PREFACE

The increasing economic and political integration and interdependence of countries, largely achieved by way of growing cross-border trade in goods and services and international capital movements under the banner of globalization, has irreversibly drawn national economies closer. In this vein, it is often heralded that the technological revolution in transportation, communications and information processing, which is at the core of the globalization process, has broadened the economic stage upon which firms compete from that of the nation-state to the globe. Understandably, a nation of traders like Canada, which is the largest per capita international trader of the G7 countries, views such developments with much trepidation. Canadians are, almost on a daily basis, being bombarded with claims that in such an environment "footloose" capital will, with the prospects of economic growth and jobs hanging in the balance, arbitrage differences in domestic public policies to the lowest common denominator in a so-called "race to the bottom." The ensuing ominous forecasts of the demise of expensive public programs meant to redress domestic inequities, of impotency in preserving the natural state of the environment for future generations, and of the loss of sovereignty on a number of domestic political fronts, most notably in the ability to conduct independent fiscal and monetary policies, whether correct or not, make for a stark backdrop on which to hang a public policy hat of complacency and in favour of the status quo.

Drawing on events and decision making of the recent past, Canada - as individuals, as business leaders and as political representatives of its citizens - has assessed this situation and concluded that both the opportunities and challenges that globalization presents require some modifications to the game plan. Perhaps our proximity and familiarity with the large and competitive American economy explains why Canada has been in the vanguard of public policy shifts favouring market liberalization through the reduction of trade barriers and the withdrawal of intensive government involvement in, or, if you will, the regulation of, its economy. Coupled with these economic strategies is the preference for a rules-based, rather than a power-based, managed order of the international trading system. As a middle-sized open economy, Canada fares much better under this type of governance regime.

Such a conclusion depends, of course, on "getting the rules right." However, "getting the rules right" begs a few important questions. As the Standing Committee emphatically stated in its ninth Report, entitled Canada and the Future of the World Trade Organization: Advancing a Millennium Agenda in the Public Interest, who makes and enforces the rules, how, and for whose benefit are valid questions deserving satisfactory answers. While as much as a decade or two ago trade rules were about tariffs and trade only, they are today in the name of "national treatment" intruding into matters that have traditionally been regarded as strictly domestic policy. Trade courts, bolstered by new powers of sanction granted in the Uruguay Round of the General Agreement on Tariffs and Trade, are scrutinizing domestic laws and regulations for discriminatory non-tariff trade barriers and, with unprecedented frequency, are forcing their redesign. Indeed, this encroachment has been so profound and pervasive that some people, including Canada's Trade Minister, are now claiming that trade policy is domestic policy. What is patently clear from all the turmoil created is that the boundary between domestic policy and trade policy is no longer clearly delineated and the uncertainty arising therefrom has forced some amount of second guessing on the part of many domestic policy-makers, national and sub-national alike.

Obviously, as trade policy matters extend further into the domestic policy sphere and have impacts on local affairs, it is imperative that broader consultation and participation of the public at various stages in the decision-making process be undertaken. Beyond the obvious reasons of advancing democratic principles, the engagement of society at large is needed to obtain input in designing sustainable public policy responses to the challenges of globalization that are also consistent with our commitments made under the rules-based trading system that Canada has worked so hard to establish. Better coordination in overall public policy-making is also likely to follow from such a process. As the Honourable Sergio Marchi, former Minister for International Trade, stated to the Committee: "Canadians want their international institutions, as well as their own governments, to be more open, more accountable, and not less. ... [W]e need to be more inclusive. We need to build a stronger consensus on issues that affect our people so directly." [88:920]

It is in this spirit that this Committee is conducting a parliamentary review of the negotiation of an FTAA agreement. As it was with its review of the proposed Multilateral Agreement on Investment and the upcoming issues of the Millennium Round of negotiations at the World Trade Organization, this Committee, as your elected representatives, intends to provide clear guidance to the Government of Canada and its negotiators. The objective here is to assist our trade officials in achieving a result that serves Canada's best interests, doing so through an open and democractic process that can be broadly supported by Canadians. The Committee also wishes to make it known that this is not a final report; it is a first report in what is expected to be an ongoing parliamentary review of an FTAA until the final deadline for concluding such an agreement in 2005 is reached.