FAIT Committee Meeting

STANDING COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE

COMITÉ PERMANENT DES AFFAIRES ÉTRANGÈRES ET DU COMMERCE INTERNATIONAL

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, April 5, 2000

• 1533

[English]

The Chair (Mr. Bill Graham (Toronto Centre—Rosedale, Lib.)): Colleagues, I'm very pleased to welcome the Minister for International Trade.

Minister, welcome to the committee to talk about the estimates.

I'd like to share something with you, colleagues. I was speaking to a colleague of mine in Geneva the other day—he is not a Canadian and not on the Canadian delegation, but someone I know from my professional life—and he said to me that our minister is perhaps the only person to have walked out of Seattle with an enhanced rather than destroyed reputation. So, Minister, congratulations for that. It's true. I don't know, I think it was maybe the wall climbing, the physical agility rather than anything else. But whatever it takes counts. Whatever it takes does it.

Minister, maybe if you give your presentation, we'll then turn over to the members.

[Translation]

Hon. Pierre S. Pettigrew (Minister of International Trade, Lib.): Thank you very much for your warm welcome this afternoon, Mr. Chairman.

I would like to start by introducing my officials from the Department of Foreign Affairs and International Trade who are with me today. They are Jonathan Fried, who is the Assitant Deputy Minister, Trade and Economic Policy; Ms. Kathryn McCallion, the Assistant Deputy Minister, Corporate Services, Passport and Consular Affairs; Ms. Louise Charron-Fortin, the Director General of the Trade Commissioner Service; and Ms. Doreen Steidle, who is the Director General, Corporate Finance, Planning and Systems Bureau. Of course, they are supported by a number of other officials who are also here.

• 1535

These professionals will be able to help me to respond to the more specific questions or comments the members of this committee might have concerning our activities.

So, if you will allow me, I will make a few introductory remarks before we go to those questions and comments.

[English]

I'd like to tell you that I'm very pleased that our discussion this afternoon over main estimates will be witnessed by a number of young representatives from the Forum for Young Canadians. I noticed their presence as they came back, and I must tell you that I'm very impressed to see young people coming to participate in our discussions today.

I'm nostalgic about these things, monsieur le président, because my very first personal encounters or participation in parliamentary situations occurred when I was a boy, a young man, in Quebec City. My father had taught me that question period was not the real thing, and that it was at main estimates where you could really see what a minister, the opposition, and members of Parliament were about. He would drag me to main estimates in May and June at the Quebec government at that time. So I learned some of the tricks then, like being nice to the people around.

Mr. Bill Blaikie (Winnipeg—Transcona, NDP): That's a form of child abuse.

Some hon. members: Oh, oh!

Mr. Pierre Pettigrew: Oh, Bill, that's good.

I'm sure you will agree that the estimates of the Department of Foreign Affairs and International Trade are full of very interesting numbers and statistics, but I want to draw your attention to one very striking graph on page 14 of part III of the estimates, because it is very important as a backgrounder to all our discussions.

What the graph shows is that Canada is per capita the largest trading country of the G-7. The figure in the book is from 1998, when our exports represented 41.3% of GDP. In 1999, our combined goods and services exports increased by 9.7%, to a total of $409 billion, or 43.2% of GDP. These numbers compare to only 25.7% of GDP just a decade ago. We have therefore moved our exports in Canada from 25% to 43% in a decade. That's very significant. That number of 25% is roughly where most of the European countries are today. That also compares, monsieur le président, to 11% for our largest trading partner. The United States exports only 11% of what it produces, which means that proportionately the United States are exporting four times less than Canada. And it's 15% for Japan. Proportionately speaking, that means the Japanese are exporting just a third of what we do.

Our merchandise exports reached over $360 billion—$1 billion a day—in 1999, up nearly 12% over the previous year. In the same period, our service exports jumped over 7%. These are the highest growth rates we have seen since 1994. At the same time, our imports of goods and services also grew by 9.7%, up from 5.8% the previous year.

• 1540

[Translation]

On the investment side, the story is even more dramatic. The stock of Foreign Direct Investment in Canada jumped by 9.5% in 1999 to reach $ 240 billion, representing a vote of confidence on the part of foreign investors in the continuation of our strong economic performance. More investment in this country means we benefit from new technologies, new production processes and, most importantly, new jobs. Eleven per cent or 1 in 10 jobs in Canada directly depends on Foreign Direct Investment, and nearly 20% more is indirectly tied to Foreign Direct Investment. As the Prime Minister said recently, over the past 7 years, nearly 2 million new jobs have been created in this country. And a large percentage of those new jobs has been created through trade. Today, more than one third of all jobs in this country are trade related.

So, with these types of numbers, it is only natural that the government of Canada—as you can see in the Estimates document of the Department of Foreign Affairs and International Trade—devotes a great deal of attention and resources to increasing opportunities abroad for Canadian companies and encouraging investment in Canada, by working relentlessly on a bilateral and multilateral basis to help create a better rules-based international trading system and by providing direct assistance to Canadian exporters in foreign markets.

What these figures show is that if protectionism increases around the world again as it has done regularly in the history of humanity, we have a lot more to lose than almost any other country.

So, Canada needs a rules-based international trading system and, as a government, we are completely committed to helping build a better, more secure and more predictable system.

[English]

At the same time, we will continue to encourage more Canadian firms—particularly small and medium-sized businesses, those headed by women, aboriginal Canadians and young people—to capitalize on the opportunities available in foreign markets.

Earlier today, I released a report called Opening Doors to the World: Canada's International Market Access Priorities, which sets out some specific goals for us. It mentions our ongoing work at the WTO, for example, not only in participating in the so-called built-in discussions on agriculture and services that started earlier this year, but in working to help to get the overall dialogue back on track.

[Translation]

Ms. Francine Lalonde (Mercier, BQ): Excuse me, Mr. Chairman. Are you reading a text?

Mr. Pierre Pettigrew: Yes. I think copies were distributed.

Ms. Francine Lalonde: No, we did not get it.

Mr. Pierre Pettigrew: You did not get it?

Ms. Francine Lalonde: Is it the document entitled “Speaking notes for the Honourable Pierre S. Pettigrew”?

Mr. Pierre Pettigrew: Yes, yes.

Ms. Francine Lalonde: That is not the document to which you just referred.

Mr. Pierre Pettigrew: No, no. The document I am referring to, Ms. Lalonde, is the one I tabled in the House of Commons this morning.

The Chair: It's the Estimates of the department.

Mr. Pierre Pettigrew: No, the document to which Francine and I are referring is a report entitled: Opening Doors to the World: Canada's International Market Access Priorities.

The Chair: We received copies of it.

Ms. Francine Lalonde: I probably don't have it because I did not go to my office.

[English]

Mr. Pierre Pettigrew: We have—

[Translation]

Ms. Francine Lalonde: I apologize, Minister.

Mr. Pierre Pettigrew: No, it is important that you know to what document I am referring.

[English]

We have a vested interest in helping to make sure the talks on agriculture go well. Canadian farmers are suffering because of subsidies paid to the agricultural sectors of many of our trading partners. Strong progress on agriculture would be a powerful incentive to begin a broader-based round of negotiations a year or so down the road. Broader negotiations in turn would help the agriculture talks as well.

We are pushing for change within the organization itself to make sure it stays relevant and focused on trade issues.

[Translation]

It is a more complex discussion because WTO membership has grown significantly in the past 15 or so years, from about 90 members to 135. China and other members are poised to join.

• 1545

The Department of Foreign Affairs and International Trade is also very concerned with upholding Canada's rights and obligations under existing trade rules of the WTO, NAFTA and in our bilateral trade and investment agreements with several other countries.

We have taken the lead in developing regional trade agreements with the European Free Trade Association, in our trade agreements with Chili and Israel, with APEC and with hemispheric partners on the Free Trade Area of the Americas.

And, on the FTAA, I want to again congratulate and thank the members of this committee for producing an excellent report and giving us recommendations on what Canada's position should be in the Free Trade Area of the Americas negotiations.

With over 800 million people and a combined GDP of over 11 billion or trillion dollars...

Some hon. members: Billion dollars.

Mr. Pierre Pettigrew: I was wondering if it was not an even larger amount. These days, people talk about “trillions” in French, and that creates confusion.

The Chair: We have to be careful.

Mr. Pierre Pettigrew: We have a trillion in Canada.

... a free trade agreement is our hemisphere would constitute the single largest free trade area in the world(!)

Your recommendations are nearly identical to the government's approach to a hemispheric agreement while also pursuing our goal of more open markets around the world.

[English]

In addition, we have a long list of other ongoing activities to help our own businesses. For example, we are adapting the services provided by the international network of trade commissioners in order to help to keep pace with the rapid changes in international business and the evolving needs of the Canadian business community.

We are creating a single point of access to trade support throughout Canada via Team Canada Inc., a network of 22 government departments augmented by partnerships in all regions of Canada. Team Canada missions, led by the Prime Minister, will also continue to be an important vehicle for fostering federal-provincial cooperation and promoting Canadian business interests abroad.

We are strengthening trade promotion in strategic sectors with high export potential, such as environmental industries and information technology, and continuing support for innovation and technology in leading export sectors, such as agriculture, agrifood, and natural resources, in order to develop markets beyond the United States.

We are finding new markets for new products developed through university and government research centres.

[Translation]

Launching Investment Team Canada to co-ordinate efforts by all levels of government and the private sector to promote Foreign Direct Investment into Canada.

Building greater public understanding of the economic benefits of trade and investment and of Canadian trade policies through outreach activities in Canada.

Implementing and managing our existing trade agreements, including 24 relating to the World Trade Organization alone. It seems incredible to me, but the number of WTO meetings rose from 800 to 1,700 annually between 1994 and 1998(!)

Representing Canadian interests in the growing number of disputes that are a by-product of rules-based trade. For example, in 1995, there were 2 disputes involving Canada under the WTO and the NAFTA. In 1999, there were 24.

[English]

As I mentioned, protectionist legislation and other actions in the United States and in other countries remains a constant threat, and we will continue our efforts to try to resolve these situations before they cause disruptions.

• 1550

The last year has been an extremely busy one for me and for my department. Let me take a moment to discuss how the government is engaging civil society groups.

By the way, I do not like the term “civil society”. It makes me wonder where we parliamentarians fall. Are we the uncivil society?

The Chair: Only question period.

Some hon. members: Oh, oh!

Ms. Diane Marleau (Sudbury, Lib.): That's uncivilized.

Mr. Pierre Pettigrew: We are all members of civil society—politicians, public servants, the private sector, and NGOs of many different stripes. We are all citizens trying in our own individual ways to improve the society in which we live. But I digress here. I will use the nomenclature that is in use.

Since Canada assumed the chair of the negotiating process for the free trade area of the Americas, the FTAA, the government has undertaken to closely consult both formally and informally with Canadian civil society NGOs. Formally, we chaired the civil society consultation group for the FTAA. Through this group, we implemented and coordinated the hemispheric consultation process. Although the mandate for the committee has been renewed, it would not be a surprise to anyone here that the Government of Canada would like to see more progress on this front.

That being said, the informal consultations, to me, really worked. They can serve as a model for governments on how to involve various non-governmental groups in the process of negotiating government to government.

Several times a year since the Santiago summit, my officials have met with a coalition of NGOs grouped together under the umbrella called Common Frontiers. My officials continually dialogue with them on the status of hemispheric discussions, and I have personally met with them in the past and will do so again. These were very fruitful discussions. We were able to roll up our sleeves, share our perspectives, and, whenever possible, reach a common understanding. We do not always agree, but the process has indeed borne fruit.

The formal and informal links provided me and my officials with a solid understanding of the concerns raised by civil society groups. It was precisely the good relationships that we have established here in Canada that led me to convince my hemispheric counterparts to join me in meeting with the hemispheric civil society groups. At the Toronto meeting, a record 22 countries joined me in meeting with civil society groups at their Peoples' Summit. Before the Toronto meeting, only five countries had ever met with these groups. This is a step in the right direction, and I'm very proud of the Canadian leadership on that front.

In Seattle, we continued the process. Every morning, we held a briefing not only for the official Canadian delegation, but for Canadian NGOs who were present in Seattle. We shared information on what was being discussed, and dialogued on matters of concern. As a small anecdote, as the meetings ended, half the room would get up to go to the convention centre to attend the sessions in the negotiating halls. The other half would get up to take up their positions outside the convention centre to protest the deliberations. This was a truly Canadian moment.

All in all, the Government of Canada, following your sage recommendations, is taking steps to consult with all sectors to help our officials promote the kind of trade Canadians want, as well as to demystify the trade negotiation process.

[Translation]

One of the first things I did after being sworn in was to travel to Mexico for a bilateral meeting with my counterpart there, Herminio Blanco, to discuss NAFTA, the FTAA and other issues.

Last fall, I had the privilege of hosting the FTAA Ministerial in Toronto where we agreed to adopt measures to streamline customs procedures and to increase the transparency of government rules and regulations on trade and investment across the hemisphere.

We also had a very successful Team Canada mission to Japan that helped open doors of opportunity for Canadian business, and allowed us the opportunity to lobby for further reform and deregulation of their financial services sector.

[English]

We had the WTO ministerial in Seattle that received much publicity around the world. In spite of all the negative reports, I do believe those talks will get back on track in the not-too-distant future. In fact, I travelled to Washington and New York shortly after Seattle to meet with my American counterpart for discussions on our next approach and how to get things going again.

• 1555

[Translation]

I also went to Paris, Davos and London for several strategy meetings on trade, as well as to promote our interests in those areas.

This was followed by a visit to Uruguay, Chile and Argentina, where I met with several government ministers and business people, including Canadians, to encourage more contacts and exchanges and to move along the process of tariff reduction and other issues.

Over the coming months, we will be having a Trade Mission to Australia and the APEC Trade Ministers Meeting as well as the Canada/EU Summit in Portugal, the Intergovernmental Economic Commission meeting in Russia, and a trade visit to Central Europe.

[English]

In closing, monsieur le président, I must also mention that the activities undertaken by my department are a direct reflection of the excellent work performed by the DFAIT employees, not only here in Canada, but in over 130 of our missions abroad. You may actually be familiar with some of them, as there have been recent newspaper articles on the issue of contract negotiations between foreign service officers and Treasury Board.

While I cannot comment on ongoing negotiations between the employer and the employee, I can confirm the value of these employees and commend them for their professionalism in often difficult working environments. They have brought their concerns to the attention of both myself and my colleague, Minister Axworthy, and we are supportive of the need to bring both sides to the table to negotiate a settlement.

In addition to its foreign service officers, the department is committed to all its staff, rotational and non-rotational, and is conscious of the need to improve its employment equity percentages for women, francophones, and the disabled. A human resources strategy has been developed to improve the working conditions of all employees.

[Translation]

I trust this brief snapshot, which I hope did not seem too long to you, will help you better appreciate the activities of my department, and I look forward to your questions and comments.

Thank you, Mr. Chairman.

[English]

The Chair: Thank you very much, Minister. And we'd like to welcome with you Ms. McCallion and Mr. Fried, who have appeared before the committee before.

We'd like to welcome Mr. Blaikie to the committee. He was one of the ones, Minister, who was outside protesting in Seattle, as well as occasionally inside the room. It's good to have him inside this time with you.

We go first to Mr. Obhrai.

Mr. Deepak Obhrai (Calgary East, Canadian Alliance): Thank you, Mr. Chairman.

Thank you, Minister, for coming, and the members from the department.

I'm going to ask my questions in two areas. First I will concentrate on your estimates and issues related to the estimates. Then in the second round I will come to current issues.

I notice, Mr. Minister, that in your estimates you have grants and contributions over there as well under your international business development sector. I have five or six questions. This is not question period, so I hope you will answer the questions.

Mr. Pierre Pettigrew: It would be a culture shock for the institution.

Mr. Deepak Obhrai: Yes. There are a lot of questions. There are five or six questions, so if you can go quickly on these....

First, does your department do an internal audit every year, your own internal audit every year?

Mr. Pierre Pettigrew: Do we do that every year?

A voice: You're supposed to.

Mr. Pierre Pettigrew: I'll ask Kathryn to answer that. How many internal audits do we conduct every year?

Ms. Kathryn McCallion (Assistant Deputy Minister, International Business, Passport and Consular Affairs, Department of Foreign Affairs and International Trade): We have an internal audit and evaluation unit in the department, and it does audits of all missions abroad, which includes all our operations, and which includes various sections at home. On average, every part of the department is audited and evaluated once every seven years.

• 1600

Mr. Deepak Obhrai: Seven years?

Ms. Kathryn McCallion: Seven years. But that includes missions as well. For the grants and contributions, they are audited.... I don't know exactly when they're audited. They're audited regularly. PEMD was audited in 1998, I believe.

Mr. Deepak Obhrai: Is that the...?

Mr. Pierre Pettigrew: PEMD is the most important grant and contribution of our department.

Ms. Kathryn McCallion: It's the program for export market development.

Mr. Pierre Pettigrew: Yes. That's the most important program we have, and it is audited very regularly. But every seven years, every part of the department and every mission around the world is audited.

Mr. Deepak Obhrai: Is that in conformity with the Treasury Board guidelines, every seven years?

Mr. Pierre Pettigrew: I'm sure it is. Yes, every part of the department. It is rotational; it is a rotation.

Mr. Deepak Obhrai: But grants and contributions are audited...?

Mr. Pierre Pettigrew: Every year, I would think, or every.... PEMD was last audited in what year?

Ms. Kathryn McCallion: 1997.

Mr. Pierre Pettigrew: 1997.

Mr. Deepak Obhrai: Is that information public?

Ms. Kathryn McCallion: Yes.

Mr. Deepak Obhrai: Has it been released? Is it on your website?

Ms. Kathryn McCallion: Not yet.

Mr. Pierre Pettigrew: It's about to.

Mr. Deepak Obhrai: It's about to. Is it possible to have a copy issued to the committee or to me—

Ms. Kathryn McCallion: Yes.

Mr. Deepak Obhrai: —or do I have to go through the access to information process?

Mr. Pierre Pettigrew: We'll save you five bucks.

Mr. Deepak Obhrai: Thank you.

So I understand that you will get it to the committee, the latest audit on grants and contributions.

Ms. Kathryn McCallion: Yes.

Mr. Deepak Obhrai: All right.

Minister, have you or other government ministerial officials ever been lobbied by individual companies who are—and I'm sorry to say this—known Liberal contributors or supporters regarding the awarding of Canada account grants and contributions, to your knowledge?

Mr. Pierre Pettigrew: No.

Mr. Deepak Obhrai: Okay.

Mr. Pierre Pettigrew: I find the question very bizarre, but I—

Mr. Deepak Obhrai: That's okay.

The Chair: You should come to this committee more often.

Mr. Deepak Obhrai: Minister, does the EDC conduct a yearly audit of its medium-term and long-term financing? If so, is it available to the public?

Mr. Pierre Pettigrew: Well, this is a question that should go to the EDC. You know, it is an arm's-length institution from the government, so we don't conduct the EDC audits.

All I have seen is the fact that in the last six years the EDC has three times earned the Auditor General's award for annual reporting. The Auditor General, as you know, has access to the board of directors' minutes of meetings, transactions, details, and financial records. Let me quote to you the Auditor General himself, who said:

...in my opinion, the transactions of the Corporation...have, in all significant respects, been in accordance with...the Financial Administration Act and regulations, the Export Development Act...and the by-laws of the Corporation...

Mr. Deepak Obhrai: From what I understand, Minister, under the Canada account program, the EDC is able to support transactions that on the basis of prudent risk management cannot be supported under the corporate account. So the transaction will first be considered under the corporate account, and if it is rejected by EDC then it is referred to you for consideration under the Canada account program.

Mr. Pierre Pettigrew: Well, what happens is that the EDC works with two accounts. There's the corporate account, and there's the Canada account. From the corporate account, which represents 98% of its transactions, let's be clear, the EDC uses its own coffers then. But for the Canada account, which represents 2% of EDC's transactions and which the government has to approve.... Actually, it's myself and the Minister of Finance who have to approve it and recommend it to the government. They are tools we use for Canadian exporters to be able to compete with other countries in distorted markets—that is, where the free market doesn't really play. I don't want to name any here, for obvious reasons, but you know what I'm talking about.

A voice: Like the United States.

Mr. Pierre Pettigrew: So when we are to compete with other countries in distorted markets, we use the Canada account. And most OECD countries have that system as well. That explains why transactions may often have softer terms of repayment or better interest rates: because we want our Canadian companies to be able to compete on a level playing field in some international markets so that their technology and their expertise can be present there.

• 1605

Mr. Deepak Obhrai: As you know, the Canada account is under attack under WTO, and other countries—

Mr. Pierre Pettigrew: In a particular case some questions were put to the WTO, but we have made some alterations in our way of functioning, and I am very confident that the way we do things in Canada in the technology transfer partnership and the Canada account... I believe they both meet our international commitments.

Mr. Deepak Obhrai: So when was the last audit done on the Canada account? Was there ever an audit done on the Canada account?

Mr. Pierre Pettigrew: Do we know that?

Ms. Kathryn McCallion: I don't know that.

[Translation]

Mr. Pierre Pettigrew: You should put the question to the Department of Finance, because it looks after...

[English]

Mr. Deepak Obhrai: I am—

Mr. Pierre Pettigrew: I'm sorry—

Mr. Deepak Obhrai: I'm sorry. Go ahead.

Mr. Pierre Pettigrew: This is a question that you should direct to the Department of Finance, because they are the ones who really do the audits on the Canada account.

Mr. Deepak Obhrai: So the Department of Finance does the audit of the Canada account, but you approve the—

Mr. Pierre Pettigrew: No. Both of us, both ministers, have to sign on. That is, if we decide to do a particular transaction, to recommend to EDC to do a particular transaction to help Canadian exporters on distorted markets, I and the Minister of Finance both go to cabinet and obtain cabinet support. The whole government has to support it, but the recommendation has to come from the Minister of Finance and the Minister for International Trade.

Mr. Deepak Obhrai: But at the end of the day...?

Do I have time?

The Chair: You have another two minutes.

Mr. Pierre Pettigrew: At the end of the day, it's the government. It's a government decision.

Mr. Deepak Obhrai: For me to check on how it was done, I have to go to the Department of Finance, as you're saying, and not to your department?

Mr. Pierre Pettigrew: Well, to EDC, I would say. But on the question of the audit, I understand that it's the Department of Finance that does the audit. On other questions, you can go to the EDC.

Mr. Deepak Obhrai: Yes. I want to know—

Mr. Pierre Pettigrew: Oh, I know you asked—

Mr. Deepak Obhrai: I go back to this question. When EDC has looked at it and has said that under its corporate account it cannot finance this thing, then it'll go to the Canada account, from what I understand. Then it'll come to you with the full risk management analysis associated with that.

Mr. Pierre Pettigrew: I'm not sure I get your question. On the corporate account...?

Mr. Deepak Obhrai: No. How does EDC send financing to the Canada account? How do they do it? Does it look first under its corporate account?

Mr. Pierre Pettigrew: Oh. It is money that the Government of Canada will—

Mr. Deepak Obhrai: No. How does it assess whether it's going to go under the corporate account or under the Canada account?

Mr. Pierre Pettigrew: Oh. Anything done on the corporate account is done on a commercial basis. It is done from their own coffers. When a particular transaction requires specific attention because it isn't feasible on a commercial—

Mr. Deepak Obhrai: Right.

Mr. Pierre Pettigrew: —basis because the market is too distorted, it will receive money from the Government of Canada.

Mr. Deepak Obhrai: And how do we know? It's the Canadian taxpayers' money in the Canada account, so where is the accountability issue as to how and where this money will be used? Who uses these things under the Canada account to finance these deals?

Mr. Pierre Pettigrew: The EDC sustains these transactions from their own coffers, but when a particular transaction is too risky, when it is operating on a distorted market and the risk is high and we risk losing money, we guarantee it as the Government of Canada. We cannot ask the EDC, which is run on a commercial basis and which we want to make a profit, to take a certain number of risks. So Canada, like almost every other OECD country, has developed a tool to help Canadian exporters on distorted markets.

Mr. Deepak Obhrai: But here is the confusion. You have just mentioned that the Canada account is only administered by EDC. EDC does not make a profit out of the Canada account. So the question I'm coming at is this: because the Canada account is supported by taxpayers, where is the accountability on the issue of the Canada account? I'm talking about the Canada account; let's forget about the commercial account.

• 1610

Mr. Pierre Pettigrew: It's back to the Auditor General. The Auditor General has access to every detail of information about the EDC and keeps congratulating them for their very good work. They have access to every board meeting, to minutes and all of that. It's all there.

Mr. Deepak Obhrai: Is it possible for us to get access to it or not?

Mr. Pierre Pettigrew: Not when it involves commercial transactions—

Mr. Deepak Obhrai: So let's talk Canada account—

Mr. Pierre Pettigrew: We would need to have the permission of both parties. These are commercial transactions, so both parties to the transaction would need to give their approval for making the information public. It's a commercial transaction—you know, confidentiality.

Mr. Deepak Obhrai: On the—

Mr. Pierre Pettigrew: It's not EDC that doesn't want it. It's just their clients.

The Chair: I'm afraid we're well over the time, so we'll move on. We'll come back to you. I'm sure there will be time.

Mr. Deepak Obhrai: Please, Mr. Chairman.

The Chair: Yes. We'll put your name down again.

[Translation]

The Chair: Ms. Lalonde.

Ms. Francine Lalonde: Thank you, Mr. Chairman.

We are pleased to have you here and to hear your comments, Minister. I am going to repeat what Mr. Obhrai said: I hope you will answer our questions.

An issue that many people find disturbing has to do with the behaviour of companies supported by the CDC. On April 3, at a press conference given by the representatives of various NGOs, which are part of a task force of NGOs, a rather devastating series of facts was mentioned regarding the EDC's financial participation in a number of projects in various countries. One representative said:

The EDC is literally operating in a political vacuum. Without acceptable standards for evaluating environmental and social impacts, the EDC is guilty of irresponsible credit practices, and contempt for human rights.

You are the Minister responsible for the EDC, and I would like to ask you what you think of this, and what you plan to do, because many people find this situation disturbing.

My question is this: what do you think of the fact that the EDC is supporting exports which, as Ms. Kuyek said, seem to happen “in a political vacuum” and “without acceptable standards for evaluating the environmental and social impacts”? She also said that the EDC was “guilty of irresponsible credit practices”.

What do you think about this and what do you intend to do, because many people are concerned about this?

Mr. Pierre Pettigrew: I understand. I too saw the report and the demonstrations that took place the other day. We do have to be fair to the Export Development Corporation. It does have an environmental reference framework that results from its own policies and that ensures that environmental factors will be considered before financial support for projects is approved. That is true of any project.

Having said that, as you know, the Gowlings report and this committee both made recommendations about the way in which the EDC should deal with environmental considerations and other matters you raise. As you know, the government is in the process of analyzing the Gowlings report and the committee's report on this issue. We will be releasing our response before May 15. We will meet the deadline.

Ms. Francine Lalonde: I asked you what you thought about this, because the Gowlings report was harsh even on the issue of access to information. It said that it made no sense that the EDC would be deprived of all the information that can be available in other places. We can understand that there are industrial secrets, but the information in question contains much more than that.

What do you think?

• 1615

Mr. Pierre Pettigrew: Look, I think this requires our government to do some in-depth study. We will work on this seriously. We want to respect a fundamental right of our EDC client which is the right to commercial confidentiality. You can't ask the EDC to work against its clients and Canadian exporters as compared to what is done in the international marketplace.

However, beyond exporting its goods and services, Canada has the duty to export values. So we have to find a fair balance between, one the one hand, exporting our values, and amongst other things, respect for the environment and the disapproval of abuses committed against human rights, which are very important values for us, and, on the other hand, commercial interests that require some confidentiality.

Ms. Francine Lalonde: Yes, because we should not forget that international trade is part of the Foreign Affairs Department which says it has great ambitions.

To get back to the budget, there is an astonishing figure in there which was actually picked up by the Research Service. International trade is your priority. Now, the promotion of international trade has gone down by over 13%, almost 14%. How do you explain that there is simultaneously more work, as you say, and more requests, but that the promotion of international trade is sliding by almost 14% between 1999-2000 and 2001-2002?

Mr. Pierre Pettigrew: I don't think there will be a decrease. If you look at the amounts, Ms. Lalonde...

Ms. Francine Lalonde: The 248-million-dollar figure represents a decrease.

Mr. Pierre Pettigrew: No, no. We are not talking about the same thing, you see. Somewhere they talk about a forecast. I don't know the term they use in French.

Ms. Francine Lalonde: "Prévisions de dépenses", "Dépenses prévues".

Mr. Pierre Pettigrew: Yes, that's it. The spending estimates include the whole of the previous year's budget including the supplementary estimates we obtained from Treasury Board whereas, in the forecast expenditures, we can't...

Ms. Francine Lalonde: Well, I mean!

Mr. Pierre Pettigrew: Yes, but I am trying to explain this to you.

Ms. Francine Lalonde: Yes, but as far as clarity goes, Mr. Minister...

Mr. Pierre Pettigrew: Yes, yes.

Ms. Francine Lalonde: It says “Spending estimates” in one column and “Forecast expenditures” in the other without indicating 1 or 2. That's a beautiful example of transparency.

Mr. Pierre Pettigrew: I am always in favour of transparency, that is not the issue. I am explaining that we must...

An hon. member: Clarity.

Mr. Pierre Pettigrew: Yes, I could speak at length to clarity. I noticed that Bill 99 was withdrawn in Quebec City because it was too clear.

Some hon. members: Oh! Oh!

Ms. Francine Lalonde: She who laughs last, laughs best. Let's not change the subject.

Mr. Pierre Pettigrew: I am not the one who changed it. It was your colleague.

It was explained to me yesterday, Ms. Lalonde, that last year's figures included all the expenditures made by the department, but that I could not include in the spending estimates the supplementary estimates we will obtain from Treasury Board at two different points in time. So Treasury Board forces us to work this way and does not allow us to indicate in advance what the amounts will be that we know we will have to be granted.

Ms. Francine Lalonde: I am sorry, but I find all of this a bit vexing because others, like me, have had to work with those figures. The Library Research Service which is battle-hardened in these areas, did exactly the same thing. I did not copy my question on theirs, but after I looked, I saw that their interpretation was the same as mine.

You would have to present figures that we can understand.

Mr. Pierre Pettigrew: I had the same reaction, Ms. Lalonde, when I saw that. I wondered what was happening. How come we have less money than last year even if we know we need more for this year? There are 35 million dollars more that were given to our department this year. International Trade gets about 13 million dollars. So I was just as astonished as you, but I was told that Treasury Board did not allow us to include, in our yearly estimates, the figures we will be getting from Treasury Board during the coming months.

Ms. Francine Lalonde: I don't want to spend too much time on this, but have a chat with Ms. Robillard. Then use the two columns and divide last year's figure between the two. Divide the 286 million dollars between your first budget and the column representing what you got after that.

Mr. Pierre Pettigrew: Fine.

Ms. Francine Lalonde: We have to be able to read those figures. Otherwise, we are wasting our time. I am sorry, but I am perturbed. We have all kinds of files, and committees, and so on. If we are working for nothing and the answers we get back is that we have not managed to read the figures correctly, then that's no joke.

Mr. Pierre Pettigrew: I did not mean to say that you were not managing to read them as should be. I tried to explain what Treasury Board restricts us to doing and I will give your message to my colleague.

Ms. Francine Lalonde: To Lucienne.

Mr. Pierre Pettigrew: If you see me chatting with her during next Question Period, that is what we will be talking about.

• 1620

Ms. Francine Lalonde: She was a student at Basile-Moreau College when I was a teacher there. That's why I called her Lucienne.

Mr. Pierre Pettigrew: Good gracious! You are giving away your ages.

Ms. Francine Lalonde: May I have one last question?

The Chair: I am a bit shocked to see that you think the government's accounts are understandable. In my six years on this committee, I have never heard say that the government's accounts were understandable.

Ms. Francine Lalonde: You have to get mad.

The Chair: I am surprised that Ms. Lalonde is mad. Anyway, I must give the floor to Mr. Blaikie. I will get back to you, Ms. Lalonde.

Mr. Blaikie.

[English]

Mr. Bill Blaikie: Thank you, Mr. Chairman.

If I had all the time in the world, I'd love to pursue the EDC thing. I don't think it's a question of audits or even environmental concerns, although I share the concerns of the group that released the report yesterday. I also think there's a great deal of concern within the small and medium-sized business community as to how one gets access to EDC help, and what kind of circles and contacts you need to have in order to even be inside that tent. But that's a whole other matter.

I want to engage the minister in a talk on what he had to say today, although it relates to what I had in mind when I came here. On a number of occasions—at least twice in your remarks today—you talked about getting the WTO back on track and wanting it to focus on trade issues.

This raises two concerns I've had ever since Seattle about your approach to this. It seems to me that instead of the Canadian government learning something from Seattle and saying we now have to change our approach to the WTO, you seem to be obsessed with getting the WTO back on track. That is to say, your goal seems to be getting the WTO back into a kind of a pre-Seattle mode—let's find a way of pretending Seattle never happened.

It seems to me, instead of getting the WTO back on track, we need to get the WTO on a different track altogether. It should be concerned, much more than the case was before, with the concerns that were being expressed by people on the street in Seattle and in so-called civil society. I would certainly agree with your analysis on the inadequacy of that particular term, but nevertheless concerns were being expressed there.

The impression being given by you, Mr. Minister, and the government is that that lesson has not been learned. You keep talking about, for instance, the whole question of labour standards, as if it's still something that should be dealt with at the ILO rather than at the WTO. In fact, your approach seems to be saying, let's keep the WTO focused on trade and deal with these other issues somewhere else. That was certainly not the message of a great many people in Seattle—before, during and after.

The message is that the WTO has to deal with labour issues, environmental issues, human rights, and these other concerns, or it won't be able to proceed with any kind of consent, at least on the part of the citizens of democracies.

Mr. Pierre Pettigrew: Thank you very much, Mr. Blaikie, for giving me the opportunity to correct the impression you may have received from my remarks.

As the Minister for International Trade of a country that exports 43% of what it produces, you will understand that I find it a very high priority to make sure that the rules-based system around the world continues to be there for us. With the protectionist tendencies we sense in the United States and a number of markets, it is imperative to me that our rules-based system continues to function well and serve Canadian interests all over the place.

So indeed, it is imperative to me that the WTO functions well and continues its evolution. We have new problems. What do we do with e-commerce, in terms of an international rules-based system? We need to negotiate that with our trade partners. That's what I mean when I say to the WTO that our farmers in the west are penalized on international markets because of export-distorting subsidies. We need to have a place to continue these discussions, so the WTO must be on track.

What do I mean by letting the WTO focus on trade issues? The WTO is not equipped to deal with every legitimate concern that may be expressed around the world. Many of these concerns are quite legitimate; I don't mean to say they're not.

• 1625

On labour, for instance, just last week I had another very good meeting with my colleague, the Minister of Labour, Claudette Bradshaw. In Geneva and again in Santiago, I met with Juan Somavía, the head of the International Labour Organisation.

I don't think the WTO should steal the labour issue from the International Labour Organisation. I think the International Labour Organisation is a fine institution that has been there for 80 or 90 years. We should be working on labour organization through an incorporation between the ILO and the WTO. It would be helpful if the ILO and the WTO worked together. But I don't want to paralyse the WTO and trade ministers on legitimate concerns that might be expressed.

On the environment, we negotiated the biosafety protocol after Seattle. There continues to be progress on these fronts. It was not done by the trade ministers; it was done by the environment ministers and the governments of Canada. I don't think it would be appropriate for the trade minister to seize the labour issue, seize the environment issue, and seize the human rights abuses, for which we all care a great deal.

I also want the WTO to be a tool for the developing countries. Monsieur Chair was very generous in his presentation, in saying that our delegation in Canada held high ground in Seattle and might be one of the few delegations that did not lose getting out of there. I think of our work in the working group on the implementation of the Marrakesh agreement. What did we do there? We really narrowed the gap between developed and developing countries. That's very important.

In my meetings all around with the people I described, we're working right now on capacity-building in the developing countries. We want the WTO to be the developing countries' tool as well. We want to make the WTO more transparent. We want the developing countries to feel more comfortable in it. That must be addressed; that must be done.

Mr. Bill Blaikie: I don't want you to use up all my time for questions, although I appreciate the answers.

The minister has said the WTO is not equipped. I would agree that the WTO is not equipped, but neither is the ILO equipped, when it comes to labour standards. We've had the ILO, as you say, for 80 to 90 years. It doesn't have the power to enforce any of the labour standards it's been adopting for those 80 or 90 years. So it's a question of enforceability. If you don't equip either the WTO or some other international institution like the ILO to enforce labour standards, you're not really dealing with the whole question of labour standards.

My second question to the minister has to do with chapter 11 of NAFTA and the status of these investor-state dispute settlements in negotiations at the WTO, the FTAA, and in any other context in which these kinds of negotiations might be coming up.

One of the things that struck me about Seattle.... I had an opportunity see the text of a draft statement that was signed by the EU, Japan, and a number of other countries. One of the things they were very clear about in that draft statement was that there would be no investor-state dispute settlement mechanism.

To the extent that we have this investor-state dispute settlement mechanism in NAFTA—we're one of the few countries in the world, along with the United States and Mexico that are stuck with this—we see increasingly what a pain in the neck this is in terms of all these suits that are being brought against the Canadian government with respect to water, the softwood lumber agreement, MMT, and the list goes on.

Can you tell us if it is the position of the Canadian government—I think it should be—that in any further agreements that are signed having to do with investment, either at the WTO or at the FTAA, we will not be entering into any further agreements that have this investor-state dispute settlement? We were the pilot project; we were the guinea pig in NAFTA. The guinea pig has a rash. The guinea pig is sick. The guinea pig has found out this isn't a great thing. So I would hope that it would be the position of the government that not only are we not going to enter into these kinds of investor-state dispute settlement mechanisms in any other agreements, but that we're going to try to find a way to get this particular chapter out of NAFTA so that we can be free of this at some point in the future.

• 1630

Mr. Pierre Pettigrew: Thank you very much. If I may just have 30 seconds on the earlier issue, at the ILO just in the past year—

The Chair: You only have 20 seconds anyway, but we'll give you more time. No, I'm kidding. I'm just letting you know the member is over time.

Mr. Pierre Pettigrew: I want to say that last year we made another agreement at the ILO on the exploitation of child labour, for instance, and there has been progress done at the ILO just in the last year—

Mr. Bill Blaikie: It's not enforceable.

Mr. Pierre Pettigrew: Yes, it is. We're working on—

Mr. Bill Blaikie: In what way?

Mr. Pierre Pettigrew: We should strengthen that rather than stopping everything else. Anyway, I think we're too unfair on the ILO too often.

On chapter 11—and we had a discussion a few weeks ago, and I understand where you're coming from—I can assure you that we are not seeking an investor-state provision in the WTO or anywhere else in other agreements.

Mr. Bill Blaikie: On the FTAA?

Mr. Pierre Pettigrew: No, not on FTAA either.

Within NAFTA, Canada is continuing to pursue this issue with our partners. NAFTA officials have met twice so far to discuss chapter 11. Right now my deputy minister, Rob Wright, who would have liked to be with us today for this meeting, is in Dallas, and as I mentioned to Charlene Barshefsky a few days ago on the phone, I've asked him to raise this issue with the NAFTA deputy ministers in Dallas at this time.

When I have more time I'll go back to it.

The Chair: No, do. Honestly, Minister, before we go on, I think all the members of the committee were very pleased when the government responded positively to the committee's report, and obviously the core problems in the report revolved around human rights, labour standards, culture, and environment. And the evidence we heard was, on the one hand, if you loaded it all into the WTO you'd kill the WTO and it would become the World Organization, not the World Trade Organization; and on the other hand, if you're not going to put it in the WTO, then we have to ensure that the other institutions work. We had people like the former president of the Canadian Labour Congress come before us and say, the same guys who go and negotiate the ILO agreement then go and do an end run around it at the WTO.

So I think all the colleagues who worked through these issues—and on both sides of the House—are very much supportive of you when you're saying we're going to make sure these other fora work, then, because if the WTO isn't going to do it, then we have to have other international institutions with teeth that will, or we will have this huge level of frustration. So I think that's the assurance you're giving us at the moment. And the biodiversity in Montreal may be a good example, but you're going to need a lot of that in the future to build up the other institutions.

Mr. Pierre Pettigrew: But I think the Montreal protocol is a very good step in the right direction. But what you have just been describing, Mr. Chair, is exactly a government-wide approach that I am supporting, and that is what I have embarked upon with Claudette Bradshaw, the Minister of Labour.

The Chair: Thank you.

Mr. Bill Blaikie: Just for the record, I like what you said, but I think the real news here, if you like, is that the minister has gone further than the report, has gone as far as I would like the report to have gone. He's saying that in the FTAA negotiations and in the WTO negotiations, the government is not seeking an investor-state dispute settlement provision. I think that's really good news, because that has been part of the big problem with NAFTA. And that was in the MAI. Now, if it's not going to be sought in the FTAA or the WTO, this is good news.

The Chair: That's another discussion, but there are other institutions like ICSID and all sorts of other international institutions to enable a resolution of disputes.

Mr. Bill Blaikie: This is progress.

Mr. Pierre Pettigrew: Take the good news and run with it.

The Chair: I'm not necessarily convinced this is good news, Minister, because as you know, we've signed dozens of investment agreements with dozens of countries and they all have investor resolution things in them.

Mr. Bill Blaikie: Not like NAFTA.

The Chair: Anyway, we'll take it and run. We'll take it and run.

[Translation]

Mr. Patry.

Mr. Bernard Patry (Pierrefonds—Dollard, Lib.): Thank you, Minister, for your visit. All these exchanges are very interesting.

• 1635

I have two questions concerning the future expansion of EDC. Knowing full well that the US are presently absorbing 86% of our exports and that Canada must open up other markets, I'd like to say something about the European market.

It seems a bit of a paradox presently that the relative penetration of European markets by Canada is decreasing while the European Union should actually open up, with the arrival of new members, the establishment of a single currency and the implementation of economic reform. So this is my question: what can Canada do so that the expansion of the European Union does not lead to a decrease of a broad access to the European market for Canadian products?

And now for my second question. Still concerning the development of the European market, the Sub-committee on Trade was recently told that your department was presently working on an action plan in view of a free trade agreement between Canada and the European Union and that this action plan might be presented to the European Union's Secretary for Foreign Trade. Supposing that the perspectives concerning the trade liberalization mechanism with the European Union is realistic, what should be the main components of a free trade treaty with the European Union?

Mr. Pierre Pettigrew: Thank you very much for your very relevant questions. It is true that it is very important for Canada to continue being active in markets other than the one with the U.S. We should be careful about the 86% figure. Of course, 86% of our exports go to the U.S., but a lot of them are simply on their way towards Latin America, South America or even Mexico or to brokers sending them elsewhere. So I think the 86% figure is more of a reflection of how business is done than the fact that they are our only client. The figure should be taken with a tiny grain of salt. Reality is fundamentally as you have described it, but I simply wanted to draw your attention to that.

Now, concerning Europe, you are right. I have regular chats with Pascal Lamy, the Trade Commissioner for the European Commission. Just last week, I was talking about bilateral trade between Canada and the European Union and multilateral trade. We are trying to work together with third countries, developing countries, to get them into the World Trade Organization.

Actually, we have developed a new tool with them that is called the CERT in English. I don't know what it is called in French, but this is a round table made up of business people from the European Union that has taken on a lot of importance during the last year and that meets at the same time we have our Canada-Europe summits and which, in my opinion, should eventually produce results.

During the last meeting of the CERT, this round table, the Canadian side once again put forth the idea of free trade negotiations with the European Union. There are problems on the European side. There is not a lot of interest there, but Mr. Lamy did say he agreed we should examine the matter. Should we be looking at a free trade agreement? In other words, are there business reasons for negotiating that kind of thing? His argument is that tariffs are already so low that a free trade agreement would not change the reality of the thing very much. We are presently looking at this and we will certainly want to pursue, at the very least, other initiatives to facilitate business or work together with this round table.

On the European side, there is not only the European Union: you also have the EFTA, the European Free Trade Association. That is made up of the four neighbouring countries. It is small, but it is significant nonetheless. I dare hope that we will be getting a free trade agreement within the next few weeks or months. My cautious advisor is suggesting I should say months, but it's coming.

Mr. Bernard Patry: That's fine, thank you. I will share my time with...

The Chair: When your witness is accompanied by a lawyer, there is always a problem. It's a lawyer problem, isn't it? With whom are you sharing your time?

Mr. Bernard Patry: I just have a comment to make. How can you explain...

The Chair: Whom are you sharing with? With Ms. Marleau?

Mr. Bernard Patry: With whomever comes next, Chairman.

The Chair: It's Mr. Paradis.

Mr. Denis Paradis (Brome—Missisquoi, Lib.): Thank you, Minister, for your presence here. For your department, it is important for SMEs, small and medium-size enterprises, to be active in the export business. Do you have any data on Canadian SME exports? That's the first part of my question.

• 1640

Second, the National Rural Conference is going to be held in my riding of Brome—Missisquoi at the end of April. Delegates from all Canadian provinces, from April 27 to 30, will be meeting in our magnificent Magog—Orford region to discuss things during a few days. With this in mind, what more could your department do for SMEs in our country's rural regions? How can we get rural regional SME people to think more about exporting? I am putting that question to you because my riding is located along the American border, and our currency advantage as compared to the Americans should encourage rural SMEs to increase their exports. What more could your department do?

Mr. Pierre Pettigrew: First of all, I would like to draw our colleague Bernard Patry's attention and that of the committee to page 54 of the report I tabled today giving a very good list of the results obtained with the European Union as well as projects for next year. That could improve on the answer I gave you before.

As for the more specific data for small and medium enterprises, I don't have them right here with me, but we'll send you and the other members of the committee the data from my department on SMEs. We have all kinds of data on the market development programs as well as the work done by the EDC, 80% of whose clients are SMEs. So we have a certain number of tools available.

As for making the public aware of the importance of international trade, especially in rural areas, there are so many new tools today. Technology eliminates so many barriers for the regions. Before, when you lived out in the country, you were penalized because you had to go through the big cities and all that. Now, the Internet and modern technology free the surrounding areas from the economic domination of Montreal or the other big centres, in many respects, our rural regions can have direct access to the rest of the world now without having to go through our metropolitan centres. So the potential is huge.

We count on members as committed as yourself, colleague, to increase the awareness of our rural regions. During the two-week Easter break, I'll be travelling across Canada. I've decided to meet Canadian citizens and Chamber of Commerce representatives. I'm also going to travel through rural regions and major metropolitan centres to promote international trade. I'm going to travel around Canada during the two-week Easter break to explain what my department can do and to promote the Canadian government's other tools and how important these markets are.

We're counting enormously on each and every member to do this in their own communities and their own regions.

The Chair: Thank you.

[English]

Mr. Obhrai, did you want to ask any other questions?

Mr. Deepak Obhrai: I'll take the liberty.

The Chair: Five minutes.

Mr. Deepak Obhrai: I'm reluctant, but I'll take the liberty. Thank you.

To your questions from my colleague from the NDP, of course you know that on many of those issues I agree with you. So I have to state that.

Mr. Denis Paradis: You might want to elaborate a little bit.

Mr. Deepak Obhrai: No, I don't want to.

Kathryn, you said that the audit was done in 1997. That was two years ago, and no report has been released on that, none whatsoever.

Ms. Kathryn McCallion: The audit was done in 1997. If I'm not mistaken, there's a summary available on the Treasury Board website. But if not, it is about to be made available on DFAIT's website.

Mr. Deepak Obhrai: That's good, after two years, which is a long time. When the HRDC scandal came out, I would have probably felt it was prudent for your department to issue your audit report right away. So why wasn't it sent out?

Mr. Pierre Pettigrew: I have been told that ministers are not normally briefed on audits in their department, that these are done by officials. And given the circumstances around HRDC, which you will understand I will certainly not call a scandal myself, the situation at HRDC has prompted a number of colleagues—and myself, asking my own deputy minister—to ask whether it is normal that the minister is not briefed on an internal audit. We're not often briefed. It's not usual to be briefed, and I don't think even opposition parties used to ask very much about audits.

• 1645

Mr. Deepak Obhrai: But then, Minister, are you telling me that you haven't seen the 1997 audit, which is the last audit, at all?

Mr. Pierre Pettigrew: No.

Mr. Deepak Obhrai: I think you'd better see it.

Mr. Pierre Pettigrew: I'm accountable for the—

Mr. Deepak Obhrai: That's right, because you're accountable, you had better see it.

Mr. Pierre Pettigrew: No. I am accountable. I asked my deputy minister a few weeks ago if he had any doubts or reservations about our grants and contributions in my department, and he came back to me a couple of weeks later and confirmed to me that he saw absolutely no difficulty and no problem in our grants and contributions. So I take it for granted that as he went through the audit he realized that things are absolutely under order.

Mr. Deepak Obhrai: This report will come to us, I'm sure, and I'm asking when the next audit is taking place.

Minister, I'm not finished here. I'm coming back to the EDC thing.

When EDC refers a loan to you...and we're going back to the Canada account here, because as the Minister for International Trade you are responsible for the Canada account.

Mr. Pierre Pettigrew: I'm accountable.

Mr. Deepak Obhrai: That's right, exactly, and that's why the questions are coming back to you.

So when EDC refers the loan to you on Canada account for financing, what specific risk management procedures are followed to protect the taxpayers' interests, if any? Is there an independent audit done or is there an independent assessment done on that, or is it just an assessment by EDC that this is a good loan and blah, blah, blah? How do you make that decision, because it is the taxpayers' money?

Mr. Pierre Pettigrew: It is EDC's assessment and a recommendation that is made to us to accept that transaction and then to recommend it to the government. EDC is the expert. EDC has developed that expertise and they make an assessment and they say the government should support that, but because it is a distorted market the risk is difficult to evaluate and the government gets in as a backer.

Mr. Deepak Obhrai: So EDC makes this decision on how to use the taxpayers' money and goes to you, but nobody knows about it and nobody can figure out if this was a right decision or a wrong decision or whatever, or if an outside assessment was done? Of course we are also talking about these environmental issues that have now been coming out. So what are you going to do to actually get this information to the Canadian public? It's Canadian taxpayers' money. There is a hidden provision here.

Mr. Pierre Pettigrew: It goes from the corporate account to the Canada account when the national interest is at play; when the Canadian national interest is at play, it goes to the Canada account. It is when the magnitude of the risk is too high on a distorted market to put it exclusively under the responsibility of the EDC, and it is then that EDC makes an assessment that they pass on to us. My department looks into it and I receive a recommendation, along with the Minister of Finance. We, the two of us, need the full government support, but we go when the national interest is at play, when it is a distorted market where traditional commercial interest rates and ways of doing it would not apply, and then we ask for a full review by cabinet.

But it is audited by the Auditor General, and from the Auditor General I can repeat to you the beautiful quotes I gave you a little earlier.

Mr. Deepak Obhrai: But do we get that? Is that public information available?

Mr. Pierre Pettigrew: Ask the Auditor General.

Mr. Deepak Obhrai: You're hiding behind that confidentiality issue.

• 1650

Mr. Pierre Pettigrew: No. The Auditor General has access to the board of directors' minutes of meetings, transaction details, and financial records. He goes through all that, and three times he has given EDC the Auditor General's award for annual reporting.

He said:

...in my opinion, the transactions of the Corporation...have, in all significant respects, been in accordance with...the Financial Administration Act and regulations, the Export Development Act...and the by-laws of the Corporation...

Mr. Deepak Obhrai: You've read me that three times.

Mr. Pierre Pettigrew: Yes, but you don't seem to understand.

Mr. Deepak Obhrai: I do.

The Chair: Members, some of these questions should go to the public accounts committee, partly because when the Auditor General appears before the public accounts committee, there seems to be some suggestion that....

I'm not trying to interfere with your question, Mr. Obhrai, but the way it works, as I understand the system, is that if it goes to the Canada account.... I hate to use this example because it was so controversial, but the loan, say, to China for constructing nuclear facilities there went to the Canada account rather than the normal corporate account. It's recommended by the minister, it's approved by the cabinet in Order in Council, and then it's monitored by the Auditor General.

Mr. Deepak Obhrai: Well, I don't think—

The Chair: I think that's the transparency trail you're looking for, so I don't think we should confuse the committee with the suggestion that it's some sort of weird hidden thing. It's not.

Mr. Deepak Obhrai: When was the Canada account last audited?

The Chair: But you can certainly ask the Auditor General. The Auditor General audits this and reports.

Let's go on. Ms. Augustine is next, and then Mr. Rocheleau.

Mr. Pierre Pettigrew: Mr. Chair, would you mind if I ask Mr. Fried to give a complementary answer to our friend from the official opposition—

The Chair: Yes, sure. Anything that can clear it up.

Mr. Pierre Pettigrew: —on the audits and the PEMD, because I want to make sure we have the right technical information.

The Chair: Absolutely. That's very helpful. Thank you.

Mr. Jonathan Fried (Assistant Deputy Minister, Trade and Economic Policy, Department of Foreign Affairs and International Trade): Thank you.

To clarify, 1997 was an audit for the program for export market development, PEMD. The department responded to the audit's recommendations immediately with a number of improvements in 1998.

There has been a more recent audit of the government's international business development activities. The Auditor General released a follow-up assessment in November 1999, and in his report he noted and reported on a number of improvements that the department has made since the time of the earlier audit.

So I think there may have been some misunderstanding that the most recent document from the Auditor General was only in 1997. November 1999 is the most recent Auditor General's review of all the business development activities of the department.

The Chair: You can get that in the normal Auditor General's report in one of the supplementary volumes that are there.

Mr. Deepak Obhrai: That's the internal audit?

The Chair: Yes, they do an internal audit as well.

Ms. Augustine.

Ms. Jean Augustine (Etobicoke—Lakeshore, Lib.): Thank you, Mr. Chairman.

The Chair: You can ask any question you want except about audits.

A voice: Is that the right clarification?

Mr. Pierre Pettigrew: In 1997 there was an internal audit by our department of the PEMD.

Some hon. members: Right.

Mr. Jonathan Fried: That's the one that's on its way to the website.

As Ms. McCallion said, there is ongoing audit and evaluation and a dedicated unit in the department for that purpose.

You seem to be looking for the Auditor General's most recent review, and—

Mr. Deepak Obhrai: I'm looking for the Auditor General's—

Mr. Jonathan Fried: —in November 1999 there was a review of all trade promotion activities and services.

The Chair: The answer is very clear. There are two forms of audit. One is an internal audit by the department, just like corporations do their own internal audit, and there's an external audit done by the Auditor General, just like corporations are audited by their auditors. That's just the normal practice in today's business, and everybody does it the normal way.

Ms. Augustine.

Ms. Jean Augustine: Thank you, Mr. Chairman.

Mr. Minister, I was pleased to hear about your promotion of international trade to small business event that's going to be occurring in a couple of weeks. I hope you come to Etobicoke—Lakeshore.

But I want to ask about small economies, like CARICOM and the developing economies in Africa and places like that. When you talk about Canada taking the lead in developing regional agreements, I wonder whether those small economies are being considered.

• 1655

My second question has to do with a statement you made about employees and the equity programs, the percentage of women, francophones, and disabled. You went as far as delineating or naming those groups. I notice you didn't name racial or ethnic, and I wonder whether people of colour are included among your foreign service officers and your departmental staff in locations both here and abroad.

Mr. Pierre Pettigrew: I honestly thought I had also said visible minorities.

Ms. Jean Augustine: No, it's not in your paper.

Mr. Pierre Pettigrew: If it's not there, it should have been there.

Right now, in regard to visible minorities, we have 86 non-rotational individuals and 96 rotational in the staff of our department, which means we're at 8.7% of staff coming from visible minorities right now.

In regard to women.... Do you want them all?

Ms. Jean Augustine: Sure.

Mr. Pierre Pettigrew: I'll give you this fact sheet, but I should have said visible minorities. It's just that I missed it. It's very much part of our several delineations.

Ms. Kathryn McCallion: They have to self-identify.

Mr. Pierre Pettigrew: Yes.

About the smaller economies, I know this is a file in which you have much interest, Madame Augustine, and I totally share your interest in that.

At the free trade area of the Americas, we have a special group that has been appointed to study the challenges for the smaller and often least-developed economies of the trade agreement, and in particular, our evolution towards a free trade area of the Americas. So we have that special group really identifying both the challenges for smaller, often least-developed economies, and solutions. We are demonstrating as much sensitivity as possible for their integration in the free trade area of the Americas.

I can tell you that in Seattle, in this working group on implementation, we worked very closely with Minister Hilton of Jamaica, who spent a lot of time with us explaining very carefully the difficulties facing smaller economies. So we are paying very special attention to that.

Ms. Jean Augustine: Do you have timelines?

Mr. Pierre Pettigrew: The target for the whole agreement is 2005, but the next meeting at which we will have a report is 2001, about six weeks before the Quebec City Summit of the Americas.

Ms. Jean Augustine: Thank you.

The Chair: Thank you very much.

Monsieur Rocheleau.

[Translation]

Mr. Yves Rocheleau (Trois-Rivières, BQ): Minister, in your presentation you mentioned the difficult labour relations the department is having concerning the renewal of the collective agreement. We should remember that the Professional Association of Foreign Service Officers saw the agreement it had entered with the department voted down by 84.6%.

Should we see a link between that difficult administrative situation and the fact that your department's chosen strategy is to hire local trade agents who, from what we're told, cost three times less than Canadian or Quebec foreign trade agents?

Mr. Pierre Pettigrew: No, no.

Mr. Yves Rocheleau: Where does this...

Mr. Pierre Pettigrew: No. The practice of hiring local agents has been there for years. As you know, the people hired in this way are often very competent people who know the culture and the language and already have their own contacts in the chambers of commerce and industrial associations. It's a very precious resource for our exporters and businesses who want to be introduced to people when they show up to do business and want to find out about the different files and all that. I can assure you that it is very practical for our business people to have access to a network of people who have local commitments because of their sensitivity and their networks and contacts in international markets where we're trying to develop business.

Mr. Yves Rocheleau: But if there is no link between the hiring of local trade agents, how do you intend to try to solve the collective agreement problem?

• 1700

Mr. Pierre Pettigrew: I think that our officials are most competent and I wanted to emphasize that. I've known them since way before I had the opportunity of becoming the Minister for International Trade. As you know, when I was in business in Montreal, I worked very closely with a lot of them to help Quebec businesses to develop on the international market. I was a consultant on international management. So I can tell you all about the professionalism of our agents because I had already known them for quite a while when I was put in charge of the department.

Now, this negotiation is taking place with Treasury Board. It's not up to the minister responsible for a department to talk about negotiations between the employer, which is Treasury Board, and a group of employees who did not accept the result of the negotiation between their union and Treasury Board.

Mr. Yves Rocheleau: How long has your department had this policy of hiring local agents?

Mr. Pierre Pettigrew: Oh, it's been quite a while. I was working for ages with local agents.

[English]

For how long have we been hiring local people?

Ms. Kathryn McCallion: Since 1894.

[Translation]

Mr. Pierre Pettigrew: Since forever, since 1894. We've always had local employees. Trade is now becoming more important. Mr. Rocheleau, one must understand that international trade is taking up a lot more space than it used to. Previously, trade was about 5% of an embassy's business. When it is 40% of its business, chances are greater in favour of hiring local employees than when you're just dealing in foreign policy. I hope you understand that.

Mr. Yves Rocheleau: It would seem that your department chose this hiring policy recently.

Mr. Pierre Pettigrew: I'll ask Ms. McCallion, who is in charge of...

[English]

Ms. Kathryn McCallion: Thank you, Mr. Chairman.

To be brief, after program reviews one and two, it was decided that in certain locations there were enough skilled locally engaged officers to augment our trade staff in missions. Some of them are Canadians, non-resident Canadians.

We have now a policy. I think it was two years ago that Minister Marchi announced that we were trying to reinstate certain trade officers abroad. We were going to go back from having a 50-50 split of the foreign service at home to 70-30. It was announced in his report to Parliament last year.

We are trying to put more Canadian trade officers abroad. The locally engaged staff are trained. We have courses, both long distance courses and direct courses, to keep them apprised of Canadian business interests as well as their expertise in local markets.

[Translation]

Mr. Yves Rocheleau: Do you agree with the assistant deputy minister in charge of international trade development activities who says that Canadian agents are three times more expensive than local agents?

Ms. Kathryn McCallion: Yes, it is true. But it is because in the Canadian foreign service, you also have expenses for renting, moving and all kinds of extra things. It's not just the salary.

Mr. Yves Rocheleau: But you can't see that as savings. Thank you.

[English]

The Chair: Madam Marleau.

Ms. Diane Marleau: I'm going to speak about medicare. As you know, many Canadians are very anxious about the implications for a publicly funded medicare system. Under any rules such as the WTO, the NAFTA, or other future negotiations, can you explain to us how you intend to protect this publicly funded medicare system? Are you aware of any legal opinions that state that perhaps the bill that is being brought forward by Alberta at this time might bring an end to the protection we have for our publicly funded medicare system?

Mr. Pierre Pettigrew: I've been quite clear on that question, and I think it is a very important one. You're right to raise it because it's quite crucial to our Canadian values. Canada is right to regulate and protect fundamental Canadian values such as the health care sector. I would say the same thing about our public education system. They are fully protected under NAFTA and the GATT.

• 1705

The issue is really the Canadian health system. At the GATT, it's a bottom-up approach, not top-down. In a top-down negotiation, you apply principles from the top down. If Canada chooses not to put health on the table for the negotiations, nobody can force Canada to do that. As it is a bottom-up approach at the GATT that we're seeking, there will be no opportunity for our trade partners to demand access to the Canadian health services.

Ms. Diane Marleau: Right now, if a publicly funded system is open to competition.... For instance, I believe what is being thought of in Alberta is that they would open up these private health facilities to competition. Could it be then that our system would be under pressure because American companies would want to come in and compete for these?

Mr. Pierre Pettigrew: The Canada Health Act is protected. As the Prime Minister said, if Alberta is consistent with the act, we will still be protected. It will be up to them to make sure their bill is consistent with Canadian legislation and the Canada Health Act.

Ms. Diane Marleau: There's a great deal of concern, and it's being expressed openly by many. I thought it was important to bring it up. Perhaps you might look into it further to ensure that all provisions, all precautions, are taken.

Mr. Pierre Pettigrew: Our officials continue to monitor very closely the progress around both the proposed legislation and the General Agreement on Trade in Services, which, as you know, Sergio Marchi is heading in Geneva. He's been elected by his—

Ms. Diane Marleau: I believe I can get a copy of a legal opinion that would say the opposite. I don't have it, but I know someone said they had one. Perhaps I will make sure you get it so that you know what's being said.

Mr. Deepak Obhrai: Are you challenging the minister?

Ms. Diane Marleau: Yes.

Mr. Deepak Obhrai: I'm not the only one.

The Chair: Legal opinions are....

Ms. Diane Marleau: Oh, there are a lot of legal opinions, I know that. I just thought it would be important because these are things that are being said, and I know how important it is to you as well as to all of us—on this side, at any rate.

The Chair: Just to support Madam Marleau's position, Minister, I suppose the concern is not, as you say, from the WTO because clearly, unless Canada signs on to health, we don't do it. Under NAFTA, if we open our system to private competition within Canada, then the non-discrimination obligations of NAFTA would come into play, and this is the concern that's been expressed.

That's exactly how we got caught on the MMT case, with which Mr. Fried is more than familiar. We got caught on MMT, and you'll get a section 11 challenge that will say “My corporation has been discriminated against and I can't participate in an activity as a Canadian private corporation”. That's the concern and that's what we're hearing. I'm not trying to put you on the spot. I'm saying that's where this is all coming from.

Mr. Pierre Pettigrew: I know, but under NAFTA there is a hole carved out of the Canada Health Act.

The Chair: Right.

Mr. Pierre Pettigrew: So it's clear, it's there, and there is that hole carved out there.

The Chair: Yes, but it's not like the MMT situation because it's not—

Mr. Pierre Pettigrew: No, no. That's an investor.... That's what we had a discussion on with Mr. Blaikie.

The Chair: Okay.

Mr. Obhrai.

Mr. Deepak Obhrai: I'm just going to go back for a minute to the audit, and then I'm going to go back to Jonathan and ask another question.

Mr. Diane Marleau: You know what? You should have been an auditor. You wouldn't be asking all these questions.

Mr. Deepak Obhrai: The 1999 audit is the external audit the Auditor General did that was presented in the Parliament. The 1997 audit is the internal audit you did that is inside. Am I right? Are we clear on that? You will table that to the committee?

Ms. Kathryn McCallion: Right.

Mr. Deepak Obhrai: When is the next internal audit going to be done?

• 1710

Ms. Kathryn McCallion: We had an audit and evaluation committee, of which I'm a member, last week. The trade programs were not up for review because we have no reason to believe there are any difficulties with them.

The advantage of PEMD, if I could be just a little more elaborative, is that it is a reimbursable program. It is monitored very closely. We have an active auditor who works with it all the time to make sure the required money is returned. It's a pay-back program. It's quite well managed in that it is actively managed on an ongoing basis.

Mr. Deepak Obhrai: I'm going to ask this question to the minister.

Over the course of the mandate of your government, which came into power in 1993—and this is something that has been brought to attention—relations with our biggest trading partners were at a better keel, on a better plane, than they are today. Over a period of time, chips in relationships based upon your government's policies have led to a state today in which there are quite a lot of challenges, a lot of trade irritants, taking place between us and the Americans. Many would blame the rise in these trade irritants on these little chips of relationships that have been going down between your government and the U.S. government.

What would your comment be on the rise of trade irritants?

Mr. Pierre Pettigrew: Mr. Obhrai, I would have to disagree with your premises. I honestly think our relationship with the United States is a very healthy and good one. I get along very well with Charlene Barshefsky. I'm on the phone with her regularly. My deputy minister is with her right now in Dallas.

On the contrary, every time I've been to Washington my advisers tell me, “Minister, you don't know how lucky you are, because there's no major bilateral irritant right now. There are difficulties here and there, but there's no crisis.”

Mr. Deepak Obhrai: You're an optimistic man. I know you. You will always look at it this way.

Mr. Pierre Pettigrew: But there's no major thing that's creating difficulties. You know, Canada and the United States exchange $1.5 billion a day in goods and services, so there may be from time to time an irritant over...and we have had. I'm sorry, I shouldn't be bragging about that. I hope the press will not pick up that comment.

Mr. Deepak Obhrai: Please do.

Mr. Pierre Pettigrew: We have a $50 billion surplus with the United States. With such a very dynamic trade relationship, that we have so few problems is really the question.

Mr. Deepak Obhrai: I thought it was a big problem.

Mr. Pierre Pettigrew: It's solved now. It's close to a solution. Thanks to the good offices of Mr. Fried, who led the negotiations in Washington for us, we're very close to a solution.

Now, there are problems. When you trade with someone for $1.5 billion a day, there are bound to be problems from time to time.

Yesterday I met with our colleague, Jean Augustine, about the sugar caucus. One of your colleagues, Monte, was part of that discussion. We met many people from the sugar industry in Canada. There are problems there. That's why we're there—to solve problems all the time.

But I can tell you that I find the problems very small in comparison to the huge trade we're doing.

Mr. Deepak Obhrai: Thank you.

The Chair: May I just ask a couple of quick questions, Minister? Then I'll go to Madam Lalonde again.

In our report, besides trade and its relationship to human rights, labour standards, and the environment, the other complicated issue we had to grapple with was the culture file, protection of cultural diversity. We've discussed that in the past, and I just wondered if you could help us with your perspective on we're going on that issue.

• 1715

I know that's a file you share with the Minister of Canadian Heritage and that there are attempts underway to set up a cultural institution. We've heard a great deal about the SAGIT report and what we might do. I just wondered if you could tell us where we are from your perspective. Sometimes we see encouragement and sometimes we feel there aren't many countries supporting us on that issue.

Mr. Pierre Pettigrew: Well, it is a difficult file and it is important to gather allies and supporters. I would really welcome every member of this committee to be sensitive to the culture file when travelling abroad, and to indeed find allies for us on the importance of the cultural diversity in our world.

This is a file on which I'm working very closely with my colleague Sheila Copps, who is working very strongly and very well on that front. The whole Government of Canada, along with the United States, is pursuing multilaterally a new international instrument on cultural diversity that would set out clear ground rules to enable Canada and other countries to maintain policies that promote their culture while respecting the rules governing the international trading system. This approach will require intense efforts for several years.

You're right, some days we're more optimistic than others. It will take a number of years, and during this process we will of course continue close consultations with the stakeholders, through the SAGIT, and with the provinces, who have a great interest on this file.

Where should it be? I myself don't know. Some people speak about the UNESCO. My problem with the UNESCO is that the United States is not a member of UNESCO. That creates a problem.

[Translation]

Ms. Francine Lalonde: They'll come.

Mr. Pierre Pettigrew: They'll run, but I don't know if they'll come.

[English]

Anyway, let's keep an open mind on where we should be doing this. I think we agree that we have a twin track. We want cultural diversity to be discussed somewhere else and negotiated somewhere else than with the ordinary trade rules. We should respect the ordinary trade rules as well, though, for the negotiating trading system.

The Chair: It's clear that there is an aggressive effort to at least pursue this file. It's not been forgotten or anything.

Mr. Pierre Pettigrew: No, no. Absolutely not. We will pursue a multifaceted approach by seeking support for the instrument on cultural diversity in such fora as international network on cultural policy, UNESCO, WTO, and la Francophonie as well. It would be premature to rule out options for where and how the instrument should be negotiated and for its content.

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

[Translation]

Ms. Lalonde.

Ms. Francine Lalonde: I just want to add that you may have seen in the newspapers that Lucien Bouchard's visit is going to lead to a debate on that. There is a joint France-Quebec committee on this matter with Marie Malavoy, from Quebec, and Catherine Lalumière, from France, who are well known. They're supposed to table a report on that matter. I know that the work is going to be done in co-operation with you.

I'd like to get back to Europe, but about the trade question. I think that everyone admits that it's desirable for Quebec and Canada not to have the USA as quasi-sole trade partner for all kinds of reasons. However, in your policy, the priority put on trying to increase trade with Europe doesn't seem clear.

I'm saying this because I was on a Canada-Europe delegation trip and we met the people from CERT who said that we had to make more of an effort if we wanted to change things because the problem is not the improvement in trade but its deterioration. If we want to change that, we have to make more of an effort.

• 1720

Mr. Pierre Pettigrew: We're going to make whatever effort has to be made. First of all, to conclude on our relations with France, next week I'll be meeting François Huwart myself; he is the Secretary of State for France's foreign trade and he'll be in Ottawa. We'll continue our discussions on this matter. I'll be quite happy to look at Ms. Lalumière and Ms. Malavoy's report. As you know, France is a good ally in that matter. I simply wanted to mention that.

As for the European Union, in the report you got today, on pages 53, 54 and 55 you will see—I don't want to submit all of this right now—everything we see as possibilities in the way of opening things up, of gaining access, of making available what we need. We really want to reinforce our ties. But you can be sure, Ms. Lalonde, that my first responsibility is to increase and promote international trade.

We are told that the percentage of trade with the United States has gone from 72% at the time of Prime Minister Trudeau to 78% at the time of Mulroney, and that it is now at 86%. I do not want to tell people to stop trading with the United States because trade with other countries is not increasing fast enough. We have a free trade agreement with them. We have the same business culture. We are all North Americans. We have the most dynamic market on earth, a powerful consumers' market in every respect.

The Minister and all politicians must help and encourage every conceivable kind of export. Thus, it is not my job to correct statistics and to slow down the United States in favour of Europe. I would not be any happier, on finishing my mandate as Minister of International Trade, to say that Europe is now at 30% and the United States at 70%.

Ms. Francine Lalonde: Mr. Minister, I did not say that at all.

Mr. Pierre Pettigrew: No, no.

Ms. Francine Lalonde: If we increase our exports to Europe, our trade with the United States will not decrease per se, but its percentage will necessarily decrease. What would you say about that?

Mr. Pierre Pettigrew: If our trade with the United States also increases, I will be even happier.

Ms. Francine Lalonde: I would have liked you to give me an answer regarding a problem I have seen, I have read about and heard about. Since the Seattle failure, a potential agreement with Canada or the United States is perceived, in Europe in relation to the developing countries, as an alliance among the rich as compared to the agreement that did not work in Seattle.

I heard about this, I read about this and I am sure that this is a real obstacle to reaching an agreement, however it does not prevent us from making every possible effort to stimulate sales to Europe and trade with Europe.

Mr. Pierre Pettigrew: The Prime Minister will be personally present at the Canada-European Union Summit, which will take place in Portugal in June. I will be there too. The Prime Minister asked me to be there as Minister for International Trade because trade is truly a priority. I can assure you that we will do everything possible to improve the situation. I would draw your attention once again to our document. It contains clear objectives and ideas regarding Europe. I fully agree that we must make every possible effort.

Ms. Francine Lalonde: You also agree that the provinces should make every possible effort.

Mr. Pierre Pettigrew: Absolutely.

Ms. Francine Lalonde: Like Bernard Landry.

Mr. Pierre Pettigrew: Absolutely.

Ms. Francine Lalonde: Now, when Bernard Landry—and I am not talking about Europe—travels to Mexico, to Central America...

Mr. Pierre Pettigrew: I am the first to approve.

Ms. Francine Lalonde: When problems arise in meeting ministers and prime ministers, as he knows, the fact that Canada does give him a hand does not help at all.

Mr. Pierre Pettigrew: Sometimes there might have been, at the presidential level, a political element, but I do not think that it was the case at the ministerial level. On the contrary, the department organized dozens and dozens of meetings, both for Mr. Landry and for Quebec companies. I spoke to Quebec companies that went on the missions directed by Mr. Landry, and they told me that federal services had often rescued missions that had not started out very well.

Thus, I can tell you that my department will continue serving provincial governments, including the Quebec government.

• 1725

In my first weeks as Minister for International Trade, I was a member of Team Canada with Mr. Bouchard, and I can tell you that Mr. Bouchard seemed to appreciate very much being a member of Team Canada. Moreover, he has participated every year. I can tell you that he also greatly appreciated participating in Team Canada in his trade dealings.

In Seattle, I worked very closely with Guy St-Julien. Guy St-Julien represented the Government of Quebec. He was part of the Quebec and Canadian delegation and I can assure you that I don't think we had a single case where there were any problems. We might have discussions here and there, go faster on this or that, but the cordiality between us was...

Ms. Francine Lalonde: I'm going to make myself a little note.

Mr. Pierre Pettigrew: Honestly, I can say that I had the opportunity to talk about it to Mr. Landry when I met him in Davos. According to people from the private sector and my people, when it's a matter of foreign trade and international trade, we're quite duly diligent. Our objective is to increase exports. If there are matters of politics when you reach the level of heads of State, well then, that's something else again.

Ms. Francine Lalonde: Do you speak to Axworthy?

Mr. Pierre Pettigrew: As Canada's Minister of International Trade, when I go to another country, I don't ask to meet the president. We meet people who work at the same level as we do when we visit other countries. You don't want to look like a social climber. I was speaking for myself.

Ms. Francine Lalonde: Yes, yes.

The Chair: Ms. Lalonde is the one who meets heads of State when she travels. That's the true danger. And we'll be meeting heads of State when we travel in the Caucasus, if the House gives us approval, Madam.

[English]

Minister, I wonder if I could just quickly ask you a question about the relationship between trade flows and FDI, foreign direct investment, both in and out of Canada. Some people are saying that Canada's proportionate share of FDI is going down. That comes out of your own figures. That could have some impact on our trade because there's a relationship between trade and foreign direct investment, particularly in services, where you have to have an investment in place.

From the committee's point of view.... I don't know whether you have any comments. I know the Minister of Industry has made comments about this before, about the need to increase the proportion of foreign investment in Canada in order to create jobs and help our trading position. I don't know whether that is something that comes under your scrutiny or not. I don't know if you had any comments on it.

Mr. Pierre Pettigrew: We do. I'm working very closely with John Manley on this Team Canada investment. This is something where we really want to make sure we improve our global market share. It might have been dropping even though foreign direct investments in Canada are at a record level. There are more and more of those. We have to position our country very closely and very well.

I'm very pleased to see the KPMG annual study, which has demonstrated that our Canadian sites were absolutely good places for foreign direct investment. I think we have the right tools. We have the right country to promote as far as that is concerned. I will be working even more closely and energetically with my colleague John Manley to do that at the international level.

The Chair: Do I understand your answer to be that while maybe the proportion has slipped somewhat, in fact the absolute number is bigger than it was in the past?

Mr. Pierre Pettigrew: Absolutely.

The Chair: With China and other trade people coming in, it's hard to assume that we could keep the proportion we always had when it was a smaller trading world and we were—

Mr. Pierre Pettigrew: You're so bright, Mr. Chair. You impress me.

The Chair: Well, I eventually get the point. I start to get the point after a while. It takes a while. It takes someone as persuasive as you, Minister, to get it through to us.

Mr. Pierre Pettigrew: I think it's time we finish this.

Voices: Oh, oh!

The Chair: We have two minutes left, Mr. Obhrai.

Voices: Oh, no!

Mr. Deepak Obhrai: If we're going to finish on a nice line, I think I'd better get back in here.

The Chair: You literally have one minute. That's all.

Ms. Colleen Beaumier (Brampton West—Mississauga, Lib.): Two minutes, no more.

Mr. Deepak Obhrai: I don't have enough time, so let's go for it, Mr. Minister. We're going to go back to the risk assessment of the Canada account so I can have a very clear picture.

• 1730

The risk assessment is done by EDC. It is sent to you. Does the department do another assessment on that or not? Is what EDC has recommended what happens? That is the question. At the end of the day, you and the finance minister sign on it, yet the assessment is done by EDC, by another body that gets money for it. Henceforth we are trying to look at the accountability issue here. Is another assessment done on it by the department?

Mr. Pierre Pettigrew: No. The assessment is done by EDC and there are interministerial consultations involving Finance and my department. It is that which comes to me for my recommendation to the cabinet and that of the Minister of Finance.

Mr. Deepak Obhrai: Is that a detailed assessment or not? It's just looking at it and then you put a political picture onto it.

Mr. Pierre Pettigrew: It depends on the importance. When you have numbers of high magnitude, obviously the assessment by EDC will be more thorough and the interministerial consultation will take more time and will be more detailed. These matters sometimes take months to elaborate.

Mr. Deepak Obhrai: You realize you just said “high magnitude”. That's exactly what we're talking about: high-magnitude loans over here that our taxpayers funded. We're trying to get a handle on it to see where the accountability is.

Mr. Pierre Pettigrew: I have been stressing very clearly that these were done with the national interest of Canada in mind. Almost all OECD countries have developed similar tools. We wish in a way that we didn't have to use such tools, but the problem is that there are still distorted markets that are very important in the world, and almost every other OECD country uses that. So I cannot penalize Canadians.

Mr. Deepak Obhrai: The issue is using taxpayers' dollars prudently. It's not whether we are going to get.... That's what we're trying to get at.

Mr. Pierre Pettigrew: We do that very prudently.

The Chair: We'll end on that note, because it's exactly 5.30.

Minister, thank you for your very helpful and open approach to the committee. We appreciate it very much. Thank you.

Mr. Pierre Pettigrew: Any time, Mr. Chair.

The Chair: The meeting is adjourned.