key areas are coal-bed methane and methane hydrate.

Technology is vitally important to our industry. I'll have more to say about that later, but we are major users of R and D, or funders of R and D.

Competitiveness is also very critical to our industry. We are a global commodity business. You see prices going up and down, but that is how the market works to balance supply and demand. I'll have more to say about that later, as well.

For short-term security, we need diversity of supply, in terms of its geographic source and corporate entities--whether it's producers, pipelines, refiners, all that sort of thing. We need alternatives--different means, and routing to get the product from suppliers to users. Storage is critically important, as well.

On the cooperation and collaboration of governments, regulators, and industry, on the infrastructure side there's prevention, response, and all the interdependencies between our oil and gas industry in telecommunications, power, pipelines, and all that kind of thing. Since we're so well integrated with the U.S. market, the coordination of Canadian and U.S. policy is important.

We have a map at the bottom. I think all you have to see from the map, on the natural gas side, is there is a vast network of pipelines that provides the ability to move products anywhere in North America quickly and cheaply.

Turning to the natural gas side on northern potential, you can see the chart. It shows different pipeline routes that are being studied and evaluated, with Alaska up on the far left and the Mackenzie Delta in Canada. I think it's interesting to look at some of the information on reserves, as well.

We have about 64 trillion cubic feet of proven reserves in the Mackenzie Delta and the Beaufort Sea. In Alaska, there's far more than that. It's about four times the amount. It's a much longer pipeline, however, to get the Alaska gas to market than it is for our own Canadian Mackenzie Delta gas. This is a very little explored area, so there is vast potential yet to be uncovered.

As well, of course, you've read in the papers that there are all the issues around which gas will come first, the pipeline route, government incentives, and such, to make the projects economic. I won't go into it in any detail. You may have questions.

If we look at eastern Canada development, Hibernia of course came on in 1997 and Terra Nova started recently. They are offshore in Newfoundland. There are other projects in the planning stages, such as White Rose and Hebron. Off Nova Scotia, the Sable offshore energy project of course came on in the year 2000. There's potential to expand it to year two, as well as the Deep Panuke project. There is very significant potential in the east coast offshore, as well.

Turning to the oil side, one rather startling statistic is our current technology only allows us to recover about 27% of the conventional oil in play. There's a little chart that shows what it looks like. The vast majority of it is not recoverable with current technology. This ties in with the R and D programs and the improvement in technology that I mentioned earlier.

¸ (1430)

The Acting Chair (Mr. John Harvard): Where is it? Is it all over the country or in one particular area?

Mr. Larry Morrison: The conventional oil is in western Canada, particularly Alberta and Saskatchewan. This would apply to the offshore fields, as well. Of course, there is oil in the Arctic. The current focus there is on the natural gas side, but those areas are where the main deposits are.

If we look at the oil sands, and turn to the chart on the bottom of page 5, you can see the amount of oil in the oil sands absolutely dwarfs the conventional oil supplies in Canada and is many times larger than the supplies in the U.S.

There's an interesting little footnote at the bottom of the chart. If you read it from the bottom to the top, there are 2.5 trillion barrels of oil in play. With current technology, 315 billion barrels would be ultimately recoverable. The established reserves are 175 billion barrels. The chart shows the more conservative number of 175 billion barrels.

The oil sands truly are a vast resource and are well up on the global scale. The Saudi Arabian reserves, for instance, are 265 billion barrels. The 300 billion in the oil sands recoverable with current technology is more than that.

To refer to just a couple of charts, 80% of the oil sands reserves are recoverable only through in situ methods. They are too deep to mine. Current production is 325,000 barrels a day. The little picture on the side shows how these resources are recovered, using what's called a SAGD, which is short for “steam-assisted gravity drainage”. It is a relatively new technology using horizontal well pairs. One is a steaming well, and the other collects the oil when it's able to flow to the well. There are promising new technologies coming there as well.

Twenty percent of the oil sands are recoverable from mining, which is where most of the production--475,000 barrels--comes from today. Syncrude is the biggest producer, and is in a major expansion phase. Suncor just completed a major expansion phase, and has more projects in the works. The newest project nearing completion is the Albian Mine, led by Shell. There are many other projects on the planning horizon.

I have an interesting quote about innovation and our industry:

“We usually find oil/gas in new places with old ideas. Sometimes, also, we find oil/gas in an old place with a new idea. Several times in the past we have thought that we were running out of oil/gas, whereas actually we were only running out of ideas.”

We have a few more charts with some interesting statistics in the back, but maybe I'll stop there. I don't know if you want me to run through those, or open it up to questions.

¸ (1435)

The Acting Chair (Mr. John Harvard): We can stop here and ask some questions.

Maybe in your answers you can perhaps refer to those last couple of pages, if they are appropriate.

We'll start with Dr. Martin.

Mr. Keith Martin: Thank you, Mr. Morrison, for being here today.

We're doing a study on the G-8 and U.S.-Canada integration, as you know. As a person involved in a prime generator of our GDP, what do you see as the major obstacle to the Canadian economy being competitive with the United States? What do you think we ought to be doing in the future economic integration that will be taking place with the United States to ensure the private sector will have the tools and ability to be competitive with your counterparts south of the border?

Mr. Larry Morrison: Right. That's a key question.

The oil industry has been doing very, very well over the past number of years in being very able to compete in the U.S. market. I would attribute this to good sound government policy, starting with the North American Free Trade Agreement. We have open market access, and governments let the price signals come through, although it's sometimes painful when prices spike. But they have stayed away from policies that would dictate pipeline routes, or dictate certain tax treatment, which might put us offside. So it's a very level playing field, with open market access and strong adherence to free trade principles.

I think the environment, of course, and principles of sustainable development have been a very important area for us. Our industry has done a lot in this regard.

I couldn't stop without saying something about climate change. It's a potential major concern. We're deeply involved in the discussions on climate change. One of our concerns is the prospect of government policies that would put Canada at a competitive disadvantage relative to other international suppliers of oil or natural gas. The fact is that most of our competition will be outside the Kyoto Protocol. In a globally traded commodity market, that is a worrisome prospect.

Mr. Keith Martin You were reading my mind, Mr. Morrison, on my second series of questions.

The Economist has done some very good work in terms of doing an analysis of Kyoto, and their conclusion with respect to Kyoto is that the cuts to greenhouse gases are not enough; Kyoto will not do that. But it also says that the industry does not have the capability for adapting and also adopting the technologies that would enable it to be competitive while also being able to bring down the greenhouse gas emisssions. From your industry's perspective, what should Canada do if Kyoto is dead? What should we do in terms of reducing greenhouse gas emissions, and how would we implement that in terms of whether it's using the tax structures for green technologies and providing tax breaks for that, having a longer period of time for the adoption of targets and making those targets deeper? What should we be doing?

¸ (1440)

Mr. Larry Morrison: There are a lot of good questions there. It's a tough one to answer. I'll maybe just talk, and if I don't hit all your points, please remind me.

Our industry is very much taking a position of constructive engagement. We believe that more needs to be done to reduce greenhouse gas emissions. When we look at it, we particularly look at it on a per unit of production basis. And we have a very good track record. In oil sands, for instance, we've reduced greenhouse emissions by 45% per barrel. Now, one of the catches is production has gone up far more than 45%, so that in aggregate we are increasing greenhouse gas emissions.

I think when you look to industry and competitiveness, that per unit of production--what is the best-in-class performance that is possible using current technology on a global benchmarking basis--that's vitally important. Our industry is prepared to put itself up against best-in-class performance on an international basis and aim for continuous improvement on a per-unit-of-production basis in terms of setting goals and targets for future years.

For Kyoto, the first commitment period is just five years, 2008-2012. So more will come. It's really just the first step.

Another key thing is R and D, which I talked about earlier. I think we in government and industry need to spend far more in terms of developing new technologies that will further improve performance on greenhouse gas emissions. I think that should be a real focus. Canada can be a leader in this area, and I think we should be. One of the facts of life for us is our rich natural resources endowment, and I think we have to make the best of this. So whether it's oil and gas, coal, or other forms of energy, I think we should make the best use possible for all of our natural endowments.

Mr. Keith Martin: Thank you.

Mr. Larry Morrison: I probably didn't hit all your points, but--

Mr. Keith Martin: No, you did just great. Thank you.

The Acting Chair (Mr. John Harvard): Go ahead, Mr. Rocheleau.

[Translation]

Mr. Yves Rocheleau: Thank you, Mr. Chairman.

Good afternoon, Mr. Morrison. I do not know whether it is because of the phenomenon of corporate concentration, the weakness of the Canadian dollar or the natural expansion of the American economy, but I think we can assume, unless I am mistaken, that there is an ever greater domination of American interests over Canadian natural resources, particularly in western Canada.

I would like to know whether as a businessman, you feel that this is a positive phenomenon for the Canadian economy, or rather that we should be worried about it. That is my first question.

Secondly, do you have any opinion on a possible customs union between Canada and the United States and on dollarization, ie, more marked and systematic use of the American dollar? I would like to know whether your company, among others, or your members do business in Canadian dollars or American dollars.

Thirdly, what message would you like to convey today to the committee and consequently the government of Canada?

[English]

Mr. Larry Morrison: In the last two or three years we've seen an increase in American ownership of oil and gas production in Canada. That actually is a bit of a reversal of a long trend going back to the 1970s where there was a sustained decline in the amount of foreign ownership of our industry. If you take a long-term perspective, the amount of foreign ownership today is far less than it was in 1970 or 1980.

I think it's also interesting to note that Canadian-based companies are increasingly being international headquarters for investments in other jurisdictions. There are quite a few examples of that. The amount of investment made by Canadian companies outside Canada in the oil and gas industry has been running at $1.5 billion to $2 billion per year. Canada is indeed becoming a global headquarters for an increased international oil and gas presence.

On the questions on customs union and dollarization, we certainly support free trade. We haven't been engaged at all in anything that would go beyond the kind of economic integration that comes from a free trade agreement. We do not have a position on dollarization.

Our basic commodities, though, both oil and natural gas, tend to be priced off markets in the U.S. and the prices are driven off markets in the U.S. If you pick up your newspaper and see the west Texas intermediate price, which is probably the one most commonly reported, or the NYMEX price for crude oil, it's of course in U.S. dollars. The way the markets work is those pricing points are set in U.S. dollars, and from a producer point of view what you get is that price adjusted for the transportation cost to get it to that market, and also adjusted for any quality differences--the sulphur content of the crude oil or the heaviness of the oil. The producer then gets that price, converted into Canadian dollars.

I guess the key message I want to leave today is that Canada has vast potential to be a major international player in oil and natural gas. Our industry is strongly committed to sustainable development principles. From that development of the resources will come a lot of social and economic benefits right across Canada. We operate in 12 of the 13 jurisdictions in Canada today.

¸ (1445)

The Acting Chair (Mr. John Harvard): Thanks, Mr. Rocheleau.

I have a couple of questions, Mr. Morrison. The first would have to do with the broad subject of soft subsidy. When Mr. Cosbey of the International Institute for Sustainable Development was here this morning he made reference to the subsidies enjoyed by your counterparts, petroleum producers in the United States, which he says are considerably higher than what's available here in Canada. He suggests that's a problem. I'd like to ask you whether from your point of view it is.

Of course in addition to that, just recently we've seen some American politicians toying with the idea of subsidizing the Alaska pipeline project and perhaps even inserting some kind of floor price. I would think that would cause some concern among your members.

What do you say on those two things? I'll ask the other questions later.

Mr. Larry Morrison: On the question of U.S. subsidies, that is something people watch quite carefully. There are various reports that come out looking at different jurisdictions, whether it's on royalty rates or income tax treatment of operations in one jurisdiction relative to another.

Canada does fairly well in those comparisons, and governments are always watching to see whether they're getting a fair share of new investments or if they're considered to be a favourable climate or not.

I don't perceive that we have a problem competing with U.S. producers so much. Their resources are limited, their production generally is in decline. The hot spots for new activity are off the gulf coast--the offshore, deepwater stuff. So it's not affecting us significantly that way. Our real competition is the other countries supplying the U.S. markets--Saudi Arabia, Venezuela, Mexico, and Nigeria.

I think the last comprehensive report I can recall was done by the federal Auditor General's sustainable development branch, and it concluded that the playing field within Canada was indeed quite level between oil and gas energy supplies and renewables and other energy. So I don't think we have a big concern in those areas right now.

What the U.S. is looking at right now--which has passed the Senate, but still has a long way to go--is subsidizing construction of the Alaska gas project. This is very worrisome, because that project, of course, is in competition with the Canadian Mackenzie Delta project. Some people say both could go. The bigger concern is that both could not be constructed at the same time. So it's a matter for debate still, but what they're talking about doing in the U.S. is of very great concern, because we've just been through the last round of the softwood lumber issue, and in those international treatments of globally traded goods, it's very important that we let the market work.

¸ (1450)

The Acting Chair (Mr. John Harvard): You say it's a matter of concern, so I guess my question would be what would you advise the federal government? Do we have any means of realistically resisting that? The Americans tend to be going it alone on a lot of things these days. I suppose if they make up their minds they want to subsidize that project, they will do it. What can we say? Is there anything in our arsenal to fight back with?

Mr. Larry Morrison: Well I think our government and our diplomats have to make that message very loud and clear to the U.S. legislators, and publicly, north and south of the border.

One of the other realities is that no matter which pipeline route you're looking at, those pipelines cross Canada. So there is the permitting issue, the right of way and that sort of thing. Hopefully it will not come to that, that we would have to use tools of that nature.

The Acting Chair (Mr. John Harvard): Do you think it would behoove us to deny the permit if they were to use subsidies?

Mr. Larry Morrison: I wouldn't--

The Acting Chair (Mr. John Harvard): You don't want to get into that kind of skirmishing?

Mr. Larry Morrison: It's a hypothetical question.

The Acting Chair (Mr. John Harvard): All right, let me ask you a couple of other things.

Do the energy producers in this part of the country have their eyes on offshore oil, offshore British Columbia?

Mr. Larry Morrison: They do as a long-term prospect. It's under active study and consideration. There was a long-standing moratorium. I think our basic view on it is that we'd want government to let that consultation process run its full course, satisfy all the stakeholders.

The Acting Chair (Mr. John Harvard): But you see that as long term, not so much short term, is that it?

Mr. Larry Morrison: I think there's a lot more work to be done before we would consider making major investments. I think one of the things to look at is Canada's track record for offshore oil and gas on the east coast and elsewhere. I think it's really quite good. But I understand the sensitivities people have, so from an industry investment standpoint, you don't want to go into areas where you're not welcome.

¸ (1455)

The Acting Chair (Mr. John Harvard): I have two more things.

Recently Canada reached an agreement with the Mexicans on an energy cooperation plan. Does that represent opportunities for your industry? That's number one.

Number two is with respect to Kyoto. If it fails for whatever reason, Americans don't adopt it, let's say that we don't get on board, we don't ratify it, can you see something in its place, at least from a North American perspective? Can you imagine, Mr. Morrison, some kind of North American accord? You wouldn't call it Kyoto, you'd call it something else. But do you see some kind of an accord that would meaningfully, realistically, reduce greenhouse gas emissions?

Mr. Larry Morrison: On Mexico, I'm not really familiar with that; I have a vague awareness of it. I believe it's just building on the provisions in the North American Free Trade Agreement and opens up new trade possibilities between Canada and Mexico. That would be a good thing that I spoke to earlier that--

The Acting Chair (Mr. John Harvard): So it's a positive step, but you're not dancing in the streets here. It's too damned cold to dance in the streets.

Mr. Larry Morrison: They're a competitor too. But as I mentioned earlier, Canada has a unique position and opportunity to be a global leader in better production practices, exploration, development, and all that sort of good thing, so I won't say anything more on that.

On Kyoto, as you know, the U.S. has already decided to go its own way. It has taken a lot of criticism for that, most of it coming from the Europeans. In Canada, the federal government is really only starting to do a consultation program. The high-level plan will come out in the middle of May, I understand, and following that there would be consultation with industry affected, as well as with individual Canadians. I know Alberta, for instance, is developing an alternative. You've read about that in the newspapers.

So I think the jury is out as to what will happen in Canada in terms of ratifying Kyoto. Kyoto has a long history now, and in many people's minds Kyoto is synonymous with climate change action; it almost has a branding to it.

The Acting Chair (Mr. John Harvard): But Kyoto, for better or for worse, is what you might call an intercontinental plan, or intercontinental initiative, to deal with an intercontinental problem. Greenhouse gas emissions are a problem around the world, so I guess one might wonder whether something like an accord for just North America wouldn't make much sense.

Mr. Larry Morrison: Did you say it would not make much sense?

The Acting Chair (Mr. John Harvard): Yes. Or at least would be extremely limited in its effectiveness.

Mr. Larry Morrison: Yes, if you look at it in terms of it being an environmental objective driven by concerns about the planet heating up, it's a global issue in that perspective. But there are other dimensions to it as well, economic and social dimensions. The fact is, world trade patterns are more continentally aligned, as is the competition that we talked about, cost impacts on jobs, governments, industry. If you start to take it out of the realm of a purely environmental standpoint, then some of these other solutions that people are talking about do make more sense than they do on a purely environmental basis.

The Acting Chair (Mr. John Harvard): On that note, we want to thank you. We very much appreciate you coming here and sharing your thoughts with us. On behalf of the committee, thank you.

Mr. Larry Morrison: Thank you very much.

The Acting Chair (Mr. John Harvard): Okay, members, we are going to go into the final lap now. We're going to invite to the desk Robert Huebert, who is the associate director for the Centre for Military and Strategic Studies at the University of Calgary. The director of the centre is David Bercuson, who could not be with us today, but I'm sure that Mr. Huebert has a good record for pinch-hitting, and I'm sure he'll knock a few out of the park. The game is going to last 45 minutes, although I don't know whether that will be nine innings.

Thank you for coming, Mr. Huebert.

¹ (1500)

Mr. Robert Huebert (Associate Director, Centre for Military and Strategic Studies, University of Calgary): It's my pleasure.

The Acting Chair (Mr. John Harvard): You may want to give us some opening remarks, and then we'll get to some questions.

Mr. Robert Huebert: Okay.

The major focus of what I'll be talking about and what I'd like to address is the whole issue of Canada-U.S. relations from a security perspective. Really, we're in a continuum of a very rapidly changing relationship.

I don't want to follow the cliché that so many people do in terms of saying that post-September 11 things have changed so drastically. The reality is that things were changing as early as 1989; we just didn't pay that much attention to it. Nevertheless, the relationship from a security perspective in regard to the United States is one that is indeed becoming as challenging as it was in the days immediately following the Second World War.

I will be addressing four major issues. The first one is just dealing with the process of trying to stay on top of this changing relationship with a couple of suggestions in terms of how we might want to better manage this relationship, followed by a discussion in terms of the developing North American security complex.

Basically, the whole idea that what we are seeing within, for better or worse, the American context is an entirely different orientation as to how it defines its security. This includes such developments as the U.S. NORTHCOM, changes to NORAD, the issue of homeland security, and fourth, an issue that takes up a lot of my own research interest, the growing Arctic relations between Canada and the United States.

Just in terms of process, one of the underlying themes--and I think September 11 brought this out very clearly--is that from a structural perspective there is indeed a challenge to make sure that we fully appreciate and understand the situation. I and many of my colleagues who have looked at this issue have been struck by the fact that to a certain degree a lot of our responses often appear ad hoc. Perhaps something akin to the American National Security Council or perhaps an existing senior-level cabinet committee that is constantly being briefed on security issues may indeed be the best way to approach some of these challenges.

The second issue I would like to raise is that, as much as I would like to congratulate all of you on having these hearings and allowing me to put on the record how important I think public consultation such as this is, we haven't had enough in terms of both our foreign policy and our defence policy. I would suggest an overall approach to security policy. Events have changed so drastically since 1994 that it's difficult to see why we haven't been able to have more public consultations such as this. I commend the work of the committee, and suggest that one of the major changes we desperately need to institute is more frequent consultation, not just as something that happens perhaps at an event following September, but something we do as a matter of process.

Let me get into the substance. First of all, in terms of NORTHCOM, there is a lot of speculation in terms of what NORTHCOM is going to mean. There is some misinformation, I would suggest, in terms of the relationships to sovereignty. Part of the problem of course is that we do not know the particulars, at least publicly, of what the Americans are talking about in terms of NORTHCOM.

The one thing we do know is that the Americans have had commanders-in-chief. They have had commands throughout every other geographical region within the globe. In fact, it was suspected that it wasn't going to be North America that was going to be the north command, it was going to be space. You should be aware that the Americans are currently developing a CNC in space, which has major ramifications for NORAD.

The point remains that the Americans have been reluctant to do it from a North American perspective because of the fear of the interplay between their domestic civilian legislation and the control of the military. It of course took September 11 for them to rethink that, and they are quite dedicated in terms of the development of it.

Canada has two options in terms of our participation: we either participate or we do not participate. In other words, we're going to be asked one or the other, there's no question. For example, the British were asked to participate in EUROCOM, so they are an actor in that regard--not only through NATO, but through bilateral relationships. If we are in, the earlier we participate, the more we can have a role in the formation of the organization.

Let me be clear. This does not mean by any stretch of the imagination that we'll be given equal partnership. The reality is the Americans are a superpower; we are not. But if we do want to have influence, we know from our history--be it in NORAD, NATO, or any other organization--when it comes to the Americans the best time is to join them at the beginning if you want to have an influence on how the organization is created.

If we decide to stay out, we're faced with two options. We can attempt to remedy the American concerns for North American security on our own. I would suggest if we go for this option it entails a much heftier price than we pay currently for the Department of National Defence, and it would be an incredibly expensive proposition to make the Americans feel comfortable. Notice I'm saying “to make the Americans feel comfortable”, as opposed to necessarily saying “to meet the threat”. We are in a situation very similar to NORAD, when we really were responding in 1957 to American considerations and not so much to our perceptions.

We have a problem also that we may decide to stay out and at the same time not increase our defence budget. We can expect that will have ramifications in our relationships with the Americans and in a whole host of other events. The Americans are very good at disassociating whenever we are really in line for brownie points, but the historical record demonstrates that the moment they think we're not pulling our weight, they find very interesting ways to economically penalize us. This is just an historical trend. It's not fair, but unfortunately it's the reality.

What about NORAD? Well, NORAD may already be being disassembled by the Americans. The Americans in some of the public press have been reported to be considering a separation between Space Command and NORAD. Currently, the commander-in-chief is double-hatted. They're talking about the possibility of separating it with the preparation for the weaponization of space. This creates two major problems for Canada. If they do separate it and retain NORAD, NORAD becomes a lot less important to them. That may be good; it may not be bad.

On the other hand, if they don't separate Space Command from NORAD, then Canada is going to have an issue to deal with in regard to the weaponization of space, because they're making it very clear that is the next step they are taking in terms of national missile defence.

As for homeland security, once again we come back to a theme that has existed since 1957 with NORAD, and that is not so much in terms of how we perceive the threat, but how the Americans perceive the threat. We're faced with a situation that--

¹ (1505)

The Acting Chair (Mr. John Harvard): Are you talking about American homeland defence?

Mr. Robert Huebert: I'm talking about the American approach to homeland defence--the whole issue of transboundary protection.

The issue here, of course, is that Americans feel insecure. If you look at the actual terrorists of September 11, none of them came through Canada. There were some associations that may have existed, but they came through work visas and student visas, directly through points of entry of the United States. Whether or not there is a real problem is something I think the record is still trying to assess in that regard.

The issue we have at hand is that we have to be very careful not to overreact. The problem is not immigration, as is often reported in the press. There is almost no record from any of the open literature from CSIS of problems of immigrants being at the source of any form of international terrorism. The problem tends to involve those who enter the country through either work or student visas. That is a problem, and there is a problem of the monitoring of refugees. I hasten to add the issue is one of personnel and resources. We have in law, in place already, the necessary mandatory means of overseeing it. The question is of enforcement.

Last, I'd like to touch on an issue that's near and dear to my own research agenda, and that is, of course, the issue of the Arctic. This is also going to tie in very closely with the American relationship, for two reasons. First and foremost, the Americans are becoming very concerned about our ability to monitor and enforce our borders in the northern regions. In 1999 a Chinese research vessel showed up at Tuktoyaktuk and basically took us totally by surprise. The Chinese had informed our embassy, but there was a foul-up in communication. The point remains that we did not have the physical means to detect it before it entered port. So any human error notwithstanding, our surveillance capabilities are somewhat limited, in that regard.

There is another problem climate change is going to be creating for Canada. The scientific evidence is almost completely convincing at this time. There are very few “ifs” or “buts” that the polar cap, the Northwest Passage, and the northern sea route will be ice-free anywhere between 2020 and 2050. I'm not talking about just the Northwest Passage, but possibly the entire polar cap. This will create a whole host of challenges for Canada, because of the obvious temptation for international shipping.

The United States, to this date, has refused to acknowledge our sovereignty over the Northwest Passage, and I would point out that is the waterway, not the islands. If this becomes a navigable strait, as some people are suggesting, we will be hit into one of the crises we've had before with the Americans, be it 1969 or 1985. Unfortunately, we're about due for another one with them. So that's another issue that will be coming up in the future with the Americans.

Where does this leave us? We cannot lose sight of the fact we are bordered to a superpower. Fortunately, this is a superpower that shares many of the same political culture, orientation, interests, and objectives of Canada. That makes it a lot easier than, say, the position Poland or Finland have faced, but it is a relationship that has to be monitored.

We will have to be careful how we understand it. We will have to be careful not to overreact, but by the same token, we have to be careful not to under-appreciate where the American concerns are. In other words, we have a balancing act that has to be monitored and examined. We have to remain constantly vigilant.

I'll be happy to take questions at this point.

¹ (1510)

The Acting Chair (Mr. John Harvard): Thank you very much. I'm sure that will give us considerable material on which to ask questions.

Do you want to go ahead, Mr. Martin?

Mr. Keith Martin: Thank you very much, Mr. Harvard.

Thank you very much for being here. With the widening gap in military technology between the U.S. and all of its allies, it's of great concern to us how we'll be able to integrate with the U.S. armed forces in the future. We can't keep up, and as you know, that gap has widened geometrically. Maybe we can keep up with the Brits for a little while, but that won't be for long.

As a military strategist, how do you see the role of our armed forces? Where should we put our limited resources, to get the best bang for our buck and be able to not only meet our domestic needs for our armed forces, but also integrate properly and appropriately with the U.S. and our other allies?

On the second question, on the U.S. Northern Command, let's assume we do participate. We've heard a number of different ideas about some of the pitfalls, but I'd like your perspective. If we participate in the Northern Command, what should we demand as the quid pro quo from the Americans in this endeavour?

Thank you.

Mr. Robert Huebert: Those are very good questions.

On keeping up with the Americans in what's commonly referred to as revolutionary military affairs, the British are making a mistake. As you correctly point out, they are having trouble staying up with the Americans. Through their most recently conducted defence review, they have made the decision to focus on weapons systems. In other words, they're putting their money right now into trying to keep up with the state-of-the-art torpedo, missile, and various weapons systems.

That is a mistake, because it's a one-time gap filler. My recommendations on where we should put our scarce resources are twofold. First of all, communications is the ultimate determinant in any revolution in military affairs. You have to be able to talk to the Americans; you have to be able to communicate.

We've seen what happens at the best of conditions through the tragic bombing of the troops in Afghanistan. Without proper communications, without the kit that comes with that, basically everything else falls to the side. You may have one or two individual weapon systems that perhaps work just as well, but unless you have the communication systems, the various links, for example, that the navies have, you can't talk, you can't operate. You may be a little behind in terms of some of the weapon systems, but that's not nearly as dangerous as not being able to talk to the Americans. So the first thing in terms of kit is that you have to go through the land, air, and navy forces in terms of the maintenance of the communications.

Secondly, it has to come to the issue of process. The whole point of the matter is that we are trying to remain interoperable with our American allies. That means constant practice. So the whole idea, for example, of attaching a Canadian frigate to an American carrier battle group provides outstanding opportunities for our naval personnel to engage, to communicate, to see how the Americans do it and to make sure they, at the very least, have the minimal in terms of communications. So it's process and it's communication kit.

In response to your second question, in terms of the quid pro quo, of what we should be asking for, obviously we should be following what we've done in NORAD. In NORAD we have made it clear we don't expect to be leaders. Paying 10% of the bill to the Americans paying 90%, it would simply be unrealistic to do otherwise. But we are involved in the decision-making loop.

If you look at the manner in which NORAD operates, it's very clear that in a complete crisis management situation both the President and the Prime Minister are informed. Obviously the President is going to have substantially more input in terms of reality, in terms of what they're able to do. Nevertheless, the information becomes a very important aspect. We tend to be forgotten. If there's an institutional linkage, this is one way of making sure that when a crisis occurs, we're at the front.

The other thing is to make it clear, when we have foreign policy differences with the Americans, that we work out relationships. Most Canadians are quite surprised to find that in NORAD the one component that is separated from the joint command is what the Americans do for surveillance over Cuba. Even though the actual physical observation of Cuban air space is within the infrastructure of Colorado Springs and Cheyenne Mountain, there is never a Canadian who is sitting at the Cuban desk. This is partly because we have strong differences with the Americans in terms of the embargo and enforcement. As a result, they've been able to institutionalize a difference in which it reflects and respects our differences in terms of foreign policy.

I'm suggesting to you that, first and foremost, you make sure we have the links to at least stay in the loop. Secondly, the other major quid pro quo we want is the ability, when we disagree with a long-term policy objective--and obviously a crisis is going to be much more challenging--to at least work out some institutional difference where we can agree to disagree.

¹ (1515)

Mr. Keith Martin: Having information, having an input to widely different issues.... I think the concern of what many of us have heard is the fact that Canadians would like to have an input, particularly where our soldiers' lives are going to be put on the line. I think the concern we have is that sovereignty over our armed forces will somehow have to be given up with respect to participating in the Northern Command.

In your view, do you think we can maintain a situation of interdependence without being subservient to the Americans--in other words, retaining sovereignty over our military while still being able to participate in the Northern Command?

Secondly, with respect to our investments beyond communications and process, the question becomes this. Do we need more soldiers? Do we become a peacekeeping and peacemaking force, but outfit our soldiers for war, in the context of being able to have the heavy-lift capabilities, to be able to put the forward thrust of our soldiers in the theatre and invest in the tools and the kit that will enable them to function in a war-like situation, which is what you'd have to do, of course, in a peacemaking and peacekeeping environment? Is that the niche that you see we ought to be in? We can't be everything for all people. Some people would suggest we shouldn't be having tanks and howitzers. Where would you focus that in terms of kit and numbers of soldiers?

Mr. Robert Huebert: Let me start with your last question first, in terms of kit.

Looking at events since 1989, looking at the types of crises that Canada has been facing, either in terms of the traditional security threat in the context of what we're seeing in Afghanistan, or a human security threat as we saw in Africa, regardless of whichever way we want to respond, it's quite clear to most of us who have been following it that in fact the ability to mount expeditionary forces that are combat-capable is the real trick.

In terms of having heavy armour, we're seeing even the Americans moving away from heavy armour. In other words, they still have some maintenance of their Abrams, but the Marine Corps is dedicated to going to light armoured vehicles. So the trend of the major heavyweights right now is to much more lightweight equipment.

What that's saying for Canada is that from our traditional requirements for both peacekeeping and peacemaking operations, my estimation is that we are by far best served by maintaining this expeditionary force capability, which includes a sea lift and air lift.

The MS Katie incident comes to mind as one of the great difficulties we have if we try to contract out these services. The Australians had major problems in some of their contracting out in East Timor. So you do have to have a reserve capability in that regard.

We see from historical records that the best types of troops for all purposes are those that are combat-capable. In other words, there have been some who have suggested we may want to move to a constabulary-type role, focus on peacekeeping operations. The reality is, as we see within the United Nations itself, be it regional within Africa, be it within Asia, peacekeeping even in the traditional context has become a much more robust operation. So even if we wanted to participate in that particular capacity, having our own combat-capable forces is probably the issue.

Your first point is one that has dogged Canadian security policy since the end of the Second World War: it's the issue of capability and commitment, as it's often referred to. The reality is Canada likes to join almost any operation. If you have a look at our peacekeeping record, and it's a very admirable one, there is a tendency to overcommit Canadian forces in terms of what we actually have. We are facing a major rotation crisis in both the naval forces and the land forces in Afghanistan.

I completely agree with the principle of the deployment of troops for peacekeeping and peacemaking operations in the name of either the war on international terrorism or for human security, but the reality is we are overstretching our forces.

We have two choices in that regard: we can either begin to scale back to a certain degree, which carries with it certain problems in terms of our commitment to both the United Nations and to the Americans, or we can start to expand the forces. Once again, that carries with it very real resources. The question that follows this is where do you expand it? Of course, that's the hard question.

The reality is when we had 80,000 troops, we engaged in activities that seemed to really require 120,000; when we had 120,000, we had commitments that really required 140,000. Canada is the ultimate overachiever when it comes to the maintenance of international peace and security. I think this is an admirable trait, but I think it's one that we probably will always be facing.

¹ (1520)

The Acting Chair (Mr. John Harvard): Thanks, Dr. Martin.

Monsieur Rocheleau.

[Translation]

Mr. Yves Rocheleau: Thank you, Mr. Chairman.

Mr. Huebert, thank you for your presentation. I have two questions for you.

The first has to do with two things I had personally never heard of. First, there is the Chinese ship that went up north. I would like you to elaborate on that and to explain the significance of that event to me. The other phenomenon, which is natural, at least, we hope it is, is the ice of the North-West Passage breaking up between 2020 and 2050, if I understood correctly. What does that mean, environmentally in particular? I do not know whether you have thought it through that far, but how would that affect the south?

My second question is more global. Another witness said he was concerned about military issues. He told us that if Canada noticed or felt that its sovereignty was not being respected militarily, the best way to deal with the Americans would be to be firm, transparent and appropriate, and to say what works and what does not work for Canada. That is how Canada is going to demand respect. Do you share that way of thinking?

[English]

Mr. Robert Huebert: Thank you very much. Once again, those are very good questions.

To begin with, the Chinese voyage in 1999 was by a scientific research vessel. The Chinese government had approached the Canadian embassy in the spring. They also approached the Americans. The Chinese vessel was basically interested in trying to get to the North Pole. There was almost some comedy in this, because it was not an ice-breaking-capable vessel; it was just a regular research vessel.

They sailed off Alaska for a couple of weeks. Then they simply decided to visit Tuktoyaktuk, which of course is our western-most port in the north. So they appeared at Tuktoyaktuk and disembarked. At that point, the northern area command of the RCMP had no warning whatsoever. The first time the RCMP recognized what was happening was when the cousin of one of the regular detachments--I think her name was Betty or something like that--came up and said, “Excuse me, are these some of the illegal Chinese immigrants that we're hearing so much about?” Remember 1999 was when illegal immigrants were coming from China. So they wandered around a little bit. They did some sightseeing around Tuktoyaktuk, and looked at some of the bingos. Then they reboarded and went off on their merry way. They tried to go a little farther north, but ran into ice, and then immediately turned around.

So it's funny. But on the other hand, it does highlight our limited surveillance capabilities. We simply did not see them coming, once we missed the call on them coming up. The year 1999 was an interesting year for events like that.

As for the Northwest Passage, I just came back from a meeting with Norwegian and Canadian experts on this issue. While the estimations or the science itself are fairly convincing, if you talk to the scientists themselves, they'll say they're being cautious. All of them believe we will be faced with an ice-free Northwest Passage by 2020, and probably an ice-free polar cap. Nobody knows what this means for the overall climate, because it's going to affect every single one of the major currents. This carries all sorts of ramifications with it.

However, what it means for southern Canada is that for the first time since the European explorers tried to discover it, the Northwest Passage is going to be a commercially viable strait. So you're going to see international shipping companies becoming very interested. Depending on where you're going, you can save from 3,000 to 5,000 nautical miles from ports in Japan to the eastern United States or to Europe. These are considerable savings.

This gives us both opportunities and challenges. The opportunity is that a properly managed international strait--as the Singaporeans have shown us--can provide us with a certain economic benefit. There will obviously be new jobs at various ports of entry--Tuktoyaktuk and possibly Iqaluit. Once again, it depends on exactly how the ice melts and what happens in this regard. There are also challenges, however. If you do not have proper surveillance capabilities and proper enforcement, we know from the straits surrounding Indonesia that you will have a law-and-order issue with smuggling of goods and people, and associated health risks from transference of disease. So there is both good and bad. But if we are properly prepared, the reality is we we might be able to benefit economically in this regard.

The issue that is going to be of public concern, of course, is sovereignty. Canada claims the Northwest Passage as internal waters by historical right. In all likelihood, if the passage opens up, any international court claim by Canada will probably be defeated. In other words, the criteria for an international strait are relatively straightforward. Once the passage becomes commercially viable, it's going to be difficult for us. In the current period, historical claims are not being upheld by the International Court of Justice. So I don't see this as a possibility.

¹ (1525)

What that means is that we lose the right to unilaterally impose environmental standards. That's the real issue in terms of what type of ship, how they are to be built, and how they're to be manned.

We might help ourselves if we ever got around to ratifying the Convention on the Law of the Sea, of which, of course, Canada was a major creator. Yet we are one of twelve countries, I believe, including Somalia, Sudan, and Croatia, that haven't gotten around to ratifying it. That might be one way we could strengthen it.

On your third question, on Canadian sovereignty, let me make it very clear in terms of my belief. When dealing with the Americans, the most efficient way of making sure you have the Americans' attention is to be participating when you have shared interests. When we have differences with the Americans, such as with Cuba, it becomes a lot easier to say to the Americans, “We disagree with you on this policy, but we're pulling our weight because we agree with you on these other policies”. The paradox, if we look at the historical record, is that by participating closer with them, you actually have a better capability of protecting our sovereignty.

The problem with the Americans is that the moment they think you're not fully pulling your weight or are not serious about an issue and you try to say no to them, they tend to ignore us from a foreign policy perspective. We've seen this time and time again. The time they seem to take us seriously is when we can say to them, “We're doing this because we agree with you on this particular policy, but, by the way, we don't agree with you on that”.

So I'm of the opinion that the best way to maintain your sovereignty is by actually getting closer in that regard, rather than the paradox of going further. If you go further, you have to be willing to pay for the necessary maintenance and expansion of the military force, which I think goes beyond what Canadians would accept.

¹ (1530)

The Acting Chair (Mr. John Harvard): Go ahead, Mr. Rocheleau.

[Translation]

Mr. Yves Rocheleau: With respect to the North-West Passage and the ice breaking up, do you have any information on the environmental impact of this phenomenon, including information on the effect on southern water levels?

[English]

Mr. Robert Huebert: You've raised the whole issue of sea level rise if we start seeing a melting of the polar cap. The current scientific expectation, for a host of geophysical reasons, is that the actual sea level would not rise that high with the melting of the polar cap alone. But where sea level rise becomes a very real issue is of course with the melting of the Greenland ice cap. In other words, when ice that is on top of land melts, that substantially raises international sea levels. If it's already on the water, the rise isn't that substantial. I can't remember right now what the specific ratios are.

It's seen as being very serious. There are wide estimations, however, in the scientific literature as to how much of a sea level rise is to be expected. In Canada, Tuktoyaktuk probably would be washed away. It is almost at sea level. Any rise, even something as minor as half a metre, is probably going to finish that. You're also going to see impacts in the southern cities. We don't know exactly how much at this point. The scientists are quite divided on this issue at this time.

The Acting Chair (Mr. John Harvard): Thank you, Mr. Rocheleau.

I have a couple of questions, Mr. Huebert. I'd like to pick up on this issue of how we should engage the Americans. In this series of hearings we have been given the advice that we Canadians should not be timid and certainly not obsequious when it comes to engaging the Americans. We really should be quite assertive and proactive, and we should not always wait for an American proposal but rather decide beforehand what our own interests are and deal from perhaps a position of strength. If we do so, the advice says, the Americans will respect us for it, as I think you've already suggested, particularly if they see us pulling our weight, to use your words, in some areas. I think I agree with it.

My concern is when Canadians do assert themselves vis-à-vis the Americans, it's not the Americans we have to worry about so much, but a lot of Canadians. We have to be watching our asses, our backsides. I don't know whether it's a general lack of confidence on the part of some Canadians or what it is. You can be sure we will be attacked for not being cooperative, or whatever, with respect to the Americans.

Do you have a reaction to that?

¹ (1535)

Mr. Robert Huebert: Yes. I agree. I've seen this phenomenon time and time again.

My response would be that when we've disagreed with them and have been able to express to the Canadian public the reasons in order to defend it, we've seen that the opposition, in a kind of knee-jerk response saying we should be more cooperative, tends to be a mile wide and an inch deep.

In other words, every single time we look at Cuba, where we've had major differences with them, you will always get a certain number of Canadians asking why we are doing this to our American allies. Substantially, any research that I'm aware of tends to back up the research of Peter McKenna, at Mount Vincent University, or John Kirk, at St. Mary's University in Nova Scotia, that Canadians, as a whole, will accept it.

It gets to the whole point and the whole issue I began with: Canadians need to constantly be discussing engagement. The worst thing we can do is say we're not going to do anything. We will try not to stir the pot and don't want to talk about it. It's the strength of what Canada is all about. You will always get those who agree. I think, generally speaking, the moment you can annunciate a Canadian interest that is different from an American interest, and explain why we are going in a certain way, Canadians, as a whole, tend to accept it.

The Acting Chair (Mr. John Harvard): I know I was struck by the reaction of some Canadians in the wake of 9/11. I think there were some Canadians, pundits and some others, who looked for a way to blame Canada for the entire episode. I found it extraordinary. I don't know whether you witnessed it or felt it. I sensed there were some Canadians who wanted us to take ownership of the debacle.

Mr. Robert Huebert: There were some individuals, to amplify what you're saying, who almost seemed disappointed when it turned out that the 16 or 17 terrorists all came directly via points of entry to the United States. I agree with you entirely. Once again, quite frankly, when you do international relations for any length of time, you find out there are extremes on all points of the issue.

The Acting Chair (Mr. John Harvard): I want you to square something for me, if you can. On the one hand, on many of the issues, including U.S. NORTHCOM, you said there hasn't been enough consultation and there should be more. Of course, consultation is time-consuming. On the other side, for U.S. NORTHCOM, you were suggesting that perhaps our response should be quick. You were suggesting that being in early is better for us because it might give us an opportunity to perhaps shape the organization. From my point of view, we can't have it both ways. Can you square it for me?

Mr. Robert Huebert: Yes. I guess I would disagree, in terms of not having it both ways, if we have a continual process. In other words, I'm not seeing this necessarily in the whole rubric, where we have consultation only when it leads to a white paper, a white-paper-like form, or some form of definitive report. To a certain degree, if we have an ongoing process at a high level, it cannot be something that basically is below the type of prestige this kind of committee would bring to it. I know it's time-consuming, but as a very democratic function, it provides the ability to constantly talk.

Therefore, when Canadians have to respond quickly, when the decisions have to be made--because you're absolutely right, we don't have time to opt, respond, or really dwell on it--at the very least you'll have had the opportunity to debate, to discuss, and to consult in terms of the general parameters.

The whole issue of how to deal with the Americans when it comes to new institutions has been something we've been dealing with ever since Roosevelt and Mackenzie King met at Hyde Park and started creating the new institutions. This is not a new theme, and these are not new problems in that regard but ones that are continuous. In other words, if we can continually examine and consider matters when individual points of decision occur, we have at the very least a sense of what people are thinking.

¹ (1540)

The Acting Chair (Mr. John Harvard): Now, you were also saying that we had two options--

Mr. Robert Huebert: That is, when it comes to NORTHCOM.

The Acting Chair (Mr. John Harvard): We either opt in or we opt out. But you said that if we opt out, that leaves us with two difficult choices. In fact, I suspect neither is an option. One is that we could go ahead and carry out our own homeland defence, and that would be too expensive. If we chose not to do that but just simply to stay out and do it ourselves--let's say on the cheap, as it were, and those are my words, not yours--then the Americans would not see us as pulling our own weight and we would be penalized somewhere down the line. The way you frame it, opting out is really not a choice.

Mr. Robert Huebert: Well, we've done it in past instances when we have opted out on certain issues, and I have no question that there are often issues. For example, we can go back to the time we opted out of SDI, the Strategic Defense Initiative, back in 1987, but that wasn't a major driving feature. There were a lot of Americans who didn't believe that the Russians were a major threat and that the U.S. needed the type of response SDI was all about. Since September 11 the American perception of threat I think is quite uniform and very real.

When you frame it in that context, when you say that I present it in a manner to the effect that we really don't have a choice about not responding to it, the problem is that the Americans believe completely that it is a threat that needs to be responded to. Historically, whenever the Americans make that decision or get that in their minds, that does very much limit our manoeuvrability.

The Acting Chair (Mr. John Harvard): I'm quite sure you're familiar with what Lloyd Axworthy and Michael Byers have said in reference to NORTHCOM. Do you disagree? One of the things they are basically saying is that this raises a whole lot of questions and that we don't have the answers, at least at this point, and that we should be taking our time to find the answers before we make any decisions.

Mr. Robert Huebert: Unfortunately, I haven't been able to read the report in its entirety. Quite frankly, some of the issues that are raised are red herrings. The suggestion that somehow cooperation in NORTHCOM would affect our policy in terms of women and gays in the forces just stretches the imagination as to how that could ever conceivably be a possibility.

But in terms of the seriousness of the issue and as to whether we should think this out carefully, yes, we shouldn't make any rash promises at this point. Once again, it's something that has been shown historically. The Americans are going to go ahead with this, and if we do not participate early on with them, we know that it's going to be created in a way that only looks at American interests.

If we are faced with a situation where we come to an issue where the Americans have something they want to do that goes directly against Canadian interests, my evaluation is that it is easier to say to them, well, we've tried to do this but we're not going to go along with you; we're going to pull out because we simply cannot allow you this. It gets to the point you raised, sir, about having the fortitude to say to them, when you disagree, sorry, this is a road we can't take.

What I'm suggesting to you is that if we want to follow the model you've suggested, one I agree with entirely, then what you want to do is go with them at this point, since they're determined to go ahead with this, to try to make sure that it is shaped to reflect Canadian interests. It's much easier in the long term if, when we reach that roadblock, we can say to them honestly, sorry, this is giving up too much control, and we don't agree with this. We can just simply say to them, we're out of here. This is as opposed to the other way around.

The Acting Chair (Mr. John Harvard): Do you believe it when we're told that the Americans want a response from us, say sometime this month, in preparation for a fall implementation date for NORTHCOM, or do you think that may be just an American bluff if it is true?

¹ (1545)

Mr. Robert Huebert: It's probably an American desire.

The Acting Chair (Mr. John Harvard): Not a bluff, a desire.

Mr. Robert Huebert: In other words, they're trying to plan ahead. I know from some of the individuals that they want to know what they are building. They want to know what the limitations are, how far they can go if we're in. Does that give them certain planning opportunities if we're not in? They're going to have to be able to respond to that.

So from a planning perspective, that's a common practice. We want to know what's happening so that we can start, because we're dedicated to having it at this point.

My discussion formally with both Canadian and Americans on this issue is that the Americans generally want us to participate, but at this point there isn't the same type of “you must be in or else” consideration. It's more like, well, if you're not going to be in, that's fine, but later on, subsequently, recognize that it may not necessarily follow what your interests are.

In other words, my understanding at this point, as an academic, let's face it, is that the access to the real senior decision-making is limited to almost non-existent. But from what I understand from everyone I've discussed it with, there hasn't been the pressure. There has been a desire to cooperate and a little bit of the Americans saying, to a large degree, “This is a real threat facing both of us. Why wouldn't you want to be along? Anthrax is not going to respect the Detroit-Windsor border. Canada 3000 collapsed even though it was a Canadian company and not an American company. In other words, any hit that is even within our borders is going to hit you guys anyway.”

The Acting Chair (Mr. John Harvard): This is my final question.

These matters that we've touched on today are largely defence and security matters. I suppose they really come under a broader rubric of foreign policy. Do you think we should have a broad foreign policy review before we decide on some of these defence and security issues?

Mr. Robert Huebert: I think we should have a broad foreign policy review; there's no question whatsoever in my mind. Some of the issues, to get back to the point you were raising, don't allow us to have that opportunity. But quite frankly, enough things are changing, enough events need to be responded to that even on the issues that need decisions now, a review looking at the whole foundation of it is needed.

For example, if we say yes to NORTHCOM and then conduct a full-blown white paper foreign policy review and subsequently find that there are just too many problems, it's a lot easier once again to pull out.

In other words, I'm saying I recognize your suggestion about the time factor, but by the same token, so much has changed since 1994 that I agree entirely that the more full and open the examination, the better.

The Acting Chair (Mr. John Harvard): This has been most fascinating. Thank you very much for your time and effort. We really appreciate it.

Mr. Robert Huebert: My pleasure.

The Acting Chair (Mr. John Harvard): Members, this meeting is adjourned.