HEAL Committee Meeting

STANDING COMMITTEE ON HEALTH

COMITÉ PERMANENT DE LA SANTÉ

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, December 4, 1997

• 1114

[English]

The Chair (Ms. Beth Phinney (Hamilton Mountain, Lib.)): Order. This is meeting nine of the Standing Committee on Health.

• 1115

We have a problem in that we're going to be 15 minutes short. I probably have the consent of everybody on the committee to extend the meeting for 15 more minutes, since it's our fault.

The first witnesses today are from the Canadian Health Coalition. They have five minutes to address the members of the committee and then we have 40 minutes or so left for questions and answers.

We'll first hear from the Canadian Health Coalition and then from the Council of Canadians.

Barry, perhaps you could introduce both yourself and Kathleen—or have you decided between the two of you who will go first?

Ms. Kathleen Connors (Chair, Canadian Health Coalition): Yes. I will.

The Chair: Go ahead.

Ms. Kathleen Connors: Good morning, members of the committee, and Madam Chairperson.

Because five minutes is a very short period of time to address a very complex issue, I want to start out by laying the position of the Canadian Health Coalition firmly on the table initially.

The Chair: I should have explained to you that some literature already has been passed out to all the members here, particularly from the Council of Canadians. We know what has been said at the other committee that's really studying MAI. We only want to hear the things that have to do directly with our committee, which would be on health. So if you could keep it down to that, it would help the committee members.

Thank you. I won't interrupt again.

Ms. Kathleen Connors: I take it that doesn't come out of my five minutes.

Some hon. members: Oh, oh.

Ms. Kathleen Connors: As I said, I want to lay the issue very clearly on the table. That is contained in two sentences.

Before I continue, I hope members of the committee have a copy of the brief. We apologize; it is in English only because of the very short period of time the Canadian Health Coalition had to prepare for this presentation. There are a number of appendices also attached to the brief that will be important in addressing specifically the health care issues around this.

Back to laying it on the table. We want to say clearly to the committee that the NAFTA reservation for medicare was flawed and should not be reproduced in the MAI. Health and social services must be fully carved out of domestic and international trade agreements. I'm going to very briefly indicate why.

We come, as the Canadian Health Coalition, from a very broad base of membership: seniors, anti-poverty groups, health care providers—I myself come to this coalition as president of the National Federation of Nurses' Unions—church groups, and many people who are extremely concerned about what is happening in Canada's health care system.

Joining me here are Michael McBane, our executive co-ordinator, and Barry Appleton, an individual Canadian and international trade lawyer who has once again provided his legal expertise to the Health Coalition because of his interest and commitment to Canada's health care system.

At the outset I simply want to say that the MAI is a landmine that has the potential to devastate Canada's health care system. While we are pleased to be here, and pleased that the standing committee is discussing the issue of MAI and its impact on health care, five minutes is not sufficient to brief anyone on very complex issues contained in a complex investment agreement. Consequently, we hope the committee will read the brief we have provided, its recommendations, and the attached appendices in order to fully understand what we're saying in our brief intervention.

One, the MAI draft reservation does not adequately protect medicare. The Canadian Health Coalition is disturbed to see the inadequate reservation used in NAFTA, annex II-C-9, as the identical reservation in the MAI. The MAI draft reservation, as submitted by Canada's trade negotiator, is inconsistent and imprudent at best, and a deliberate attempt to expose health care to commercial forces at worst. In light of the obvious weaknesses of the reservation identified, the Canadian Health Coalition recommends the following.

• 1120

The House of Commons' Standing Committee on Health should strongly recommend to the Minister of International Trade and his MAI negotiators that the current draft reservations for health and social services should be replaced by a complete carve-out for health and social services.

Second, proposed changes to the agreement on internal trade threaten medicare. The proposed changes to the agreement on internal trade would shift the focus of service delivery in health and social services on local, community-based organizations to continental, and possibly global, providers.

Because the Canadian Health Coalition believes that these proposed changes are at odds with the goals of community-based, not-for-profit health care, we recommend the following.

The House of Commons' Standing Committee on Health should strongly recommend to the federal and provincial ministers of industry that the provision of health and social services also be carved out from the interprovincial agreement on internal trade.

The third point is that the objectives of medicare are incompatible with market principles. The future of public health care and social services is absolutely too important to be left in the hands of trade negotiators and senior government managers who are serving what we say are business interests.

The Canadian Health Coalition therefore recommends that a special committee of the House of Commons should conduct public hearings into the implications of trade liberalization on health policy objectives and the impact of health care commercialization and privatization on the objectives of the Canada Health Act of 1984, which very clearly state that there should be the facilitation of reasonable access to health services “without financial or other barriers”.

Barry.

The Chair: Barry, are you going next?

Mr. Barry Appleton (International Trade Lawyer): Yes, thank you, Madam Chair, and members of the committee.

First, I'd just like to point out that I'm here as an independent international trade law expert. I'm not a member of the Canadian Health Coalition or on behalf of any particular client.

I'm here to try to provide you with some context from my understanding of how these international agreements affect specifically the provision of health and social services.

I have three points to make.

The first is that the MAI is more than the NAFTA agreement. I'm a NAFTA expert. I wrote a text on NAFTA: Navigating NAFTA. I know what NAFTA is, and this is not NAFTA.

This agreement has 29 members rather than 3. It has much broader obligations.

Of most concern to this committee is the issue of subsidies. Under the MAI, these are termed advantages, which are broader than subsidies. It means any benefits—this is done by government—clearly covered by the obligations of the MAI. This is a very significant issue because, as you can understand, this will affect CPP, UI, all provincial health care plans. All of them are going to be subjected to the specific provisions.

The NAFTA agreement understood that this could happen, so it added specific wording in article 1108(7) of NAFTA to make sure that advantages were not covered. I suggest to you that anyone who testifies to you today should give you specific references to what they're referring to so you can check for yourself as to whether or not the text says whatever they tell you.

The Chair: I'm going to interrupt you now, I'm sorry. Did you have an agreement from Mr. Clarke that you're using part of his five minutes?

Mr. Barry Appleton: He agreed to save me 90 seconds; I'm actually at 32 seconds.

The Chair: Okay. He didn't explain that. You're down here as being with Ms. Connors, and she has already spoken for five minutes. Okay, go ahead.

Mr. Barry Appleton: We'll just call this an even minute, Madam Chair.

The Chair: Are you finished now?

Mr. Barry Appleton: No, I still have two points that might be of some interest to members.

The Chair: Okay.

Mr. Barry Appleton: The second point is that health and social services are covered by the MAI. Specifically, there are areas—this is if the MAI were to be adopted—that would inhibit the ability of government to be able to maintain certain types of programs.

The Government of Canada has in fact recognized this, and it has made a proposed reservation to the MAI. That means it recognizes that the agreement would in fact be inconsistent with what we do for health and social services.

But there's a problem with that. Canada's current attempt to protect this area is insufficient. The reservation that has been proposed—as an international trade law expert, I'm telling you this—is not sufficient to be able to protect the types of programs that are currently undertaken by governments in Canada. The wording of Canada's social service—

• 1125

The Chair: You have two and a half minutes left.

Mr. Barry Appleton: Madam Chair, if you would prefer that I not—

Ms. Judy Wasylycia-Leis (Winnipeg North Centre, NDP): I have a point of order, Madam Chair. We have spent three hours hearing technical presentations on herbal medicines and we can't even respect the presenters and give them five minutes each on something that will potentially fundamentally alter our health care system. I would ask you to allow them each an appropriate amount of time to finish their presentations.

The Chair: It was the agreement of the committee that there would be five minutes per group that came before us. One group has already had five minutes and the other group will be allowed five minutes.

Mr. Barry Appleton: My colleague has graciously agreed to give me whatever additional time I need to finish.

The wording of the existing reservation from NAFTA, copies of which I believe the clerk has distributed in both English and French, is ambiguous. It clearly gives protection for the areas of law enforcement and corrections, but for other areas of social services it's highly problematic.

I want to underscore that they are only covered to the extent that they are social services for a public purpose. The American government has tabled the document to all the American states saying that whenever a commercial provider is in that sector it is no longer a social service, it is a commercial service and that reservation does not apply.

As a result, there are three suggestions I could make to this committee, and I hope you will wish to deal with them when there is time in the question period. The first is that the Government of Canada must totally exempt all government-sponsored services for health or social benefit from the MAI. It's just that simple.

Suggestion two could be done in addition to number one. Canada should revise its current social service reservation to the MAI to clearly and unambiguously protect all government-sponsored health and social services. This is a belt and suspenders. That way you can exempt it, but if there's any question you're still protected. It doesn't mean you have to do things; it just gives you the opportunity to be able to govern in that area and not have to pay compensation to foreign investors that bring claims.

The third is that Canada should only apply the MAI at the federal level, which is where we're negotiating it, or permit provinces to voluntarily be bound to the MAI and permit them the opportunity to make appropriate unbound reservations for future measures so they can make those reservations when they choose to become bound.

I've provided the clerk of the committee with a brief. I hope you have an opportunity to review it as you look at this issue. Thank you very much.

The Chair: Thank you.

Mr. Hill.

Ms. Judy Wasylycia-Leis: A point of order, Madam Chair. Could I ask for unanimous consent to allow Tony Clarke to speak for a minute?

The Chair: Do I have unanimous consent?

Some hon. members: Agreed.

The Chair: Mr. Clarke.

Mr. Tony Clarke (Board Member and Director, Polaris Institute; Council of Canadians): Thank you, Madam Chair. Obviously, this is not the time to do justice to anything.

First, I'm here representing the Council of Canadians. Secondly, there is a copy of a brief, but unfortunately it's in English only because I was asked to be here too late to be able to produce it in French as well. Thirdly, I've written a book on the subject so I know the deal; I've followed it all the way through and have watched every aspect of it.

I have three quick points. First, what Mr. Appleton just said is absolutely crucial with regard to the principle of national treatment in the MAI as it applies to all government subsidies. I urge the committee to recognize that our health care system is delivered very much by non-profit and for-profit institutions that would be subject to the commercialization process he talked about.

Secondly, there is a whole host, as you well know, of for-profit health care corporations that are lining up and are already into our systems through joint ventures and partnerships that are ready to take advantage of these subsidies and make sure they are available to foreign-based corporations.

Third, the intellectual property rights provisions of the MAI could be used to expand and extend application to the whole drug manufacturing area. Also, when we're looking at pharmacare, there are some really serious pitfalls and limitations as to how the government can move ahead with its election promise on pharmacare and a whole host of other things in the second red book that involve government subsidies.

• 1130

Finally, I'm tabling a legal opinion prepared by Mr. Appleton on behalf of the Council of Canadians regarding the health and services provisions. It's clear from this legal opinion that you can tell anyway that what has been put forward as a NAFTA-like exemption is full of holes as far as its application to health and social services and to Canada's medicare program in particular is concerned.

We believe these flaws, combined with numerous others, provide more than sufficient grounds for calling upon the government to withdraw from the negotiations and to refrain from signing the treaty altogether.

At the very least, this committee should send a strong unequivocal message to both the Minister of Health and the Minister of International Trade declaring that the MAI as drafted poses a serious threat to medicare in this country. It should urge Canadian negotiators to demand a complete carve-out for health and social services in order to ensure that the new investment rules would not apply to these kinds of services.

Thank you.

The Chair: Mr. Hill, you have five minutes.

Mr. Grant Hill (Macleod, Ref.): Thank you. I know you're hurried here, so I hope the questions will allow you to expand.

As I read through the list of OECD countries I see every country but one has a public medicare system. The U.S. has not, but the other countries do. They have taxpayer-funded medicare.

So I'd like to know what the other countries that have similar medicare systems to Canada's are doing in regard to the MAI. Are they moving along the road as you suggest to make the reservation more specific so that public-funded medicare will not be affected? This is quite crucial, because if the other countries are doing as you say, you have a very legitimate argument.

Mr. Barry Appleton: I'll try to give you a preliminary view. One of the problems about the MAI process is that the entire system is shrouded in secrecy. The filing of reservations is done by governments individually. They're not shared with the public, so I can't tell you the extent of the other reservations.

What I can tell you is that under the NAFTA reservation, which was done by three countries with very different systems, Canada, the United States, and Mexico all made the same reservations to the NAFTA for health and social services. That, in my opinion, was problematic, because one common definition will apply for what is a social service for public purpose across the three governments.

What you would want to have is the type of system where each government can determine what is a social service or what is health care for that country. The definition of “health care” or “social service” in the United States is clearly on record as being different from that in Canada. I would suspect that in Mexico it would be different from the other two.

Mr. Grant Hill: That's fair.

The Chair: Mr. Hill, Mr. Clark would like to answer.

Mr. Grant Hill: I would rather not get into a long debate on these questions, but the answer I had was you're not sure the other countries have the same concerns you do in relation to Canada. Can you give a tight answer?

Mr. Barry Appleton: I'd be happy to give you a tight answer. It's not that I'm not sure, it's that this should be provided to this committee by individuals in the public. Even if they're lawyers and experts, they're not provided with that information.

Mr. Tony Clarke: Very briefly, the problem is that this has been kept in the hands of a very few people in each government. Now it's breaking out. In France today, for example, there is a full-scale parliamentary debate being put on regarding the MAI and its impacts on social programs, including health care. That is the first breakthrough we've seen, and we're going to see more of this in the coming months.

Mr. Grant Hill: This will be very important to your argument if you can keep us aware of other countries' concerns. If they're parallel, this adds credence to what you've said.

Secondly, you must pardon me for doing this to you, because I know you have a lot to say. The same arguments, and really quite vigorously, were expressed about NAFTA. I was not sitting here around this table, but I do remember some of the arguments. Can you point to the results from NAFTA that give your argument stronger weight? In other words, what problems for health care have existed as NAFTA has come on stream?

Ms. Kathleen Connors: Dr. Hill, we only need to look to the province from which you come. On Friday, the College of Physicians and Surgeons in Alberta will be asked to rule, by the Health Resources Group in Calgary, on approval to extend the mandate of the Health Resources private facility, which has until now been called a clinic, in order to allow for overnight stays. To us, that will be the creation of the first private hospital in Canada, should the College of Physicians and Surgeons approve that extension for overnight stays.

• 1135

We see very clearly lurking at the door, under the guise of NAFTA, the approval for private facilities. If it happens in Calgary, it will happen at Kings Health Centre in Toronto and in the plethora of expansion into previously public services and lab services, where there are now public-private partnerships that are escalating the cost of lab services. There is much testimony about the erosion of the very basic cost-effectiveness of the public system in Canada.

Mr. Grant Hill: Hook that to NAFTA for me, though, because what these facilities are doing are things outside medicare. Hook it to NAFTA. Don't just tell me that this is a big threat.

Mr. Michael McBane (Executive Coordinator, Canadian Health Coalition): On NAFTA, we did raise serious concerns about the II-C-9 reservation, which is the exact wording in the MAI. Almost all provinces in Canada raised the alarm bell against the advice of the federal negotiator. At the last minute, the federal government changed its mind. It exchanged the trinational agreement with three countries—appendix 3, which we handed to everybody—and Canada issued a general reservation acknowledging the holes in the II-C-9 reservation. This is an attachment to NAFTA as a result of our concerns, so to see that put back on the table in the MAI is outrageous.

Mr. Barry Appleton: If I could just give you a brief answer, Dr. Hill, the fact of the matter is that this change that has just been adverted to would not be covered by the NAFTA reservation. All the pre-existing hospitals and arrangements were covered, but a change is not covered and that is therefore relevant.

The second point that is relevant here is that the MAI doesn't require you to give the best in-province treatment but the best in-country treatments. That means a decision in Alberta will in fact bind every other province in Canada. That's also quite significant and is the reason why you'd want to have a broader reservation: you would only cover the province where that in fact took place. No one would suggest that Newfoundland should be bound by a decision of Alberta or, more particularly, that a decision in Saskatchewan should bind the Government of Alberta. You would want to be able to make your own determination, I imagine.

[Translation]

The Chair: Ms. Picard.

Ms. Pauline Picard (Drummond, BQ): Welcome. Forgive my ignorance, but I am not very familiar with MIA. I am a neophyte with this agreement. I would like you to tell me clearly what its objectives are with respect to health services, and what is the reservation of the 28 OECD members you refer to. I would also like you to give me examples. I am sorry, but I am completely lost in what you are saying this morning.

[English]

Mr. Barry Appleton: I have to ask the clerk whether or not all members of the committee have received a copy of the NAFTA II-C-9 reservation in both English and French.

The Clerk of the Committee: It was in the briefing notes sent out by the researchers.

Mr. Barry Appleton: Since I haven't seen that, if members are able to turn to that, you'll be able to see very clearly what the reservation is, and I'll explain it to you. I'll just read it to you. It is very short.

What the reservation says is this:

Canada reserves the right to adopt or maintain any measure with respect to the provision of public law enforcement and correctional services,

—that's a complete reservation, and it's very similar to what I had suggested earlier—

and the following services to the extent that they are social services established or maintained for a public purpose:

—and then there's a list—

income security or insurance, social security or insurance, social welfare, public education, public training, health, and child care.

• 1140

That is it. So to the extent that something is a social service maintained for a public purpose and it is one of those enumerated items, it will be covered.

The difficulty is that the U.S. government issued a document to its state government that had to make reservations under that reservation, and that document made very clear that if there were any commercial providers in that sector, it was no longer to be considered a social service but a commercial service. That means that what we in Canada believed, that this was very broad and was totally covered, was not the same as what the Americans believed.

The difficulty is that reservations and exceptions to international agreements are interpreted exceptionally narrowly. In fact, in the very first decision of the NAFTA, which dealt with supply management for dairy items, the panel reiterated that exceptions to agreements must be very narrowly interpreted because the main objective of the agreement is trade liberalization—in this case, investment protection. If you have a health care system that in fact gives a benefit to domestic providers over foreign providers—and that is what the variety of Canadian health care systems do—that is inconsistent with the obligations under international investment agreements. It's that simple.

If you do not wish to permit foreign providers to have access to your health care plan in the province, then you must have a reservation or a change in the obligation. This reservation we have currently isn't good enough.

I'm sorry to come before this committee and say that the emperor has no clothes, that we are in fact exposed under the NAFTA. We didn't pick a good model for NAFTA, and we shouldn't pick the same model for the MAI. The MAI should be better, and we should do something to try to fix this problem under NAFTA. This problem is in fact fixable.

This is something that this committee and this government can do to fix this problem. If you don't, I'll come back before this committee with clients of mine. My clients will seek to be able to get recompense, because you're going to give them specific investment rights.

Under the NAFTA agreement, if a government does not meet its investment right, the investor, not the investor's government, is entitled to compensation through an international process. That is a very fair process that will look at the words. It won't say what the intentions are; it won't say, well, we intended to cover that. It will look at the words right in the agreement, right in this NAFTA, right in this MAI, and it will say what they're entitled to and what the level of compensation is. It's up to members of this House to be able to determine what in essence the level of protection will be.

I hope that answers your question.

The Chair: Madame Picard?

[Translation]

Ms. Pauline Picard: Would you like to respond?

[English]

Mr. Tony Clarke: I have a short comment, Ms. Picard. I think it's very important, particularly in relationship to Quebec, with the kind of social economy you've tried to work out and the recent child and family service pact and things like that. These are subsidies by government to non-profit, community-based agencies.

Under the MAI, the government would not be able to simply give those subsidies to community-based agencies. It would also have to make those same subsidies available to foreign-based corporations or companies or agencies or institutions that wanted to have access to that market in Canada; it's a commercialization of that, and it therefore runs flat in the face, I would suggest, of some of the basic objectives that have been behind the process you've been developing.

The Chair: Thank you, Mr. Clarke.

Mr. Myers.

Mr. Lynn Myers (Waterloo—Wellington, Lib.): Thank you, Madam Chair.

Mr. Clarke, in your testimony—I think it was in point 3—you alluded to intellectual property rights with respect to pharmacare and the whole process with respect to medications and drugs and such. I wonder if you could elaborate on that.

Mr. Tony Clark: The only thing I can elaborate on at the present time is that when you look at the MAI and at the intellectual property rights provisions within it, it provides the grounds for further strengthening the moves that were made in the past to provide patent protection for foreign-based pharmaceutical industries. It can do so if there's an attempt to move in terms of strengthening the whole area of compulsory licensing, plus, for example, moving into the patenting of life forms. The reading many people have had of that intellectual property rights provision is that it provides the grounds to further do that. I would have to leave it to other experts to fill that in in more detail.

• 1145

Mr. Lynn Myers: Are you of the opinion that it would affect the pharmacare program that's presented?

Mr. Tony Clarke: In terms of the pharmacare program, there is nothing in the MAI, as such, that says that the Government of Canada cannot bring in a pharmacare program, but if the Government of Canada wishes to make that pharmacare program cost-effective by, for example, working out an arrangement and favouring, for all intents and purposes, the generic drug industry in this country, and therefore making it much more cost-effective, then that would be seen as discriminatory and the transnational pharmaceutical industry would have clear grounds and the tools in the MAI to take the Government of Canada to the cleaners, using the investor state mechanism.

Mr. Lynn Myers: As a supplementary, do you know the views of the Canadian Drug Manufacturers Association or the pharmaceutical manufacturers on this particular point?

Mr. Tony Clarke: No, I don't specifically, but maybe Mr. McBane does.

Mr. Michael McBane: We certainly know the views of the Pharmaceutical Manufacturers Association of Canada. They are currently negotiating with the Minister of Industry for 25 years' monopoly protection beyond the current 20. The pattern is there's never enough protection and they will use one jurisdiction as leverage for another. Obviously, the MAI would weaken the government's hand in terms of a public drug plan and would strengthen the ability of the international industry to seek expropriation payments in lieu of their right to market their drugs.

The Chair: Ms. Wasylycia-Leis.

Ms. Judy Wasylycia-Leis: I'd like to thank the presenters for taking the time to be with us this morning and to apologize for the squeezed time you're in and the last-minute notification. You should know that it was a struggle to get this matter before this committee. It was only reluctantly agreed to last week, and I really appreciate what you're doing to help enlighten us all as we move into this critical stage.

One of the key issues around the table is that if we can nail down the link between NAFTA and the erosion of medicare, then we can begin to convince folks of just how serious the MAI is. Kathleen Connors mentioned the situation in Alberta. I wanted to point out that as we speak, information is being released in Manitoba showing that the contract for privatized home care by the Conservative government has gone to a wholly owned American company by the name of Olsten Corporation, which not only is totally American but also is under investigation in the state of Washington for failing to comply with doctors' orders and is under investigation for fraud in other states.

To me it seems that this whole situation of privatization is a result of NAFTA, and what you're telling us today is that if the reservation in NAFTA left grey areas, the reservation, which is the same as that in NAFTA, for MAI gives us a black area, in fact a black hole, into which medicare may fall.

My question, which relates to Lynn Myers' question, is, if MAI goes through with the present reservation and no other changes happen, can this government actually (a) preserve medicare as we know it today and (b) move forward and keep its promises to include in, to add to, medicare a national drug plan and a national home care plan that is truly in keeping with medicare, which means single-payer, universally accessible, and administered publicly? Is that possible under the current wording with the reservation as it presently exists in MAI?

Mr. Barry Appleton: Under the NAFTA agreements—if I can address the NAFTA first and then the MAI—the government has continued to provide national health care programs, but there's some risk. The fact of the matter is that if an aggressive American company wants to take a challenge, there is some risk that an international panel would make a binding decision on that.

Under the MAI, which is a broader agreement and which covers the whole issue of advantages, the provision of these health care systems and other programs would clearly be inconsistent with the obligations of the agreements. That is why the government has moved some sort of reservation.

The difficulty is that the reservation isn't broad enough to cover that. It's too ambiguous.

The real question I had for members of the committee is, the cost of making the reservation clear is nothing, but the cost of not doing it could be significant, so why would you want to take the risk? There's no cost whatsoever to the government to preserve its ability. Why would you ever want to have that risk?

• 1150

New programs clearly will not be covered. They certainly will be problematic. So if you know that new programs are going to be problematic, that existing programs dealing with subsidies, for example, the provision of health care funding in the various provinces, are going to run afoul of these obligations and that all the existing reservation does is try to plug a big hole with a little band-aid, why wouldn't you fix it? Why wouldn't you make it clear?

If I were advising a client of mine, I'd certainly tell my client to get the best protection he can, and the best protection is, first, to fix it in the actual agreement itself; and second, double up with a reservation, to the extent of any inconsistency. Then you might be covered. That seems to me to be a better business-type thing to do here.

Does that answer your question?

The Vice-Chair (Ms. Elinor Caplan (Thornhill, Lib.)): Your time is up.

Ms. Judy Wasylycia-Leis: Okay. I'll come back to it.

[Translation]

Mr. Claude Drouin (Beauce, Lib.): Mr. Appleton, I want to make sure I understand. Could you explain to me clearly what is meant by “we would have to provide medical care to foreigners”? Does this mean that we, who pay for the system, would have to provide the same services to foreigners who come here, at any time and by any means? Is that correct?

[English]

Mr. Barry Appleton: It's actually more than that. Right now, in fact, we do provide service to any foreign visitor in Canada who has emergency health needs. That's done in each province.

But what I'm saying is that you may not discriminate on the basis of the nationality of an investor or their investments. Right now, for example, in a number of provinces, foreign health care companies are not permitted to come in and bill the provincial health care system. For example, if you are an American HMO organization, you may not get access to the health care system in Quebec. You may not bill that system for services you provide. If you provide services, you have to bill them privately, separately, and for the majority of Canadians they don't want that.

The change would be that under the MAI an American investor, a Japanese investor, or any foreign investor of the OECD countries would be entitled to have an investment in Canada that would be entitled to have access to bill that system. That's a real change. It would be the same thing for private hospitals for different types of services, and that results in what's called “creaming”, with the most sophisticated technology going only to the private centres and with our basic hospitals not investing the money and doing only very basic care. That creates the beginning of a two-tier system. That is exactly what happens with this system.

That is protected by this agreement, because the nature of this agreement is to protect investment and investors. That's the object. If you're going to have that as an objective, you cannot do anything in that system to prevent that from occurring unless you have a reservation or an exception.

[Translation]

Mr. Claude Drouin: You say that it is simple enough to protect this. How do you see this? How could we include it to ensure that this would not happen?

[English]

Mr. Barry Appleton: First of all, I would be pleased to provide to this committee some specific wording that you might wish to recommend. I think that's best done in writing rather than in oral testimony.

In the terms of trade laws, my recommendation would be what is called a carve-out. It would be a specific exemption inside the text itself, for all countries, so there's not an issue, because everybody would be affected. This exemption for government-sponsored health or social service programs would be permitted notwithstanding the fact that it's inconsistent with the other investment obligations.

I'd also recommend that you have a reservation, and I would suggest that the reservation be clearer. It would say that Canada can do anything it wants for health services or for social services, rather than making it subject to other qualifications.

The Vice-Chair (Ms. Elinor Caplan): Given the time that we have available today, Mr. Appleton, I think the committee would appreciate it if you would submit in writing the proposals you've referred to in your presentation. Is that agreed?

Some hon. members: Agreed.

Mr. Barry Appleton: I'd be very pleased to do so, Madam Deputy Chair.

The Vice-Chair (Ms. Elinor Caplan): If you just supply it to the clerk's office we'll see that it is distributed to all members in both languages.

Mr. Barry Appleton: Excellent. Thank you.

The Vice-Chair (Ms. Elinor Caplan): Mr. Vellacott.

Mr. Maurice Vellacott (Wanuskewin, Ref.): Getting back to the question before this one, I didn't get an answer and I wasn't satisfied with respect to Dr. Grant Hills'.... That was the whole issue of whether in the last decade or since NAFTA came into effect you can cite me one challenge under NAFTA where a coercive measure was brought so that we then had to change something in our health care system in Canada.

• 1155

I'm not talking about an Alberta situation that was not a coercion under a NAFTA challenge. You can cite other kinds of changes that have occurred in the last decade. But is there one clear-cut case of a challenge under NAFTA and a coercive measure brought for adjustment in our Canadian health care system?

Mr. Barry Appleton: If I can answer your question technically, the ability to bring challenges under the NAFTA for this type of issue could only have occurred as of March 1996, because that's when the reservations for provincial services—and that's where most health care is delivered—were finalized.

At that time, as Mr. McBane pointed out earlier, the Government of Canada had a global reservation for everything that took place in Canada up to that point. That's not those annex II-C-9 reservations I referred to; this was an additional reservation made by the government. Therefore, everything that was in existence at that time in Canada was covered and it was impossible to bring a challenge. In fact, there were companies that were looking at challenges, but when that reservation took place they were frozen out.

Now with the changes that can be taking place, starting initially, as I understand, in Alberta, what is existing now may change. If that occurs, the reservation will no longer be valid to that extent and a challenge could be brought again.

Mr. Maurice Vellacott: So roughly in the last two years, with aggressive American companies and so on, there has not yet been a challenge.

Mr. Barry Appleton: It was impossible because of the nature of the reservations—

Mr. Maurice Vellacott: But in the last two years—

Mr. Barry Appleton: Yes, because of the broad reservation that was made subsequently, this global reservation to everything, they were frozen out.

Mr. Maurice Vellacott: For all time?

Mr. Barry Appleton: No, that was only to the existing measures at the time that reservation was made. So new measures now could in fact be subject....

Mr. Maurice Vellacott: Since March 1996.

Mr. Barry Appleton: Since March 1996.

Mr. Maurice Vellacott: My question is, have there been challenges in the last two years?

Mr. Tony Clarke: There is one, on the plain packaging legislation this government intended to bring forward regarding tobacco advertising.

What happened was a two-step process. First, the tobacco companies challenged that and hired Carla Hills, who was the negotiator for NAFTA. They brought her in to argue the case in terms of NAFTA and the takings rule of NAFTA and showed that it would be a violation of the takings rule.

The next step was a case that went to the Supreme Court. It was RJR-MacDonald versus the Government of Canada. In that case, the tobacco companies used the takings rule argument from free trade that Carla Hills had brought forward from NAFTA and added to that the charter of rights and the freedom of expression. The court ended up ruling, based on the arguments that were presented, that the government could not bring in the legislation on plain tobacco packaging because it was a violation of freedom of expression in the charter of rights. So you had a combination of how the free trade agreement was used, along with our charter of rights, to force a conclusion along those kinds of lines.

The second thing I would point out is that there are numerous cases, many more that we don't know about, of course, where all of this has a chill effect. Once you have the investor state mechanism and can use it, which will be full blown in the MAI and is not full blown in NAFTA, you have the threat of lawsuits hanging over you all the time. That often means that settlements are worked out behind the scenes before they even get to the point of any kind of major public debate or litigation.

The Chair: Thank you very much.

Madam Carroll.

Ms. Aileen Carroll (Barrie—Simcoe—Bradford, Lib.): Thank you, Madam Chair.

I realize, Mr. Appleton, that you are going to comply with the request and put that in writing, but I'm still going to ask this question because I want to go a little further on that verbally.

Further to Mr. Drouin's question—and I'm quoting the two of you on this issue—you mentioned completely carving out the government health and social programs, doing so with the expectation that all the countries that are players in these negotiations would do the same, putting in a reservation in that regard. I'm going to play the devil's advocate for a moment, if I may, and ask you if you really believe if Canada did that we would be successful in accomplishing that goal and would still be a player in this.

• 1200

Mr. Barry Appleton: Let me answer your most difficult question, the devil's question, first.

Some hon. members: Oh, oh.

Mr. Barry Appleton: I'm a lawyer and it attracts me.

Ms. Aileen Carroll: I know.

Mr. Barry Appleton: I believe Canada would be successful at negotiating an exception, a carve-out, for health and social services. We have a special rule in the MAI negotiation because we're a NAFTA country, and therefore we have more expertise and experience in dealing with these investment agreements than any other country. We have a special role there and a special place at that table, but we'll only make that type of provision known if in fact there is some desire on behalf of Parliament for that to be in the agreements.

If I can clarify what I said, because it's not exactly clear, I suggested that there should be a complete carve-out. That is an exemption that applies to everyone. That's just negotiated in the text. Each country doesn't have to make that. It's just there.

I would also recommend, to the extent there could still be any inconsistency, that Canada make a reservation, and this reservation should apply to all obligations of the MAI. The NAFTA reservations did not. They applied to everything except expropriation, and expropriation is very broadly defined under international law. It's broader than our definition under domestic law, and the level of compensation you obtain under international law is higher than what you receive under Canadian statutes.

So first I recommend the broad exception that applies to everyone and is fair to everyone. The second one is that Canada, because of the way it engages in the provision of social services, should make a separate reservation. It costs nothing and it's just extra protection. It's a prophylactic. That way we would be able to have both. This is something that is quite achievable and quite fixable. The real question I have to raise is this: why wouldn't you seek to do something like that?

Ms. Aileen Carroll: What would be the American response to that, Mr. Appleton?

The Chair: Just a short answer.

Mr. Barry Appleton: I don't believe they would be opposed to that type of proposal.

Ms. Aileen Carroll: Thank you.

The Chair: Thank you very much. I just want to say that it was a unanimous decision to hear from both sides of this argument, and we're glad you were able to be here. I'm sorry we don't have more time, but we at least wanted to hear something from both sides of the argument.

Mr. Barry Appleton: Thank you very much.

Ms. Kathleen Connors: You'll be hearing it from other arenas anyway.

The Chair: You're welcome to come back again.

• 1202

• 1208

The Chair: We have two witnesses with us for this part of the meeting. It will be 45 minutes. We have Stuart Carre, senior associate of global trade and investment. Mr. Carre has two documents with him, which I believe are there. They're in English only, but if anybody wants to pick them up they can.

From the Fraser Institute we have Owen Lippert, a senior policy analyst.

You each have five minutes and then we'll open the floor to questions. Each member will have a five-minute period and they can use that as they wish. If they use four minutes of it for their question then you'll get one minute to answer.

Do you have a preference for who will start? Okay, Stuart.

Mr. Stuart Carre (Senior Associate, Global Trade and Investment, Business Council on National Issues): I think I will, if you allow me, Chair.

I'll have to go fairly quickly through our formal statement, but as you have just mentioned, it is over in the corner. I apologize for not having this available in French.

[Translation]

We did not have time to translate.

[English]

I want to start off with three points. The first and self-evident point is that the Business Council cannot stress enough the importance we attach to protecting Canada's health care system.

• 1210

Secondly, we are convinced the present approach the federal government is taking to protect Canada's health care system in the context of the MAI is effective and will fully protect the integrity of the Canadian health care system.

Thirdly, you clearly have heard—in fact I came in just a little before you closed your last session—claims from others that Canada's health care system is not being protected in the MAI negotiations.

I want to look at a few of the claims we have followed over the last few months. For BCNI, we see these as nothing more than a very unusual mix of wild exaggeration and distortion, a misunderstanding of how trade and investment agreements are actually negotiated, and a refusal to recognize the protections to the Canadian safety net that are already built into existing agreements such as the NAFTA, on which the Canadian negotiating position to the MAI is modelled.

On dealing with how to best protect Canada's health care system, I think we all know it has come under great strain over the past years, and this has been a consequence of successive federal governments failing to address the looming crisis of federal deficits and debt levels spinning out of control, as they should have 10 or 15 years ago.

The present federal government, therefore, deserves credit and recognition for helping to bring the federal deficit under control. We know this has created strains on Canada's health sector, but we are also convinced that getting Canada's deficit and debt under control is crucial to ensuring the long-term viability of a health sector that will work for all Canadians.

The Business Council on National Issues is committed to protecting that system, not in the sense of trying to protect the status quo, but because we believe core elements of the system work, both socially and economically.

We should also not forget that Canada's health care system is a valuable component in increasing Canada's competitiveness and desirability as an investment location. When one compares the costs of Canada's health care system to that of the United States it fares very well, and companies considering locating in North America will take this into consideration. An effective health care system in Canada, in short, should help Canada attract more direct foreign investment, thereby creating more jobs and government revenue, which can then be ploughed back into the health care system itself.

On the present negotiating approach taken by the federal government, it's clearly pursuing the same type of reservation for the health sector in the MAI as it obtained in NAFTA. The NAFTA reservation exercise, contrary to what was said to you earlier this morning by some of the witnesses, has been an unqualified success in protecting full policy flexibility for Canada's health care system at all levels of government. We see no reason to believe the same approach will not produce the same results.

Turning finally to what we see as a set of unfounded fears, a small but clearly vocal group of Canadians has claimed—and indeed claimed this morning—that prospective MAI rules and existing NAFTA rules will gut Canada's health care system. This is false.

The Canadian reservation to the MAI rules on national treatment in particular is quite explicit in stating it reserves the right:

to adopt or maintain any measure with respect to the following services to the extent that they are social services established or maintained for a public purpose....

The listing includes health services. The phrase “social services established for a public purpose” is broadly cast and would capture the differing mix of public, not-for-profit, and for-profit services, which are all offered under Canada's health care system. A takeover of the system by foreign companies would thus not be possible.

• 1215

We're also aware of the fears raised by a recent legal opinion sponsored by the Council of Canadians, which argued that the protection for the provision of health services that Canada would obtain in Paris, based on Canada's present negotiating approach, is inadequate. We do not share the analysis of this legal opinion. The fears—

The Chair: Could you wrap it up?

Mr. Stuart Carre: Okay, I'll be very quick. In the same legal opinion the author suggests that provincial policies and measures would not be covered by the reservation. That suggests a misunderstanding of how trade and investment agreements are actually negotiated. The consultations with the provinces and the federal government have not concluded and therefore the final form of the reservation cannot be put in a draft.

One final point relates to the pharmacare program. We have heard views that somehow the MAI rules would prohibit the government from taking a new initiative in this area. This, again, is quite false. Since Canada would have a reservation under the MAI, it preserves all the policy flexibility it needs for existing measures and indeed for future measures.

Thank you.

The Chair: Thank you. Okay, go ahead.

Mr. Owen Lippert (Senior Policy Analyst, Fraser Institute): Thank you for inviting me to appear at this committee. I work for the Fraser Institute, which is an independent research institute based in Vancouver.

I believe in free trade. When I say “I”, I'm representing the institute in saying this. I believe in individual choice in health care, which you may want to characterize as two-tier medicine.

I'd like to believe that everything the Council of Canadians is saying about the MAI would lead to free trade across borders in health care services. Clearly, the Canadian health care system is in desperate need of new ideas and new money.

The public monopoly of our health care has led to increasingly long waiting lists and increased dissatisfaction with the service. That said, why don't I believe, then, what the Council of Canadians and Mr. Appleton are saying? It's because the government, the Liberal government, tells me it ain't so. They tell me that their reservations in fact protect the public monopoly.

So what am I led to believe? Either the government is saying this and...the men and women negotiating the treaty are either deceiving us, they're incompetent, or they are right—there is only one of three choices. I'm going to take them at their word. When they say they have these reservations, they will in fact get them.

These are, after all, the people who have had a long experience in negotiating these agreements both in the free trade agreement, NAFTA, and now through the MAI. They must know what they're doing.

So I can't get too worked up. As I said, I would like to believe that the MAI would lead to competition and private involvement in the health care system.

That's the extent of my remarks. I don't know what more I can add. You'll certainly get a lot of technical briefings from the government. I'm saying either they're right, they're misguided, or they're deceiving us.

The Chair: All right. Thank you. We can go on to the questions and perhaps we'll get some more comments from you.

Mr. Elley.

Mr. Reed Elley (Nanaimo—Cowichan, Ref.): Thank you, Madam Chair.

The vast majority of ordinary Canadians in this country have very little input into this whole process. It's been very secret to begin with and now it's becoming more public. Because of that, I've talked with some of my constituents and some are very worried about this. Many of them don't know anything about it.

I'd like to ask a question on behalf of a constituent who has some real concerns about this. The question is this. It's this gentleman's understanding that under the privatization provisions the MAI states that “no arrangements for privatization are permitted to discriminate against foreign investors”. That's a quote. This is “irrespective of the method or timing of the privatization”.

• 1220

Supposing, then, a community-owned hospital was having money problems and a U.S. or European firm offered to buy the institution, take it over, and run it at a profit. Does the MAI requirement mean that the citizens of the community, or the community-governing body, could not say no to this foreign investment if its offer was a better one in terms of dollars than, say, a local Canadian firm's offer to privatize the hospital, even though those citizens might prefer to have control remain in local Canadian hands?

Mr. Stuart Carre: There's no question about the answer to that. The Canadian community could quite clearly discriminate against the foreign company and say no. The reason for that is because Canada has, or will have, a reservation that will exempt it from the national treatment provisions in the MAI, just as it has a reservation in the NAFTA. In my mind, there's no question about that.

Mr. Owen Lippert: This is a bit of a broader point, but why would you want to discriminate against a better offer from a foreign company? This gets to the very idea of comparative advantage outlined by David Ricardo 160 years ago. If you can get someone who will provide you a good or a service cheaper than you can do it yourself, why would you not want to maximize health dollars for the health of the community rather than pursuing what is usually some spinney political control of the health care system?

So I think the question should be turned around: why wouldn't you want the most health care for the least amount of dollars?

Mr. Stuart Carre: Owen's point is not related to whether or not there is an obligation or an exception to obligations in the MAI. It's more of a policy question.

Mr. Reed Elley: Well, yes, Mr. Lippert has a very definite opinion on this, obviously, which is at great variance from the people we heard from earlier.

To get back to the question, what kind of provisions are there actually in the MAI that would give the local people in Pumpkin Corners, B.C., the right to do this, and how would they do it?

Mr. Stuart Carre: I believe you have in front of you the draft reservation that the Canadian government—

Mr. Reed Elley: We have the NAFTA one.

Mr. Stuart Carre: Well, what they have in the MAI is identical language to what is in the NAFTA. That is a reservation that allows governments at all levels to discriminate.

Mr. Reed Elley: But what's the process? Let's get back to the grassroots, because that's what really affects Canadians.

Mr. Stuart Carre: All right, let's take an example. Let's say one of these so-called aggressive American companies that wants to have access to the Canadian health care market sees an opportunity here. They make an offer. The community, the government, the responsible authorities, say, no, we see this as a social service provided for a public purpose. We are going to give it to a Canadian firm, thank you very much.

The aggressive American company goes to, say, Mr. Appleton, and says, “Can you help us?” He may well take the case. The question is, will he win the case? I don't think so. There is a very broad exception here that will provide the government jurisdiction in question with the protection that it wants to maintain that very unique health care system.

Mr. Owen Lippert: I'll add to that quickly, because it gets to a misdefinition that was in the previous discussion.

The principle of MAI is non-discrimination. You can't treat a foreign company differently from a domestic company unless you say you reserve the right to do so. But that principle is about discrimination; it doesn't mean access. If you've said there is no access to this market, then all that business of non-discrimination doesn't even come into play.

• 1225

Mr. Reed Elley: Thank you.

The Chair: Ms. Picard.

[Translation]

Ms. Pauline Picard: Hello and welcome. I am still not sure I understand the difference between NAFTA and MIA. I have the impression they both have the same objectives, and I wonder if their will not be legal confrontations between the two organizations in the future.

In 1994, the Standing Committee on Health studied the digital packaging of tobacco products. It was said at the time that such a packaging regulation would conflict with the provisions of NAFTA relative to investments, trademarks, and intellectual property. I would like to know if MIA will give more weight to the arguments I just referred to, with respect to the violations of international trade provisions, and affect the federal government's ability to control a product such as tobacco.

Mr. Stuart Carre: First, NAFTA and MIA are different in that one of these agreements is far more global and covers much broader sectors. NAFTA covers investments and the sale of products and services. MIA is fairly limited in that it mainly covers investments. As for the idea that any government could no longer legislate on such things as tobacco, the only thing I can say about this is that basically, as Mr. Lippert was saying, MIA's principle is non-discrimination.

If, for any reason, the government decided that all companies in the country must agree on regulations enacted for health reasons, according to MIA, these regulations could be discriminatory towards foreign companies.

[English]

Mr. Owen Lippert: I'd like to just add one thing—and I apologize for speaking English on this.

Any international treaty is an incomplete contract. The MAI is a particularly incomplete contract. Indeed, it calls into question Mr. Appleton's reading of the MAI. Given that so much of the language is bracketed, it's really not very far down the line.

That said, as an incomplete contract, what's really important is what the parties want on both sides. If the government wants the flexibility to enact anti-tobacco legislation of any kind, it clearly will allow itself the latitude to do that. And yes, all the details will not be spelled out at this point, but as with a personal contract between Stuart and myself, or one between countries, we assume there is a goodwill there, that there's an intention, and that the language will fill itself out, even though it may not be specifically laid out at the time. Indeed, there's no way to put down language to cover every contingency.

The Chair: Ms. Caplan.

Ms. Elinor Caplan: Thank you very much.

The Chair: There are five minutes in total for questioning.

• 1230

Ms. Elinor Caplan: The question is really for Mr. Carre. Say you're told by experts in international law, such as Mr. Appleton, that by changing the wording you can achieve the objective you're telling us you believe has already been achieved. Do you see any problem with taking his advice so that he doesn't win in the future should his concern about the existing wording prove to be accurate?

Mr. Stuart Carre: There are all sorts of international trade lawyers. We have looked very carefully at the NAFTA reservation, the results flowing from that, and now of course at the MAI. Our view is that this is not an issue. This is a reservation that, to the extent that any reservation will work, will work in terms of protecting Canada's ability—and if the provinces are involved, the Canadian provinces' ability—to maintain full policy flexibility.

So we don't see any need to go on with any additional language on this. This has worked in NAFTA. Why is it that there haven't been any challenges?

There's no question in my mind that there are a lot of American firms out there who would like to have access to the Canadian market. The trade law community in the United States is always prepared to take on clients. Why is it that there hasn't been a challenge under NAFTA?

Our view is that this is a reservation that will work. Therefore, we support the same kind of reservation in the MAI process.

Ms. Elinor Caplan: The concern I have is that we live in a world that's ever changing, and as the federal government is looking at provisions over time that will enhance Canadian medicare by including both pharmacare and home care, we want to make sure that future policy objectives will be protected. So that's the basis of the questioning.

I understand that the basis of Canadian medicare is far more, within the principles of the Canada Health Act, the notion of who pays as opposed to who delivers the service. There are many examples of commercial operations existing in the delivery of service in which the results of the service delivery are equally as good.

I'll give this to Mr. Lippert. The notion of value for money is something I have always been supportive of in the delivery of health care as long as it's of high quality.

I certainly depart fundamentally from the Fraser Institute on the issue not only of values, but also on the result to Canadian competitiveness should we ever be foolish enough to move away from the notion of the single payer and move to two tiers or multiple payers, which is so in the United States. We all know that it's not only Canadian business that will pay, but Canadian competitiveness that will be severely impacted. I've always been shocked that the Fraser Institute, on the issue of competitiveness, would not be supporting an even stronger single-payer system than what we have today. We don't have time to get into the debate today.

Mr. Owen Lippert: I would just like to make one comment about the Appleton language proposal. This is an agreement among the most advanced economies in the world. These are led by, for instance, Tony Blair, who's in a labour government in Britain, and Lionel Jospin, who's in a socialist government in France.

Canada's going to look mighty odd going to this meeting and saying that we are so in a tizzy about this that we're going to turn over certain parts of our language to the very groups who oppose international trade agreements and international investment. What kind of signal does that send? How does Canada look if we are so frightened of these agreements that we turn over the language to the people most frightened? It's inconceivable.

Mr. Stuart Carre: I just want to answer what I think was your second question, which is the whole question of whether or not this reservation would allow for new initiatives, new programs.

• 1235

Again, there is no question the reservation that's put forward here will allow all levels of government, if the provinces are involved, to enact new measures. This is not just dealing with existing measures. I hope the committee members are not misled on this point. Look at the language: “Canada reserves the right to adopt or maintain...”. “To adopt”—there's the future element in this reservation. There's no question about that. We don't need any more language than we have here to protect future governments' policy flexibility in all respects.

The Chair: Okay. Thank you.

Ms. Wasylycia-Leis.

Ms. Judy Wasylycia-Leis: Thank you, Madam Chair. I'd like to thank the presenters for participating in this important discussion.

Mr. Lippert said a couple of things I'd like to pursue. One is that we should accept this agreement on blind faith. I would really question whether he would do the same if he were signing a contract for the purchase of a car or a mortgage on a house. I think Canadians want to be assured that the things they value most are protected in very clear terms.

Mr. Lippert also said there may be a better way to do it, so what's wrong with opening up the doors to private health care and a two-tier health care system. Again I'd say that's not in keeping with where Canadians feel our medicare system should be going, now or in the future.

Can you identify specific parts of this agreement that assure us a government could embark on a new program like a universal, single-payer, publicly administered, pharmacare plan or home care plan? Can you point to some provision in this agreement that would allow that?

Can you point to anything that would assure us that governments can actually subsidize health and social service programs so we have some way to counteract this very pervasive argument that governments cannot, under MAI, enter into agreements that involve the public sector, the non-profit sector, and the private sector, which is the common way we've approached the delivery of health and social services? Can you give us some specific arguments out of the MAI agreement that will give Canadians confidence that we can pursue medicare as we know and want it?

Mr. Owen Lippert: First of all, it's awfully tough to ask me to trust a government department. It's just the nature of the Fraser Institute to have a bit of skepticism. But in this case, yes, these are the people who have negotiated it in the past.

I'm not a trade lawyer, but when I go to see a doctor I trust that doctor knows what he or she is doing. When it comes to trade law, I'm going to trust the people who have done it, and they're the ones to provide this committee with all the detailed chapter and verse. I just have to believe they are doing what they've been instructed to do by this government that believes in a public health care system, such as it established in 1984. The same government is proposing pharmacare and home care, so why would one part of it be proposing something while another part of it is trying to undermine it? It just doesn't make sense that it would be actively undermining its own initiative.

Ms. Judy Wasylycia-Leis: Perhaps the fact that it's already backing off on those two promises is the answer.

Mr. Owen Lippert: And rightfully so, if you ask me, but that's another issue.

Ms. Judy Wasylycia-Leis: I think there's a number of areas where we've seen a kind of clever tactic going on in terms of promising one thing while knowing full well that another whole process is going on that will negate the fulfilment of that process.

Notwithstanding where you fall in terms of supporting a publicly administered universal health care system, can you point to anything in this agreement that would guarantee governments the right to establish new programs in the area of health and social services and be able to subsidize programs and be involved in a delivery of services that involves the public sector, the non-profit sector, and the private sector?

Mr. Owen Lippert: Ask the minister of investment and trade if he will resign if this isn't guaranteed as he says it is. There you've sent him an incentive.

The Chair: Mr. Carre, just one minute.

Mr. Stuart Carre: We keep coming back to the same question. I point you to the Canadian reservation. That is what provides the ability—

Ms. Judy Wasylycia-Leis: How?

Mr. Stuart Carre: Because it's talking about existing and future measures and deals with social services established or maintained for a public purpose and then lists them. It's a reservation. It is a way for the government to say it has these obligations, but in certain areas—and health care is certainly one of them—it's not going to meet those obligations. In other words, as far as national treatment goes, we're not going to provide national treatment. We are going to maintain our ability to discriminate against foreign companies. That's what that reservation does. In practical terms, all you have to do is look at the NAFTA and realize that we haven't been challenged by firms that do want access here. Why? Because we have the same reservation in NAFTA.

• 1240

The Chair: Thank you, Mr. Clarke.

Mr. Myers.

Mr. Lynn Myers: I have a question for Mr. Carre and a question for Mr. Lippert.

Mr. Carre, in terms of the reservation, part of the text reads, “established or maintained for a public purpose”. I think I've heard you say you think that is strong enough. My question is, could it be stronger? It's not about “should it”, because you have already answered that. I think you think it should stay the way it is, but could it be stronger?

Mr. Stuart Carre: Canada has already worked something through that has worked, in terms of the reality or the facts. We have proven that we are not going to be challenged.... Well, we can always be challenged, but obviously the wording of the reservation in NAFTA is so strong that the army of United States trade lawyers who are down there in Washington always ready to make a dollar has not been able to convince any of their clients that they can find a loophole in this. Therefore, we don't see a reason to start looking at other wording. If you do that, you potentially get onto a very slippery slope. Why don't we stick with something that has worked?

Mr. Lynn Myers: Just very quickly, I have a supplementary. Do you think it's too late to make any of these changes to this kind of reservation, or in your view could it still happen? I guess anything could happen.

Mr. Stuart Carre: In my view, that is one of the difficulties in talking about this agreement, because it is, of course, not yet an agreement. There is no end to the negotiations until they're over.

Mr. Lynn Myers: Of course.

Mr. Lippert, we heard from the Canadian Health Coalition. They have one view, of course, and you have another. I'm wondering if you would agree, though, that their view should at least be considered by government negotiators, even if they don't agree to it. Should it at least be weighed out and considered?

Mr. Owen Lippert: I'm assuming that the government negotiators follow the hearings of this committee and other committees, that they read the newspapers and are aware of them. Should they be given special consideration? Should they be given a seat at the negotiating table?

Mr. Lynn Myers: I didn't ask that.

Mr. Owen Lippert: I think Canada would hobble its ability to deal with other countries if it turned these negotiating sessions into a circus for domestic political reasons.

Mr. Lynn Myers: No, I didn't ask whether or not they should be given special status. I asked if their views should at least be considered.

Mr. Owen Lippert: Absolutely, and so should everyone's. There is nothing in what's being said by myself and by Mr. Carre, I'm sure, that says there should be a suppression of debate. Indeed, the accusation that there's secrecy involving the MAI is a bit overblown. Clearly, if it was so secret, we wouldn't all be talking about it.

Mr. Lynn Myers: Touché. Thank you very much.

The Chair: Thank you.

Mr. Hill.

Mr. Grant Hill: I asked this of the other presenters. Since most of the other countries in the OECD have publicly financed medicare systems, do any of them, to your knowledge, have similar reservations to the one that's being proposed by Canada?

Mr. Stuart Carre: I would assume that most of the countries have a reservation that is very similar to the reservation Canada has put forward. I do not know, and the reason is that I have not seen the reservations that have been put forward by the other OECD members. But it would be almost unthinkable to me that they did not have a similar type of reservation since, in many cases, they have similar approaches to protecting health care.

The Chair: Mr. Hill, I won't count this as part of your time.

I was in Strasbourg at the European parliamentary meeting in September. If I remember correctly, every country that spoke had reservations on culture—that was the main one they spoke on—and several on the social policies.

• 1245

Mr. Grant Hill: This does, however, give credence to the argument that this has been a silent, talked-down, not-well-publicized issue. I think their response to me was “we don't know”. Your response to me is “I think so”, and so it does give credence to the fact that this could have been far more open to give the public the chance to review and make certain we're satisfied. I'm not really asking a question there; I'm making a statement, if I may.

The Chair: Do you want to respond to that? No?

Mr. Grant Hill: Now for my second question. Let's say the worst-case scenario comes about. Mr. Appleton is dead on the mark. We have trade challenges that come about because of MAI. We didn't take his advice; we didn't make the language tight enough, and he's right.

Is there any recourse in the future if he in fact is right? Could we go back and say, wait a minute, medicare is far more important than we thought and there are intrusions here we couldn't have foreseen? Could we go back and undo that damage if in fact we've made a mistake?

Mr. Owen Lippert: Look, this hinges on the issue of sovereignty. Can Canada reclaim complete and total sovereignty, rip up all our agreements? Sure. We're a sovereign country; we can do that. But we do so at a cost.

The thing to realize here is if indeed what Mr. Appleton forecast did come true, the ultimate benefit would go to the consumer. Their right to get goods and services at the lowest possible cost would be fulfilled, rather than having a public monopoly dictating the shape and size of medicare.

So you can always do those things, but at a cost to the consumer and at a cost to your standing in the international community.

The Chair: Mr. Carre.

Mr. Stuart Carre: Again, simply trying to look at this from the point of view of possible.... The whole issue would then go through the dispute settlement process, and assuming that Mr. Appleton was right and somehow or other we lost a case, there would then be some requirement for compensation, perhaps, but there would not be any requirement to change our policies. Again, in our view, it's not going to happen.

In any international agreement, though, you cannot give guarantees that disputes will not take place. Look at the GATT. There have been all sorts of disputes in there; the same is true of NAFTA. But it would go through the normal dispute settlement provisions in the MAI.

The Chair: Thank you.

Mr. Drouin.

[Translation]

Mr. Claude Drouin: Mr. Clarke, you said earlier that our costs were lower than those of the Americans. Is that correct? Knowing this, Mr. Lippert, I, too, agree that it should cost as little as possible to Canadians, and that we should not have waiting lists. I think we all support this.

However, if the Americans have a different system, which costs more, is that not favouring a two-tier health system in which more financially comfortable people would have faster service than underprivileged people, a slower service?

At the present time in Canada, although we have a system that may not be perfect, this system is fair to all the population. With this, would we not have a two-tier health system that would be damaging to the majority of our population?

[English]

Mr. Owen Lippert: I have two points to make, and again I apologize for not being able to speak to you in French.

One, there is no evidence put forward here yet that would convince me that this MAI would lead to two-tier medicine. I'm hoping for two-tier medicine, and I see nothing here that would provide it.

Having said that, I would add the comment that, as Stuart said, none of the American companies who could conceivably be participating in the Canadian health care market seem to be gearing up to do it. The other thing, and as a slighting blow, today 40,000 of our highest and best trained Canadian workers a year are going to the United States. They're not afraid of the medical system in the United States, and they're clearly seeking out a lower tax regime. If our current health care system is leading to such incredibly high taxes and is pushing people out of the country, then it's time to rethink this issue.

• 1250

The Chair: Thank you.

Madam Carroll.

Ms. Aileen Carroll: Thank you, Madam Chair.

It's certainly some time since I took my course in international law. I'll be dusting off the old textbook this weekend.

I do find, as I think other members of the committee are finding, such a contrast between the witnesses we've heard this morning.

I'm directing my question to you, Mr. Carre. In your brief this morning you mention on page 3 that a takeover of the system by foreign companies would thus not be possible from the extract you've taken.

Yet Mr. Clarke made a statement this morning. When he was mentioning the national drug insurance plan, or the possibility thereof, he said no, that MAI would not prevent this. He said that should the government move to make it more cost-effective, then it could be seen as discriminatory. The investor state mechanism kicks in and then it could be used to take the Government of Canada to the cleaners.

What I'm hearing here is that as long as we stay on script within the agreement we negotiate and sign, from your perspective we're on safe territory.

From Mr. Clarke's comments made this morning, when there's any shifting of public policy, when there's an attempt to broaden it or in effect make it more cost-effective, we're out into possibly shark-infested waters.

I would ask you to comment on that, keeping in mind we are lay people and we are presented with quite a contrast here.

Mr. Stuart Carre: I'm not going to comment directly on anything Mr. Clarke said because I didn't hear all of it. But let me comment on the concept that I think is at issue here, on the notion that if there were to be a change in Canadian government health care policy from its existing mix of public and not-for-profit services to for-profit health care services.... Let's say there was a shift towards more for-profit services delivery. Somehow that shift to a somewhat more commercial orientation would open the door for the aggressive American or Japanese company to come in and demand that it gets equal treatment. What I would again say there is that this is not the case.

Look at the language of the reservation that talks about the provision of social services provided for a public purpose. The public purpose is the effective health care system. So the fact that you might shift now or in the future at the federal level or provincial level is irrelevant. It is not opening, as I've heard before, the floodgates to foreign companies taking over our health care system.

Let's be realistic. This whole debate we're now having we've had over NAFTA, we've had over the FTA, and our social system is intact. It has not been gutted, as some would have you believe, as a consequence of NAFTA.

In fact, while I have the floor there was an interesting question raised. What is the link between NAFTA and any erosion of social services in this country? No one has been able to answer that question, simply because there have been no challenges to our health care system.

• 1255

Ms. Aileen Carroll: I think we have the same question. Perhaps I could just ask it of you, Mr. Lippert. Since we have been hearing legal views as well as other views this morning, have you or the Fraser Institute, which you represent, obtained a legal opinion that supports the view you have put forward today?

Mr. Owen Lippert: No, nor would we. It's just simply a case of either taking the government at its word or not, and if the balance of evidence.... First of all, lawyers aren't going to help you understand this. I'm sorry, it's not to be skeptical of that profession, but look, they're negotiating these things. If for some reason they were tricked, it would show up over the course of the next year or two years.

The Chair: Mr. Carre, could you answer the same question?

Mr. Stuart Carre: We have two lawyers on staff and they've both looked at it.

Mr. Joseph Volpe (Eglinton—Lawrence, Lib.): Do you have an analysis?

Mr. Stuart Carre: Yes, they've looked at the—

Mr. Joseph Volpe: Do you have a written brief?

Mr. Stuart Carre: No, we don't have a written brief on this. Listen, if you were to go to the—

Ms. Aileen Carroll: What is the area of specialization of your two in-house counsel?

Mr. Stuart Carre: One is an international trade expert—the president and chief executive officer of the BCNI, Tom d'Aquino—and the other works on a range of issues.

Mr. Owen Lippert: I'll give you a personal anecdote. At a conference yesterday I met with an official from the World Trade Organization. He had just read Maude Barlow's book and Tony Clarke's book and was reduced to laughter.

The Chair: Thank you very much.

We thank both groups for appearing. I think these were a very enjoyable two hours. Thank you.

The meeting is adjourned.