FAIT Committee Meeting

STANDING COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE

COMITÉ PERMANENT DES AFFAIRES ÉTRANGÈRES ET DU COMMERCE INTERNATIONAL

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, November 27, 2001

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[English]

The Chair (Mr. Bill Graham (Toronto Centre—Rosedale, Lib.)): Colleagues, I call this meeting of the committee to order. We have a quorum for hearing witnesses.

I'd like to welcome our distinguished panellists, particularly Mr. Flynn, who has come up from the United States.

Thank you very much for coming. I think some of the other members of the committee will be able to hear you speak this evening to a group of Canada-U.S. members.

We also have Mr. d'Aquino, Mr. Rhéaume, Mr. Shea, and Mr. Boutziouvis with us.

I would like to draw your attention to a procedural matter. Mr. Harb is anxious to get a trade subcommittee report in, but we need a full quorum in order to be able to do that. So I'm going to start now with Mr. Flynn, but I might interrupt the witnesses for a few minutes to get that procedural matter dealt with as we go along.

As you know, we're starting 40 minutes late. We were to go to 5:30, but I'm hoping that perhaps, if we're going to have a vote at 6:30, we might stay a little past 5:30 and see if we can catch some time so that members can ask you more questions.

We'll start with you, if we may, Mr. Flynn, and again thank you for coming.

Mr. Stephen Flynn (Fellow, National Security Studies (New York), Council on Foreign Relations): Thank you so much, Chairman Graham.

The Council on Foreign Relations is a non-governmental, non-partisan think-tank that has its offices in New York and Washington. I'm headquartered in its New York office.

It certainly is a privilege for me to be here today to testify on this vital issue of securing an open border between our two countries in the wake of the tragic events of September 11.

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Over the last two and a half years I have been conducting research on the issue of border management and the era of globalization. That project has afforded me the opportunity to conduct field visits along the U.S.-Mexican and U.S.-Canadian borders, within major seaports and airports throughout the United States, and in Montreal, Rotterdam, Hong Kong, and Kingston, Jamaica.

Directly relevant to the topic at hand today, I've conducted interviews with U.S. and Canadian border control agents at border crossings in Detroit-Windsor, the Niagara, and the Champlain regions. My research question has essentially been this: Given the cascading tides of peoples and goods moving across international borders, how do border control agents accomplish their public mandates of filtering the bad from the good and the dangerous from the benign?

The answer I arrived at, and what I expected to spend a quiet fall writing a policy book about, which about six people would probably read, was that essentially they don't do that. That is, they don't—

The Chair: Our researchers read everything.

Mr. Stephen Flynn: Which I'm thrilled to see, in Canada at least.

But essentially they don't. Border control agents are not able to filter the bad from the good or the dangerous from the benign, and given our current border management architecture, they simply can't.

Let me be clear about this. The international community has no credible way to routinely detect and intercept terrorists or the means of terrorism if intent on crossing international borders. Our border management system is broken. It's simply not working for the age that we're in.

This is obviously a sobering conclusion to reach, particularly in light of what I would argue are the three unpleasant facts of life that we must accept in the wake of the events of September 11.

First, there will continue to be anti-American terrorists with global reach for the foreseeable future, regardless of what goes on in Afghanistan right now. Essentially, the folks we have in Afghanistan are what I would call “the terrorists of the moment”.

Secondly, these terrorists will have access to the means, including chemical and biological weapons, to carry out catastrophic attacks on U.S. soil.

Thirdly, and this is very critical, the economic and societal disruption created by the September 11 attacks and the subsequent anthrax mailings have opened a Pandora's box. Future terrorists bent on challenging U.S. power will draw inspiration from the seeming ease with which the United States could be attacked, and they will be encouraged by the mounting cost to the U.S. economy and the public psyche associated with the hasty, ham-handed efforts to restore security.

That is, there's a purpose or method behind the madness in terrorism. It is not simply to kill people or topple buildings; it's ultimately to generate societal and economic chaos that will lead to a weakening of the power of your adversary to change its behaviour. A lot of that disruption was not a result of what happened on September 11, but it is what happened as a result of how the United States reacted to what happened on September 11.

That is, within just a few hours, the United States did something that no nation could do to a superpower. It effectively imposed a blockade on its own economy. Not only did it close down the aviation sector, as you all know, and reduce traffic to a trickle across the U.S.-Canada and U.S.-Mexican borders, but it also effectively closed all its major seaports as well.

Why did it do that? It did that because the sense was that we have no credible means to do this filtering of bad from good within the international transport modes that bring us peoples and goods across our borders. So we had to freeze it, and we had to assess that risk before we could turn it back on. But the fact of the matter is, the aviation sector is a virtual Fort Knox of security when compared to the maritime and surface modes. The simple fact of the matter is that those systems are wide open and continue to remain wide open post-September 11. That poses a real challenge for the United States, and I would suggest more importantly for the international community at large.

What we saw, I would argue, on September 11 is how warfare will be conducted in the 21st century. No one is going to take on the United States directly in terms of its military might. That was a fool's game that Saddam Hussein tried in the 1990 Persian Gulf War timeframe. It's something nobody else would likely repeat.

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What we saw was the way asymmetric warfare will be done, to target essentially the civil and economic elements of power in order to challenge that superpower. This is what's keeping people in Washington awake at night: that when they look at those systems, essentially the civil and economic backbone that is the basis for so much of U.S. power and also the basis of American and global prosperity, they see only vulnerabilities in that system.

In a rather knee-jerk response they have focused on the border as a way to try to get a handle on this because that seems to be at least a workable place to make a step forward. I'm going to suggest to you that this is not a very good place to start, and we need to raise the bar a little further.

What I suggest here is that what the United States and the international community are facing is the stark reality that there will continue to be adversaries who'll use catastrophic terrorism as a means of warfare. We also must be mindful of the fact that the goals of these attacks, again, are not simply to kill people but to create this chaos. Ultimately, therefore, a war on terrorism should be about reducing the vulnerability of the global systems of transport, energy, information, finance, and labour to be exploited or targeted by terrorists. This is a task that simply cannot be accomplished by focusing on control activities along national borders.

The best way to illustrate the limits of border-centred inspections as a response to terrorism is to consider the security challenge represented by commercial containers. Consider the 20-foot and 40-foot boxes that find their way onto ships, backs of truck, and trains and that account for well over 90% of all the overseas general cargo that arrives in North America. These containers can be loaded by upwards of 500,000 forwarders in what's called NVOs, non-vessel operators, around the planet. They need to provide only the scantiest of information about they're putting in the container, and the seal is a little plastic thing with a number on it. Once you've done that, away it goes onto ships, through ports, and into a jurisdiction.

Six million of these containers arrived by sea in the United States in the year 2000. More than half a million of those came via Halifax and Montreal. In the case of those containers and particularly the ones that arrived in Canadian ports, most are loaded onto rail cars and sent directly to the United States with no inspection of their contents.

Let us imagine a scenario where a bomb that is triggered by opening a door is loaded in one of these containers. The result of that bomb being activated would not just be the destruction of the surrounding area and the death of those who are nearby, it would likely lead to the complete shutdown of all container trade. The container trade is the equivalent of the postal service or of global trade, except that unlike when the postal service had the anthrax attack and we could go to e-mail, FedEx, and UPS, there simply isn't an alternative to the movements of general cargo—not in the short term, by any stretch—if you eliminate the container trade.

With respect to whether a container has been compromised by a terrorist, if we ask how you assess whether a container is clean or not, the answer would have to be that in the United States and Canada, we don't. We inspect an infinitesimally small amount. When we talk about a physical inspection, the opening and checking of its contents, we're talking not the 1% or 2% customs typically uses as a number; we're talking one in a thousand. That's what actually gets that kind of look. It's a very small percentage, one I think the American population, if they were targeted, would likely find unacceptable. They would want to turn off the spigot.

I lay out that dark scenario not to unnerve you but to help highlight the new security challenges associated with this post-September 11 world and what I think represents a real opportunity for the Canadian international leadership. It has an added benefit of helping to preserve the long tradition of a largely open border with the United States.

Just as Lester Pearson helped to find a way to secure world peace at the height of the Cold War during the Suez crisis, I am convinced that the Canadian government can take the lead in establishing new standards that sustain the openness so essential for advancing global economic prosperity and freedom while reducing the growing threat posed by criminals and terrorists who want to exploit that openness to do their worst.

My argument is this. While states will always seek to exercise some control at their borders, it is the international transportation networks bringing people and goods to those borders that must be made secure. There are virtually no made-in-Canada threats. There is some very good marijuana that's grown here in Canada, but we have our own competition south of the border. This issue is really that in many cases there are people and goods moving through Canada and posing a potential problem, but neither of our jurisdictions has much competence in dealing with them.

It's the transport networks, the arteries that feed the global markets by moving commodities, cargo, business people, and tourists, that should be the focus of our attention post-September 11, not the 49th parallel. But enhancing security in transportation networks can only be accomplished by moving away from placing primary reliance on an ad hoc system of controls of borders and individual national jurisdictions. These threats don't fall out of the sky and land at the 49th parallel. They come to us via trains, ships, cars, and various conveyances, and they are usually from, again, other jurisdictions.

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The challenge is, how do we get away from the border? The key in this case is to look towards point-of-origin controls supported, I would argue, by a concentric series of checks conducted at transhipment points and at the points of arrival. This is particularly important to the United States and Canada. We're trying to distinguish the illicit from the licit at the border or within ports of arrival. It's a bit like trying to catch minnows at the base of Niagara Falls. Moving upstream is not as difficult or futuristic a task as it might appear at first blush, I would argue.

As a starting point, the United States and Canada could capitalize on the enormous leverage over the global transportation networks we exercise through just a handful of jurisdictions. Suppose our two countries were daily joined by nations such as the United Kingdom, the Netherlands, Singapore, and Germany. If they could all agree to common standards for security, reporting, and information sharing for operators, conveyances, and cargo, those standards would become virtually universal overnight. Anyone who chose to not play by these rules could expect to find themself frozen out of competitive access to the world's major markets.

These standards could include the requirement that anyone who wants to ship a container or transport passengers through the jurisdiction must take some steps to validate their legal identity and purpose. This could include, for instance, a mandate that a container be loaded in an approved, sanitized facility. At these facilities, loading docks would be secured from unauthorized entry, and loading processes would be monitored by camera. In high-risk areas, the use of cargo and vehicle scanners might be required, with the images stored so they could be cross-checked with the images taken by inspectors at transhipment or arrival destinations.

A system that advances near-real time transparency of train and travel flows could also be required. This would serve two purposes through the use of a GPS transponder as a truck moved through. First, it would reduce the risk to shippers of being compromised in transit. They couldn't slide off and disappear if somebody did something bad to them en route. Second, it would enhance the ability for enforcement officials to quickly act on intelligence of a compromise when they received it by allowing them to pinpoint the suspected freight.

The importance of achieving the second objective cannot be overstated. The sheer number of travellers and the volume of trade, along with the possibility of internal conspiracy even among companies and transporters who are deemed low risk, make critical the ongoing collection of good intelligence about potential breaches of security. But that intelligence is practically useless if it helps only to perform a post-attack autopsy. Mandating in-transit accountability and visibility would provide authorities with the means to detect, track, and intercept threats once they receive an intelligent alert.

A GPS transponder could be placed on ships, trains, trucks, and even containers so they could be tracked. A light or temperature sensor could be put in the interior of a container, and an alarm would be set off if the container were opened illegally at some point. Importers and shippers would make this tracking information available upon request to regulatory enforcement authorities within the jurisdiction through which the cargo moves or for which it is destined.

Finally, manufacturers, importers, shipping companies, and commercial carriers would agree to provide in an electronic format advance notice of details of their shipments, operators, and conveyances to the appropriate authorities. That would essentially allow those authorities to assess the validity of the data, check it against watch lists, and basically feel comfortable facilitating a shipment because it's deemed to be low risk.

As to validating the legal identity and purpose of international travellers, obviously the people issue is a huge one in the U.S. and Canada right now. There is a straightforward solution, albeit something we can't do overnight, but it is one we could do with off-the-shelf technologies. It is essentially that we have to move away from easily forgeable paper-based documents such as traditional visas or passports. In their stead, we should be embracing universal biometric travel identification cards that include electronic scanning of fingerprints, eye retinas, or irises.

These ATM-style cards could be used by consulates and passport offices and presented at the originating connecting points of an individual's international travel itinerary. Airports, railways, rental car agencies, and bus terminals would all be required to install and operate card readers as a condition for allowing their customers to use conveyances moving across national jurisdictions. The idea here is essentially to get out of being concerned about all Arab Americans, particularly in the U.S. context.

How would this system work? Let's say somebody applied for a visa to go to the University of Indiana to study botany and they had $1,500 of disposable income to live off. If on the weekend, maybe a long weekend of their break, they decided to fly to Bonn, down to Egypt, or up to Montreal, that would set off an alarm. How does a botany student do that on $1,500 a year? You can pinpoint those who are a problem because of aberrant behaviour and not end up casting blame on a wide population group about whom you have basically unsubstantiated concerns.

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For non-citizens, a country could require the presentation of these cards for renting cars, flying on domestic flights, or using passenger rail service within a host jurisdiction as well, so you can do that kind of anomaly detection.

Now, there's one thing to mandate that this data be provided, effectively managing it so that it makes a credible determination of low versus high risk, and is something else altogether. And here, I think, Canada has a lot to contribute to the rest of the community, including the United States. Front-line agencies simply have to be brought out of the 19th century and their stovepipe record-keeping worlds.

To reduce the potential for overload, existing data collection and requirements must be evaluated to determine whether they can be eliminated, consolidated, or accomplished by other methods, such as statistical sampling. Investment and information technologies and training personnel to process and analyse these data is key. For the sake of both efficiency and minimizing the risk of information gaps, the goal should be to create within each national jurisdiction one clearing house for receiving data about people, cargo, and conveyances. The government users of the data can collect and analyse what they need from that pool.

Inspectors and investigators assigned to border control agencies will obviously continue to play a critical role, as well, in the timely detection and interception of anomalies. To be effective, however, a serious effort must be made to improve their pay, staffing, and training, and this is very important, to push them beyond the border. Customs agents should not necessarily be at the border; there should be places in the transport network where it would make sense to essentially do the assessment early on and allow for them to be facilitated at their final entry point.

Megaports and regional transshipment ports should play host to international inspection zones, where agents can work side by side for goods and cargo and people ultimately destined for their jurisdictions. This would provide a little more strategic depth; it would provide some exchange of information and allow, ultimately, some facilitation. The model here is actually one that the French and British are using at the bases of the chunnel, a sort of one-stop shopping approach to clearing people and goods going into that chunnel.

I would argue and finish with this: Canadian governments could help to advance this agenda by taking several important steps. I want to make the case here—I think Canada is better positioned to do this than the U.S. government right now—that, first, they could indicate their seriousness in tackling these daunting problems by issuing an order in council that authorizes an immediate and practical and symbolically important step by calling for the reversal of the location of the inspection functions along the major bridge and tunnel crossings between Ontario, New York, and Michighan and to allow the binational colocation of inspectors at North American ports of arrival.

In the first instance, Canadian inspectors would move to the United States side of the border and the U.S. inspectors would move to the Canadian side of the border, so that cargo, people, and conveyancers can be checked and cleared before they use the bridge and tunnel infrastructures that themselves could be targets.

As I've learned from Canada and the wonderful job folks do in the government here providing useful quotes, more trade goes across the Ambassador Bridge than the United States government has with Japan. Well, who protects that bridge? The answer is, a private company. Neither the United States government nor the Canadian government has even thought about the security of the bridge as a target.

We were worried about west coast bridges not too long ago in the United States, but we have a heck of a lot more vulnerable one now.

How do we verify that somebody dangerous is coming? After they get across the bridge, then we check them out. What if that bridge were used as a target? What about the two-mile queue on the Ambassador Bridge? Where would those people go? The answer is, they have no place to go. Or, even worse, in the tunnel between Windsor and Detroit.

This is crazy. You check stuff before it gets onto the facility. This would mean, horror of horrors, actually allowing inspectors to work where it makes sense, versus tethering it to a piece of geography that makes no sense in the world that we're operating in now. That, I think, would be a tangible step and a very important symbolic step.

The other side, the second instance, is to allow U.S. and Canadian inspectors to work side by side inspecting shipments and enforcing their regulations for goods bound by their respective jurisdictions. This would be U.S. customs and immigration inside Montreal or Halifax and vice versa, Canadian customs and revenue and immigration inside Newark or Boston or Portsmouth. Let's do something tangible here.

Second, Revenue Canada and Canada Immigration can go the next step in the innovative application of technology to support the border management mission by embracing the use of biometrics, that is, electronic fingerprint scans and eye scans, for the CANPASS and the NEXUS identification cards.

In addition, they can require advanced transmission of data for shipments and operators for those companies and conveyancers who participate in the self-assessment program. This is key. Essentially, having alterable data is not going to work in this world. In order for you to assess if somebody's legitimate, you need data upfront. You can't do risk management with post-data. You have to have the data upfront, about who's coming and when. The key is not about whether there.... In this case, it's the timing of the giving of the data. The timing should be as early in the system as possible, not after the fact, or even on the border, where it's too late to do any intelligent analysis of it.

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Finally, Revenue Canada should invest in gamma ray container scanners that can be used in each of the major seaports and airports to facilitate rapid non-intrusive, non-destructive inspections of cargo—ideally, spot checks.

Next, Ottawa should support regional experimentation in prototype programs and innovative approaches to achieving border management objectives. We don't have answers to a lot of these problems; we should experiment. The way to do that is for both federal governments to allow their regional directors to work with local governors and premiers to pilot things. Give them some discretion to do so.

In New England I spoke with Governor Jean Shaheen of New Hampshire, who is mobilizing the other governors of Maine and Vermont to work with their Quebec and east maritime provinces counterparts to develop private-public prototypes, working again with those regional federal directors. The hope is there'll be receptiveness on the Canadian side. This is a good thing.

Finally, as a chair of the G-8, Prime Minister Chrétien should advance the “Beyond Border Control” regime as vital to sustaining free trade and global prosperity. Specifically, the G-8 should adopt, at their forthcoming meetings, standards for advancing point-of-origin controls and enhancing security integrity within the international transport network system.

There is a real opportunity to get out of the kind of bilateral minutia conversation and let Canada essentially acknowledge what we're facing here is a problem of globalization writ large. While there aren't a lot of clear heads in Washington these days on some of these issues, I know there are clear heads up here north of the border.

It's not something we can solve just in the hemisphere. It's a broader issue of how to sustain essentially the lifelines of globalization, in a context where there are very evil people destined to do very bad things. I think Canada can play an instrumental role, particularly in this chair role on the G-8 again, saying those of us who control those arteries are insisting on standards to enhance our collective security.

In so doing I think we will be able to stay engaged, as we must do if we're not to surrender to the terrorists, and inspire the world rather than shrink it and hide behind our borders.

Thank you very much.

The Chair: Thank you very much, sir. I'll be interested in the questions when they come.

Mr. d'Aquino, can we go to you next? Welcome back before the committee.

Mr. Thomas d'Aquino (President and Chief Executive Officer, Business Council on National Issues): Mr. Chairman, it's always a pleasure to appear before this committee.

My colleague Sam Boutziouvis and I will offer some very brief thoughts.

Let me say, first of all, how impressed I was with the testimony of Stephen Flynn. I shall read a paper he gave me that is in draft form only, but is due to appear—I'm doing a little commercial for him—in Foreign Affairs. Based on the testimony he gave today, I recommend we all read it.

Our comments are going to be very brief. Rather than deal with the highly specific recommendations Mr. Flynn has put forward to you, we will try to respond to a broader set of strategic issues dealing with the issue of integration, which it was my understanding was one of the terms of reference of this committee.

It won't surprise any of you to hear from me or the organization I represent—the 150 chief executives of our largest companies in the BCNI—that we have considered for a long time, and still consider in particular, that the resolution of our relationship with the United States has to be a very top priority for Canadians.

What do I mean by that? We've had a very beneficial free trade agreement that led to a very protracted debate in this country. The chairman, who's a former professor of international trade law, will agree I'm sure that debate over a long period of time resulted in an education of Canadians about the importance of trade, and the high degree of dependency Canadian jobs and investment have on trade.

In that respect, even if the free trade agreement, God forbid, had been defeated and we were today, as a result, a wee bit poorer, at the very least Canadians would have come out of that debate in the 1980s much better educated on the subject of trade.

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However, the passage of the free trade agreement really left us with a situation where we saw increasing integration at the firm level and in terms of how our daily lives take place in the North American economic space, but at the same time, we did not see, either at the border, or in a broader sense at the institutional level, a catching up with what was happening economically.

For that reason, when the BCNI launched its Canada global leadership initiative two years ago, which looked at issues on how Canada could become the global leader in terms not only of trade and investment, but also of its relationship on a broader set of issues throughout the world, the issue of Canada-U.S. was very important in that paradigm. However, when we had our CEO summit in Toronto, we purposely decided to put our studies on the issue of the future of the Canada-U.S. relationship aside, because we felt that with an agenda dealing with productivity, innovation, and tax reform, we did not want to open yet another front.

However, those studies, over the course of the last couple of years, have reinforced not only the need to rethink elements of the relationship, but more specifically, to rethink elements of the border, to think of the border in a much more creative way, as Mr. Flynn has outlined for you today.

Indeed, the thinking behind this led to a book that a colleague of mine, David Stewart Patterson, and I authored: Northern Edge: How Canadians Can Triumph in the Global Economy. The fundamental thesis behind that was that we had to reduce the border effect if we hoped to finish the job we had made a lot of progress on in the last ten years in this country.

Ten years ago, if I were appearing before this committee, we would have seen a country that had a relatively poor record among the G-8 in battling inflation. We would have seen a country that was beset with deficits and debt, a country that had a crushing tax burden, and a country whose productivity and innovation growth in relation to that of the United States was in decline.

When we brought Professor Michael Porter to Canada, you may remember his prognosis was rather sombre and dire. In ten years, through a mixture of good government policy, sacrifice on the part of Canadians, and some very, I think, enlightened and aggressive thinking on the part of the private sector, the Canada now is in much better shape. However, we still have a weak currency. It's been in decline for 24 years. We have cheap assets that are being bought up by American companies. We're losing headquarters, and we are all suffering a brain drain.

I mention all of that because in a sense the solution to those problems requires a rethinking of the relationship with the United States and how we think of the border.

On September 10, a small group of us, Canadians and Americans, met here in Ottawa to look at some of these problems. My co-convenor was Peter McPherson, the president of Michigan State University, and there was a very eclectic mix of Canadians and Americans in that group, both business and non-business. We said what the country desperately needed was a much more integrated approach on how we deal with the United States. We could no longer continue to deal with the United States in a highly compartmentalized way—the Minister of Agriculture today, the minister responsible for culture tomorrow, the Minister of Trade here, the Minister of Defence there. The relationship was much too huge to be dealt with in a compartmentalized way.

Indeed, in Northern Edge, we went so far as to recommend that as part of the integrated approach, the Prime Minister should chair a committee of ministers. The relationship was so important that it could not be dealt with in form and in organization as we would deal with a relationship with a country other than the United States.

But we also concluded that an integrated approach would require us to look at trade in goods and services, security, defence, immigration, refugee issues, and policing, and that in the absence of such an integrated approach we would continue to fall increasingly into a backwater as far as U.S. priorities were concerned, particularly at a time when the United States was engaged in a love affair with Mexico's Vincente Fox.

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However, I have to say to you that at the conclusion of our meeting we decided that we had only two choices. One was to approach the issue through what we called a “big bang” approach—that is, the only way you could capture the attention of the Americans is in the same way as we did in the 1980s, by proposing a grand design, a grand vision, as in the case of the first free trade agreement, and that therefore perhaps what we should be talking about is some form of customs union between the two countries.

In the absence of that, if there was going to be political opposition to that approach in Canada and boredom about the issue in the United States because it wasn't sufficiently important, we concluded that, in the absence of some crisis, nothing very much would happen.

The next morning we had our crisis, and as tragic as it was, I think it did create some very extraordinary opportunities for Canada. Suddenly the United States had to pay close attention to all of its borders. It certainly had to pay attention to its northern border as well as its southern border, and because there were perceptions in the United States that perhaps we were a country that was a little more lax about how we dealt with refugees, a little bit lax on how we dealt with immigration...incidentally, perceptions that are real in the United States but, I would submit to you, do not have valid foundation when in fact a great number of the threats and problems are coming north and not going south.

However, we were given an opportunity with the attention devoted to the northern border and with the cost that industry had to subsume in those early days after September 11, when suddenly people in Canada realized that if a few border points, a few choke points, a few tunnels, a few ports and a few airports were shut down or impeded in any serious way, it would do incalculable damage to jobs and to investment in our country.

So it was a very important wake-up call, a wake-up call that dealt with issues that should have been dealt with a long time ago. The result of all that has been a much more energetic concentration of energies and focus in Canada and, to some extent, in the United States as well. It has resulted in the kind of very promising exchange that took place between Secretary O'Neill and Finance Minister Martin on the occasion of the G-20 weekend, where Secretary O'Neill arrived with a real sense of urgency and said that we should be measuring progress in how we deal with transborder issues not in terms of months, but weeks. The relationship between Minister Manley, Governor Ridge, and Colin Powell, and now the triggering of various committees and work at the officials level, is extremely important and timely.

The reason it's timely and important is because it emphasizes something that Mr. Flynn has told us, that we cannot assume that there will not be additional terrorist strikes. We cannot assume that there will not be strikes in the future that will be vastly more catastrophic than those that took place against the Pentagon and against the trade towers.

So there is this sense of urgency and, I would argue, a very narrow window of opportunity that I'm pleased to see the Government of Canada and certain actors in the United States are taking seriously.

However, will we be able to move quickly enough? Well, we've taken steps domestically. The bill on counterterrorism is a very important step, the actions that have been taken dealing with immigration, the so-called front-end screening, the fact that there is very intense study now of the infrastructure requirements at border points. But also there is a recognition that there are much more creative ways of dealing with the problem. I won't get into them, because Mr. Flynn has outlined them for you rather impressively this afternoon, but let me just mention a few of the ones that we are working on.

For example, when it comes to people, we do have a diversity of approach in dealing with visas, the United States having something like 60 exemptions, and Canada having 30. There's no reason why the two countries could not sit down together and agree on a common policy towards visas. This does not mean buckling down to the United States and buying anything that they want, but taking steps that in fact are good for public policy in Canada.

Secondly, on the issue of advance passenger information, which to some extent is now provided in the air transport system, which Mr. Flynn said, in comparison to other forms of commercial and people flow, is literally Fort Knox, there's no reason why we can't apply that kind of thinking very creatively to other forms of commercial movement.

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There's the whole issue of refugee status. The fact of the matter is that 25% of refugees come to Canada via the United States. On the other hand, we know there are certain lacunae—loopholes—in how we deal with refugees. Certainly there's an approach we can take, I think, that would be a joint approach enhancing a sense of both assurance and security in both countries.

The issue of customs data-sharing, up front and in advance, customs commercial information-sharing, the expansion of the NEXUS program, the idea of joint facilities—these are all doable things if there's a sufficient degree of political will.

One of the reasons why the small Canada-U.S. group I was talking about addressed a letter to President Bush and Prime Minister Chrétien yesterday was not in any way to be critical of the two chief executives, but to say that it's imperative, seen from both sides of the border, that we work very hard and quickly to establish a zone of confidence between our two countries.

I would add that action on these fronts cannot be separated from a subject this committee has looked at often and with great skill, and that is the whole issue of Canada's defence and security capability. To a large extent, the ability to develop a zone of confidence cannot just deal with the items I have outlined. In my view, it has to deal with the issue of Canada's defence and security capability—which, I've said publicly before and I'll repeat again, has been very sadly under-resourced for a long period of time and deserves now, in the light of post-September 11, a very serious look.

Let me conclude, Mr. Chairman, with a couple of very quick points. I think we are at a stage where the very constructive debate that has been generated in this country will lead some people to say we must move on a “grand design” basis. I'm the first to confess that I'm a sucker for the grand design; I'm a great believer in the grand design; I get very excited about the grand design.

Just as the free trade agreement in 1981 was a grand design for me, so would a customs union be between Canada and the United States. I think we have to be very careful not to be drawn into a debate that could become counterproductive. That is, what we have here now is an opportunity that does not require us to think in terms of a grand design, one that might provoke a tremendous amount of debate and fear in this country, and even in some parts of the United States.

What we have here is an opportunity to move decisively on six or seven areas around which there is already a confirmed willingness to move. My argument is that if we move on all of those fronts, we may in fact—18 months from now or two years from now—have a very different kind of relationship that we can then leave to the political leadership of both countries to redefine as they would wish.

I would conclude by strongly endorsing what Mr. Flynn has said: that while the border must be something we address very quickly, for all the reasons you know so well, we will not resolve this issue unless there is a global approach.

I think Mr. Flynn's suggestion that Canada take a leadership role, that the Prime Minister use this as an opportunity—build it into the agenda of the G-8 meeting in Kananaskis—as one way for Canada, which is well seen in the world, has credibility in the world, and has a tremendous amount at stake in an open trading system, to take the lead at Kananaskis in proposing a global approach to dealing with transportation and the security of transportation. I think it would be extremely well received and would be, as Mr. Flynn said, a template—not just Canada and the United States, but perhaps Canada, the United States, the Netherlands, Singapore, and Germany—a very good idea.

I can't conclude without devoting 30 seconds to Mexico. Some of you may say, “Well, you've talked about integration, but what about our NAFTA partner?” I guess what I would say is this. There are few Canadians in this country more attached to Mexico than I am; however, I would make a very powerful argument that the approach toward North America must be an asymmetrical one.

The problems of Mexico are very different from ours. I think our leadership, and I would argue the leadership of the United States, should avoid at all costs trying to solve these subjects on a trilateral basis. Mexico should do its thing; Canada should do its thing.

We have an opportunity Mexico doesn't have. September 11 and our response to the Afghan crisis and the terrorist crisis very clearly differentiated Mexico from Canada. That gives us a tremendous opportunity.

• 1650

Those are my views, Mr. Chairman. I'd be happy to answer any questions.

The Chair: Thank you very much, Mr. d'Aquino. This committee will probably in the spring be doing a study leading up to the G-8 summit, so you've already launched us on that. So your evidence will be of double employ for us. Thank you very much.

Mr. Rhéaume?

[Translation]

Mr. Gilles Rhéaume (Vice-President, Policy, Business and Society, Conference Board of Canada): Thank you very much. My name is Gilles Rhéaume and I'm a Vice-President with the Conference Board of Canada. With me today is one of our researchers, Mr. Andrew Shea.

This afternoon, we would like to speak about our work in the area of North American integration and foreign trade security.

The Conference Board of Canada is an independent, private, non-profit organization with over 1,000 members across Canada. Its mission is to help members develop leadership skills with a view to building a better country . The Board seeks to fulfil this mission through the development and exchange of knowledge about economic trends, organizational strategies and public policy issues.

Our members come from the private sector, business and government, including the federal and provincial governments. Member organizations also include unions, associations, hospitals, universities and school boards. As you can see, our membership is quite varied.

We do not speak for these members when we do an analysis of public policy. That's why I say we are an independent organization. We take a balanced approach and weigh in all sides of an issue.

Since 1996, we have been evaluating Canada' socio-economic performance and producing an annual report. The 2001-2002 edition focuses on the theme of North American integration, which is critical to our economy. The message we deliver is that integration has become more important than we ever imagined and, in examining policy issues, we must increasingly take into account Canada's interests in the North American context.

[English]

When we're looking at North American economic integration, it has become very important in this country. You're looking at closer business links through trade, investment, and technology transfer. Our trade has increased by 140% in the last decade. It represents about 40% of our GDP in terms of exports to the U.S. So it's an important part of our economy, and anything that can affect that flow of goods south of the border has a dramatic impact on our economy.

We also have more integrated production systems, which is just-in-time delivery, and that is happening in the north-south context. And you've noticed, following the September 11 event that shut down our borders, that it didn't only shut down our borders, it also shut down a number of plants on both sides of that border.

We've developed complementary Canada-U.S. transportation and communications systems. Actually, there is more flow of goods going north-south than going east-west. So this North American economic integration is very critical to our economy and to our well-being.

The virtual lockdown at the border following September 11 showed that security concerns continued to impinge on Canada's ability to trade. If not addressed properly, it will lower the attractiveness of Canada as a location for industries serving North American markets.

It is as much an economic issue as a security issue. Following the September 11 events we released a study on the economic impact. That was released on September 19 and it looked at the implications of the terrorist attack on the Canadian economy.

The total impact, according to this assessment, is between $4.5 billion and $5 billion in lower GDP over the next year. So it does have a dramatic impact in terms of its implications.

When you look at the issue of the Canada-U.S. border, the trade irritants are not new. They have been in existence since NAFTA, but they became more acute following the September 11 events.

We have come to a better understanding that there is a strong link between national security and trade. Therefore, the policy options chosen must recognize that link and ensure that security is not addressed at the expense of trade, but that policies to address security also improve our trade flows.

• 1655

That led to a report, which we released on October 11, called Border Choices—Balancing the Need for Security and Trade. The purpose of that report was twofold: to add clarity to the unclear concepts that were being thrown around, such as harmonization or a security perimeter. It has many meanings for different people.

The purpose of that report was also to provide insight into what we see to be the three policy scenarios to achieve speedy border crossings and to enhance domestic security. The scenarios looked at what can be done in the short term and the longer term and the grandiose type of plan that Mr. Tom d'Aquino talked about.

I'll ask Andrew to briefly go over each of those scenarios, because there are implications in terms of the course that Canada needs to take forward. Andrew.

Mr. Andrew Shea (Research Associate, Conference Board of Canada): I'm going to outline three broad scenarios. As Gilles said, each is progressively more complex and challenging to achieve. The first is enhanced border efficiency through more intelligent processing of border examinations. The second is to rethink the traditional border management through closer cooperation and some of the initiatives that Commander Flynn pointed out. The third is to closely coordinate policies that potentially eliminate the border altogether, and I think this is where Mr. d'Aquino is going.

In scenario one we talk about enhanced border efficiency. This is about using a variety of technologies and inspection innovations to reduce congestion without fundamentally changing the nature of the border as it is right now. Border efficiency initiatives were already underway prior to September 11. It's generally recognized that Canadian agencies have been ahead of the U.S. in implementing these border efficiencies and that rail is ahead of trucking, at least in terms of implementing surface transportation efficiencies.

To make these scenarios work there is an onus on both government and transportation and logistics companies to improve border efficiencies. Governments need to ensure there are adequate staffing and information systems. As well transportation and logistics companies need to provide adequate information about the content, origin, and destination of the goods being moved.

Having said that, the border is like a random spot check and it's impossible to intensively inspect and verify all but a very small percentage of the goods crossing the border without significantly slowing down traffic. As we heard from Commander Flynn, for containers it's less than 1%. Therefore, more has to be done to assess risks away from the border in order to better target what cargo or people could pose a risk before they even get to the border in the first place. This should allow low-risk traffic and people to move across the border with minimal inspection. In our paper we call this scenario moving from the Maginot Line to defence in-depth.

For government the most basic form of defence in-depth is to share information between Customs and other enforcement agencies, both domestic and foreign. Sadly, we have not seen good evidence of this. In an April 2000 report the Auditor General said that Canada Customs needs to improve its communications with other departments. Just recently, on October 11 of this year, the General Accounting Office, the equivalent of the Auditor General in the U.S., issued a report saying that the U.S. Immigration and Naturalization Service, or INS, does not have a good plan for upgrading its information systems and this is worrisome.

As for working in general more closely with the Americans, there appears to be some movement following the meeting two weeks ago between Ministers Martin and Cauchon and Secretary O'Neill.

For businesses this scenario requires the tracking of goods to ensure that the transportation systems remain secure. Commander Flynn, as we've seen, is in a much better position than I am to provide more detail on secure transportation systems.

Assessing risks away from the border will be good for confidence building on both sides and will likely go far toward accomplishing the twin goals of enhancing security and trade.

In our paper we also looked at what would be needed if scenarios one and two, enhanced border efficiencies and moving security away from the border, were not enough to assure the free flow of trade while ensuring security. In this instance we're looking at possibly eliminating the border altogether. It's at this point that besides having very close cooperation on security and intelligence procedures, we would have deeper trade liberalization and the creation of a customs union. It would also imply requiring the harmonization of immigration policies with the U.S.

• 1700

A variation on this scenario is the elimination of customs and immigration but still having an agricultural inspection station, similar to what exists presently on the California border with other states.

The last point that I'd like to emphasize, and this is absolutely key, is the measures that are considered must include customs and immigration. For instance, if trucks are pre-cleared away from the border there may not be any reduction in border delays if the U.S. INS still does not have pre-clearance of the driver; that is, they may still stop the truck and ask the driver who the person is to determine whether this person is an undesirable individual. So the immigration and the customs must go hand in hand.

I'll turn it back to Gilles for some closing remarks.

Mr. Gilles Rhéaume: In terms of wanting to achieve our goals in terms of enhanced trade and security, it's important that we don't act unilaterally. So cooperation with the Americans is critical.

In terms of the scenarios that Andrew has outlined, it becomes one that is the simplest to do, which requires still some investments into something that is very complex, such as the one we outlined in scenario three, which is the full customs union. So from that perspective, the scenario of enhanced efficiency at the border could be something that could be achieved in the short-term reasonably quickly and that could address at least some of the issues we see.

Of course as you're moving to something that is more elaborate, like what was found in scenario two, it would take a longer time to achieve. And if you're looking at scenario three, in terms of a customs union, you're looking at a very long period of time before any agreement could be reached.

So it is critical to move fast. It is critical that we embarked on that dialogue and it's happening, but the faster we can move in terms of the border issues the better it will be. And of course we can always look at the longer term in terms of finding out what would be long-term solutions for our country.

The Chair: Thank you very much, sir.

Colleagues, we only have half an hour left, so I'm going to make sure that I keep questioners to their five-minute period, which is technically the rule, but I usually allow a lot of latitude because we can allow that time. However, before I proceed to questions I have two procedural matters.

The first matter is that Mr. Harb's subcommittee has done a report on border issues, which addressed, as you know, some immediate recommendations that were thought worth bringing to the attention of the House and the government. There were some controversial issues in there that were removed, but I understand it does not impact on our future work. It will contribute to our future work in this committee's main report, but it enables us to get out ahead, if you like, on the issue.

I understand Mr. Harb has spoken to the opposition critics responsible and has the unanimous support of his subcommittee. Unless there's anybody in this committee who has a specific problem with any of the recommendations, I would like to suggest that we adopt the report now and then he can put it into the House tomorrow.

[Translation]

Mr. Paquette.

Mr. Pierre Paquette (Joliette, BQ): I don't have a problem with the recommendation, but we had agreed on a certain wording and we had ordered some changes...

As I said, I don't have a problem with the recommendation, but I was under the impression the committee had asked the drafters to make several changes. Perhaps we could agree on this, Mac.

Mr. Mac Harb (Ottawa Centre, Lib.): Indeed, the most important part was the recommendations.

Mr. Pierre Paquette: I repeat, I'm fine with the recommendations.

Mr. Mac Harb: The most important step is to table these recommendations. If there are some mistakes in the French or English versions, we can always arrange to correct them by tomorrow.

The Chair: The resolution is drafted in the customary format which leaves the chair the option of making some editorial changes. The clerk informs me that the committee has already adopted the final version of this resolution.

The Clerk of the Committee: If I understood correctly, the sub-committee agreed to several changes and staff worked Wednesday evening to incorporate them into the text. We distributed the corrected version incorporating these amendments to all members on Thursday afternoon. Mr. Schmitz may be in a better position than I to...

Mr. Pierre Paquette: It's really only a matter of some minor details.

• 1705

The Chair: We will make the corrections. The resolution called for the committee to table the report to the House, but we don't have to do that tomorrow. We have the option of making some drafting changes and there could yet be more changes before the report is in fact tabled. The resolution authorizes the chair to table the report to the House, but I submit that it should authorize the chair of the sub-committee to table such report to the House.

[English]

So can we authorize Mr. Harb to put in the report in the House?

Some hon. members: Agreed.

The Chair: And we are authorized to make the editorial and typographical changes, and order that 1,000 copies in bilingual format be printed, and the report will be put into the House by Mr. Harb?

Some hon. members: Agreed.

Mr. Mac Harb: Thank you very much, Mr. Chair.

On another note, tomorrow we'll be reviewing Bill C-41. So I would recommend that any members of the main committee who have any interest whatsoever in the bill show up tomorrow at the subcommittee level. It's a very small bill and it's technical in nature. It has absolutely no impact on the mandate or how the agency will conduct its business. It's our intention to bring it back this Thursday to the main committee so it can be reported to the House at the earliest possible convenience. So if anyone has anything to do with it, please come in.

Also, we have a hearing tomorrow with—

The Chair: The Canadian Commercial Corporation.

Mr. Mac Harb: Yes.

And also we have a hearing tomorrow with the representative from the milk industry in Quebec. So if anybody has an interest in the issues, at 4:30 they are welcome to come in.

Once we have completed those issues the committee will go back to its study of the free trade of the Americas.

The Chair: Thank you very much.

We've adopted the report. We're authorized to put it in the House, subject to your making corrections with Mr. Paquette.

I'm sorry to keep going with this, but we're doing this while we have a quorum. I want to explain to our witnesses why sometimes people drift off, and while we have the necessary quorum here we're proceeding.

Mr. Pallister.

Mr. Brian Pallister (Portage—Lisgar, Canadian Alliance): Mr. Chairman, I'm certainly open to amendments from my colleagues, but pursuant to Standing Order 81(5) I'd like to move that the committee hold meetings to consider and report on the supplementary estimates (A) 2001-2002 for the Department of Foreign Affairs and International Trade; that the committee invite the Minister of Foreign Affairs and senior officials to appear before the committee on the supplementary estimates 2001-2002 as soon as possible, but no later than December 1, 2001; and that the committee consider and report on the supplementary estimates (A) 2001-2002 no later than three sitting days prior to the final allotted day in the current supply period.

Mr. Chair, may I quickly comment on that?

The Chair: Yes, very quickly.

Mr. Brian Pallister: I have spoken to the minister, and though his schedule is very full, he did mention that he may be available, not next week—because I believe he'll be in Europe—but the following. So I would certainly entertain any amendment from my colleagues that would address the particular part of the resolution that says “no later than 1 December”. Obviously we want to accommodate the minister's schedule.

The Chair: Colleagues, before I turn to anybody else, let me give you my understanding of the time we're faced with. If we're going to affect the supply we have to have had our report in three days in advance of supply being dealt with in the House. The latest day is December 10, correct?

A voice: That's correct.

The Chair: But the House leader could put it in before that. So it could be even December 4 or December 5. It would be very difficult to get the minister here before supply is even voted in the House, and if he's not here this week and next week we probably won't even see him until after supply has been voted. That's my point. So I don't know whether you want to keep your motion in those circumstances or anybody wants to speak to it, but that's just the physiological problem, a physical problem of dealing with the fact that we're proposing it at this point.

Do you have any comments on that, Mrs. Carroll?

Ms. Aileen Carroll (Barrie—Simcoe—Bradford, Lib.): Only to confirm, Mr. Chair, what you said, which is that the timelines are impossible, but Mr. Pallister has already commented on that. The minister simply can't get here by the dates given in this motion. And that's the information I came prepared to deal with, the motion on hand.

If Mr. Pallister is extending the date, then I would have to respond to that on behalf of the minister after discussions with him. But I think the timelines are incredibly tight. These are just unacceptable.

• 1710

The Chair: You can propose an amendment, but I think....

Mr. Brian Pallister: I want to establish the importance of us reviewing the supplementary estimates, and clearly that's the intention of the motion. So I'd be quite open to an amendment that removed the portion that says “no later than 1 December”, if that satisfies Madam Carroll.

Ms. Aileen Carroll: What I would ask is if you were willing to put “as soon as possible”, because today I can't commit—

Mr. Brian Pallister: Yes. I'm quite happy to do that.

The Chair: If we don't have the minister, should we bring in senior officials and try to do it that way? Or would you rather have the minister, recognizing that he may appear after actually the House has dealt with the estimates, in which case we'll be getting an historical observation about them rather than something before they are voted on in the House?

Mr. Brian Pallister: An historical observation—

The Chair: Is preferable to nothing?

Mr. Brian Pallister: That's it.

The Chair: So you'd rather have the minister than the officials?

Mr. Brian Pallister: This doesn't preclude us inviting the officials if that's the wish of the committee, but I certainly think we should encourage the minister to come.

The Chair: Then we'll just deal with it as soon as possible.

Mr. Brian Pallister: Recognizing that it's as possible.

The Chair: We accept that amendment. That amendment is accepted. So it would be to invite the minister and officials to appear before the committee on supplementary estimates as soon as possible.

[Translation]

Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Will the third paragraph remain as is?

[English]

The Chair: No. That would have to come out, because we—

A voice: Yes.

[Translation]

Ms. Marlene Jennings: This needs to be made clear. Does Mr. Pallister have any objections?

The Chair: No.

[English]

Thank you very much, colleagues, for expediting that matter.

We'll go to questions. Mr. Pallister.

I hope maybe our witness can stay a bit past 5:30, and I hope members can too, since we lost the first half, 45 minutes, of the hearing.

I'll go to Mr. Pallister.

Mr. Brian Pallister: First of all, thank you very much for your presentations. They were most informative, and I appreciate your patience while we dealt with these more mundane matters.

Mr. d'Aquino, if I may, I'll address your comments briefly.

You mentioned the dangers of an unproductive debate. I'll give you an opportunity, after a brief comment, to explain exactly what you mean by an unproductive debate.

It would seem to me that we have a parallel situation in a way to the free trade debate here, where some members of this committee, I'm sure, engaged in rather ferocious opposition to the concept. Canadians were brought into the debate. As a result of that debate, ultimately we moved forward. Canadians were engaged. I think that was a productive and positive thing.

Right now we have a parallel situation in some respects, certainly in the sense that it's difficult to think of a time in our history when security and trade opportunities, and the opportunity for integration and positive benefits, have been more obvious to more people. I would think, given the circumstances we face, that there is no better chance for us to advance some of the points that each of you have addressed in your comments than now.

I'm a sucker for the grand design too. I understand what you're saying, that half steps are perhaps better than none. I understand that this point has been made today. And I recognize that our Prime Minister is not one who seems to have a lot of affection for the grand project, but rather sees himself as something of a problem-solver. But I see the two as married right now. I see there are many problems, potential and real, that should be addressed. And I would hope this administration would see this as a challenge for them to address and to solve those problems.

At the same time, the opportunity for grand design is very real. And again I am curious as to why you would suggest that it would somehow be better to avoid this grand design debate. I think it is very timely for us to engage in it.

Mr. Thomas d'Aquino: Mr. Pallister, when you say that you too are very warm to the idea of the grand design, I understand where you're coming form.

The point I was really making was not that debate on issues such as a customs union—or for that matter, for those who are interested, even the debate on the subject of a common currency—should be stifled, that it should be put underground. That would be wrong. And indeed, it's terribly important that this debate go on.

• 1715

As somebody who had quite a bit to do with the first free trade initiative...we started talking about it in the autumn of 1981. The free trade agreement was not signed until January 1, 1989.

The point I'm really making here is that whatever the merits of a customs union may be, and they are considerable, to launch a debate.... For example, say this committee were to recommend to the Prime Minister that he meet his American counterpart and say “We've got all these problems. They have to be dealt with in an integrated way. Let's begin negotiations on a customs union.” I daresay that by the time that debate was under way, by the time all the various constituencies would have to be brought to bear, the issue that we're trying to resolve in a matter of weeks would have to be looked at in the context of years.

So by all means, Mr. Pallister, let's have that debate. And that debate has already started. Several members of the Liberal Party have openly said we should be looking at the issue of a customs union. So if members of the Liberal Party have said so, surely members of the Conservative Party and the Bloc and others should not be denied the privilege of doing so.

From a strategic and practical point of view, we have a window of opportunity that's relatively small. If Commander Flynn's views are to be taken seriously, and I think they really are, all it would take is another major catastrophic terrorist strike to result in a border being shut down very tight. And then what would we do?

My only point is this. Let's push that agenda very rapidly and let's leave it to the thinkers and those who wish to say “Let's try to see this in a grander context”, but let's not let one confuse the other.

Mr. Brian Pallister: It has to be fair, is what you're talking about here, and the wisdom to know the difference. Certain components we can push in advance with success. You anticipate others will encounter difficulty.

Those areas that you see as encountering the greatest difficulty would be the phony sovereign debate. Is that a fair assumption? The reason I raise that is you alluded to the sadly under-resourced defence capability of this country, which is a concern certainly many of us share. The sadly under-resourced defence capability is certainly the single greatest challenge to our sovereignty of any reality in our country today. So given that reality, which is a real threat to our sovereignty, do you share the view that there's the potential for this sovereignty debate to enter into this thing undeservedly?

Mr. Thomas d'Aquino: Mr. Pallister, as a great Canadian engaged in public policy, you know that the sovereignty issue is always there. It's been the history of our relationship with the United States.

One very encouraging thing to me is that September 11 triggered a response in the body politic of Canada in a variety of ways, in attitudes toward some of our more controversial policies that show very clearly that Canadians want security above all, not at the expense of human rights, but they want security above all. And secondly, they recognize that the things we do with the Americans must not be done to make the Americans happy. They must first pass the test of good public policy in Canada.

When I talk about all these things, people say, “Well, are you doing that because you're frightened of the Americans?” And I say “No—because it is good public policy for Canada. The secondary benefit will be that it will also please our American allies in many respects, but it first must meet the test of good public policy in Canada.”

A strong defence capability, sensible refugee policies, sensible immigration policies, good infrastructure in Canada leading to the United States, whether it's bridges, tunnels, the proper security procedures on airlines—we shouldn't be doing that to make the Americans happy. That's what Canadians are asking for, and that's why we should do it. The point is that it will also lead to very official impacts on our relations with the Americans.

Mr. Brian Pallister: Thank you for your comments.

[Translation]

The Chair: Mr. Paquette.

Mr. Pierre Paquette: You'll have to excuse us because we are running short of time for the discussion. You've raised some very interesting points. I don't necessarily agree with everything that's been said, but many of my concerns have been addressed, particularly transborder, border and security problems.

The focus of our study is North American integration, a much broader issue. I fully agree with Mr. d'Aquino's statement that some matters can be resolved in the short term, while others will take much longer.

• 1720

You mentioned the development of a zone of confidence. Others have referred to it as a security perimeter. Regardless, this idea was rejected outright. On numerous occasions, it has been suggested that working committees be struck to examine the implications of such a perimeter not just for the short term, but for the medium and long terms as well. As you know, the government did not express any interest in pursuing this matter.

It was also suggested that Mexico be included in this perimeter, even though it was clear Mexico did not necessarily have the same border problems as Canada. However, Mexico is one of our North American trading partners and Canada would do well to understand the kind of measures that have been instituted between the United States and Mexico. I was surprised to hear a witness say yesterday - I believe it was Mr. Sands - that their discussions with the Mexicans had centred on more or less the same subjects, that is to say business self-assessment and cards. The impression we have here in Canada is that the problems at the Mexican border are altogether different.

Therefore, with an eye to the medium and long terms, wouldn't it be in Canada's best interest to work more closely on its relations with Mexico, while bearing in mind the fact that in the short term, our problems are somewhat different?

I'm asking the question because I think that we tend to underestimate Mexico's weight and that we lack vision by failing to invest more in our relations with the Mexicans . To some extent, this could offset U.S. bias.

My question is directed to you, Mr. Flynn. Someone implied this morning that Canada was partly to blame for its problems with the United States because it doesn't really know what it wants from its relations with the Americans. Therefore, we would do well to make ourselves clearer in so far as our expectations go of our American partners.

Would you care to comment on this? I would also appreciate hearing from Mr. d'Aquino on the Mexican question. Of course Mr. Rhéaume is also welcome to comment as well.

Mr. Thomas d'Aquino: Thank you for your question, Mr. Paquette. This matter is very important because as you know, we maintain strong tries with Mexico. I have to admit that in the wake of September 11, we have observed major differences between Mexico, the U.S. and Canada.

[English]

And what do I mean by that? What I mean by that is I talked about the love affair with Vincente Fox, and I'm a great admirer of Vincente Fox. He invited me to his inauguration and I even travelled with him on the inauguration weekend. So I had an opportunity to see this man in action.

I think what is happening in Mexico is remarkable, and it deserves our strong support. However, what September 11 did was to show, in sharp relief, that Mexico is a society that has a very different attitude toward the United States. There were no meetings of 100,000 mourners in Mexico. There was a prolonged delay in the official response of the Mexican government.

Foreign Minister Castaneda, who actually was brave enough to say that the United States had the right to retaliate against the attacks, was described in the leading editorials of Mexico as having had his career buried under the rubble of the two World Trade Centre towers.

As my Mexican friends say, the reason for this very different response—military, financial, emotional—is because Mexico has a very different relationship with the United States from what we do.

The point I'm really trying to make here is that the tragedy of September 11 pointed out very clearly that in terms of values, in terms of commitments to defence, in terms of our NATO relationship that was triggered by the attack, in terms of the way in which we are dealing with cross-border issues with a high degree of trust, all of those factors give us now an opportunity to work in an asymmetrical way vis-à-vis the United States. That does not mean excluding Mexico. It means, for example, that if we move ahead on all of these issues that we talked about more quickly than the Mexicans do, there's no reason at all why we can't create a template for them to come in later, as we did with the NAFTA.

[Translation]

Mr. Pierre Paquette: It's unfortunate that we're short on time. We heard yesterday that, since September 11, the American public is no longer concerned about the southern border and has now turned its attention to the northern border. Contrary to what you said, we have become the problem, while Mexico and others have become less of a problem in the short term.

• 1725

Secondly, the United States has a Latin American minority population . Like all Americans, they witnessed these tragic events as they unfolded. Members of this community are allies of Mexico. I don't want to downplay your statement and I can understand very well why the Mexicans did not react to the situation as we did. New York is only several hours away from Montreal and Toronto. To my mind, Canada would do well to forge more ties with Mexico in the medium term.

Mr. Thomas d'Aquino: I agree that we need to work with the Mexicans and that we can work together in some areas.

I talked about a strategic opening because as the Americans observed, Canada and Mexico reacted very differently to the events of September 11. Prior to this date, the difference was not so clear in the minds of President Bush and his entourage.

[English]

The Chair: Mr. Flynn, you might have a comment from an American perspective on the two borders.

Mr. Stephen Flynn: Sure.

Prior to September 11 I would have made the case, and did make the case with some of my Canadian friends, that you have to realize and accept the reality that political power in Washington has shifted heavily toward the south, and that the relationship that President Bush has with his counterpart and former governor, the governor kind of relationship, is a very powerful one.

One of my quips was that Texas no longer had to declare independence; it had taken over the union. When you look at essentially where a lot of power was situated, the reference point was the southwest border when you're talking about the border, not the northern one.

In regard to post-September 11, I agree with everyting Mr. d'Aquino said about the sudden realization of the difference in the maturity of the relationship here vis-à-vis in Mexico. Mexico is a work in progress. Clearly the U.S.-Canadian relationship is a very robust one, and one where these very difficult issues I think can be advanced relatively quickly.

But I would say, and I don't think there's disagreement here on this, that ultimately, as I try to get something to pitch on why it even warranted a G-8 kind of conversation, it's about the sustainability of having people and goods be able to move throughout this planet that we're really having to wrestle with. We saw that its whole credibility came into question by the tragic events of September 11.

Mexico is as much a part of that conversation as Canada or any other country is. Ultimately we would want to advance this agenda within the context of U.S.-Mexican and the trilateral relationship.

But I think the key here is about prototyping first. And talking in those terms we can demonstrate where the hemisphere should go. In the free trade area of the Americas ultimately we'll have to do these kinds of approaches. So let's do what we can as soon as possible here in the U.S.-Canada context, always with an eye, and I certainly wouldn't want it to be exclusionary, where we would like to see the same kinds of approaches adopted in the U.S.-Mexican context.

It was clear in my travels on the U.S.-Mexican border, and this is what worries me in part about this issue, that the hardening of the border along Mexico has in fact made the border more insecure. That is what worries me in part about the direction in which we may be headed from a security perspective, which is the world I come from.

Why is that so? Essentially the hardening of the border has made the border more chaotic, more difficult to police. It created enormous incentives for corruption. It has essentially brought a trucking sector from being just a mom-and-pop thing to being very difficult to regulate. You're not going to run a state-of-the-art truck, for instance, and have it sit for six hours in a queue to go twenty miles to go empty. The driver, who's paid $7.50 for a trip, whether it takes him an hour and a half or six hours, is highly susceptible to taking something else along for the ride.

So a lot that is done ostensibly to enhance security in fact is creating an environment that is making things more insecure. I would think it would be crazy to repeat that model here along the U.S. northern border as well.

Ultimately, even with the Americans' relationship with Mexico, we have to move beyond the wall approach in order to get at the very difficult issues of immigration, narcotics, and terrorism.

I came to a lot of the issues that we talked about here today by inventorying not just the terrorism threat, but we have an issue of bio-hazards, and disease, crime of every sort, human beings who are smuggled in containers. There was the horrific act we saw last year of fifty-odd Chinese dying and suffocating in a container.

We have trade rules that are very difficult to enforce, point of origin and so forth. We have export controls against people like Saddam Hussein that are impossible to enforce, and economic sanctions, which we often use as a tool of statecraft. All these things are largely meaningless, because we lack the capacity to essentially filter bad from good.

• 1730

Ultimately we do need to advance this in a comprehensive way, but let us begin in the U.S.-Canada context by taking concrete steps very quickly, I would suggest. It's important to do that, to put a template down as to how it can be done in more rational way.

The Chair: Thank you very much.

Mr. O'Brien.

Mr. Pat O'Brien (London—Fanshawe, Lib.): Mr. Chairman, thank you very much. I second the comments about the interesting presentations.

My first question is for Mr. d'Aquino and it's on the customs union. Of course I think everybody here knows that's not a new discussion; it predates Confederation, really. I think it's another debate we should have again, but I think we need a definition of terms. I don't think parliamentarians are agreed on what the term means, let alone the public, who don't follow these proceedings as closely as we do.

I don't know whether you can give us a real quick snapshot on what the key elements of a customs union are. If you can, I would like to hear that.

For Mr. Flynn, it's a very interesting point you just made on all the attention to the border having the opposite effect of what was intended on the southern U.S.-Mexican border. I come from southwestern Ontario, London, Ontario, specifically. We were massively impacted by the border crossings. You talked about Windsor just down the road from us.

How do we achieve both? How do we improve the security and yet make sure that goods and exportation, importation, travel in goods and services and people, which is daily, and is massive from our area to the United States to work and back.... How do we achieve both?

Secondly, I don't know how much you're up on the NMD discussion, but is NMD less likely, in your view, to continue to be pushed by the U.S. post-September 11, given some of the things you said, or more likely?

I'd better stop there, I think, Mr. Chairman.

Mr. Thomas d'Aquino: To respond to your question, Mr. O'Brien, the definition that we have used in our book Northern Edge is that a customs union is the second level of regional integration following a free trade area and involves the establishment of a common external trade policy, allowing for the free circulation of goods and services within the customs union.

What that would mean, in terms of what I've called the unfinished agenda vis-à-vis Canada and the United States within the context of NAFTA, is having to deal with still many unresolved problems with regard to trade remedy law, government procurement preferences where we still haven't gone all the way, security-based restrictions, border restrictions, state and federal agricultural programs and practices, standards-related issues and dispute settlement provisions.

We can see that in all of those areas the work is unfinished. If we were to move to a resolution, in other words, going all the way—and the chairman as a trade lawyer would know this—if we were to unify trade remedy law, that would be an extremely important step toward what it is we're trying to define here.

The Chair: I presume you would have to add to your list, though, Mr. d'Aquino, also to deal with all the bilateral trade agreements that exist between the United States and Israel, Canada-Israel, Canada-Chile, Canada-Costa Rica, which we just did the other day, etc., and Cuba, and a few other little nettles.

Mr. Sam Boutziouvis (Vice-President, International Trade and Global Economics, Business Council on National Issues): Mr. Chairman, within the context of a common external trade policy, it would also mean coming to a common external tariff policy.

Mr. Pat O'Brien: Can I make a request, if it's not too much? I'd ask Mr. d'Aquino and his organization, could you table with this committee, at some point, the parameters as you just outlined them, however fully you would like to? I think that's critical.

• 1735

Some would argue that the ultimate extension of what you just said would be finally the fulfilment of American manifest destiny from the 19th century. I don't necessarily subscribe to that, but that's a very real fear that will have to be tackled head-on.

Mr. Thomas d'Aquino: I know you realize this, but there's a very clear distinction between what I have said and a common market. The logical extension in some people's minds would be go to common institutions of the kind we have seen in the European Union. First of all, I don't think there's a reality in that debate. I think for now, that is a non-starter. But certainly a debate about a customs union is worth having.

Mr. Pat O'Brien: Well, I agree, but I'd like to have the term defined, so I'd appreciate it if you could give us something fuller.

The Chair: We'll get the book.

Mr. Pat O'Brien: Yes, okay. The chairman should buy us copies for Christmas.

Mr. Thomas d'Aquino: In fact we did send you all a copy of the book, and I see from this reaction that perhaps some of you have not yet read it.

The Chair: I've kept it under my pillow in the hope I'd acquire it by osmosis.

Mr. Pat O'Brien: May I hear from Mr. Flynn?

The Chair: Mr. Flynn.

Mr. Stephen Flynn: First, on the issue of the border congestion problem, here again there is an opportunity, and this new security paradigm helps to some extent.

You're probably all familiar with the story of how the interstate highway system was built in the United States. It was built by President Eisenhower as a national security mechanism, and it was with some resistance from the states, because of course the loss of roads that would go by diners and so forth was an issue. Also, frankly, a source of graft in most states was those road contracts, and all of a sudden the federal government came in and trumped it all. But obviously that has been a critical part of drawing the American market in the U.S. context together.

I would draw a parallel. A lot should have been done prior to September 11 with regard to infrastructure and congestion, and a lot should have been done in regard to all sorts of administrative madness at the border. I want to make the argument again that what I saw on the Texas and California and southwest border in general holds true here: the more our border is chaotic in the U.S.-Canada context, the more it is also susceptible to being exploited by terrorists.

So there's a national security rationale for improving the infrastructure, improving the access roads, and getting a handle finally on the administrative madness that goes with being at the border so that you can facilitate those legitimate people, because once having validated them as legitimate, you actually want to expedite their movement. You'll find—and this is again what you see very much on the southwest border—that where there is chaos is where organized crime tends to concentrate, where there are hand-offs. Goods at rest are most vulnerable.

So to some extent, my grand vision would be—and I think relatively soon it could be at least talked about.... I know there's a proposal in Ontario to build a mid-peninsula corridor, and there's conversation of twinning either the Peace Bridge or the signature bridge. We should be thinking on that line. Ultimately that should be a dedicated trade link. An inspection zone should be set up outside Toronto, where many of the goods destined for the U.S. jurisdiction are loaded. The customs could clear and all that could be done there. Then everybody would get on that highway, and the highway could have Jersey barriers and transponders, so that trucks could be monitored all the way across, and they could sail all the way down to Florida. There's no reason we can't do that. The barrier seems to be that we're bounded by geography.

I joke with the U.S. audience about the inspection station at the base of the Ambassador Bridge. We can't let those Canadian trucks, God forbid, cross the Detroit River without making sure we hook them right at the base of the damn bridge. This is crazy. It's not the best place to do it. Surely two countries that sit together in the Cheyenne Mountain complex, each with a lieutenant general with a finger on the ultimate trigger.... If we can manage that threat, we should be able to handle things such as accommodating each other with regard to how we do these inspections.

The idea ultimately is, you have to push that border inspection process away from the bridge and away from the tunnel and find a way you can funnel the traffic effectively to that border crossing to avoid the chaos it's creating in the communities.

The Chair: And when the inspectors come on our side of the border, will they be willing to leave their guns at home?

Mr. Stephen Flynn: This is an important issue for Canada. I know this is a sore spot, and I can appreciate why this has been such a problem.

The fact of the matter is it's hard for me to make the case to U.S. audiences that the Canadians are serious about addressing these security issues when we cannot resolve the fact that a customs inspector who is sitting in Alburg station can't walk across a 1,200-square-foot building to use the toilet on the Canadian side of the building, and when we have at that same border a house where people sleep in Canada and dine in the United States, with a border marker in the centre of it. The fact of the matter is the border is rather soft.

• 1740

I know this is a very tender issue, but the French and the British have resolved the same problem there. Within the zone at the base of the Chunnel and through the Chunnel, the French can carry their sidearms, so you get one-stop inspection clearing into the Chunnel. If we can't come up with that kind of definition of real estate, it makes all the rest of this stuff we're talking about a bit of a pipe dream.

The Chair: Mr. O'Brien asked about NMD, and then we'll go to Ms. Augustine.

Mr. Stephen Flynn: Quickly on NMD, my own view has been—and I made this case in advance—when you put a weapon in a container, you get a twofer: one, you get a lot of dead people and destruction, and two, you shut down global container trade. When you put it on a missile, you get a lot of dead people and destruction. If I were to prioritize, I would choose the higher-risk issue that has more of a consequence. That argument I haven't won.

This is almost a religious issue in the United States, so it will continue, but I would definitely say a lot of the air has been sucked out of its sails. Serious people in Washington, in both parties, are committed to this set of problems, not the missile defence one. But it will be there. It will be a part of the situation.

The Chair: Thank you.

Ms. Augustine.

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

I too want to thank you for your presentation. I'd just like to hear...Commander? Okay. I was trying to find out what that—

Mr. Stephen Flynn: I'm here in my smaller hat. I'm not here as a representative of the U.S. government. I want to be clear on this.

The Chair: In Afghanistan, the term “commander” has taken on a another aspect, so we're a little nervous, Mr. Flynn, as to what that might mean. Is it the Taliban or what?

Mr. Stephen Flynn: Steve Flynn will be fine.

Ms. Jean Augustine: Mr. Flynn, as we work towards our collective security, as we work towards a seamless border, I would like to hear you say something about Canada's autonomy, Canada's sovereignty. In your discussion, I know Mr. d'Aquino did address that, but somehow you seemed to just slide by without any major consideration of the discussion that takes place in my constituency about who we are as Canadians and how we operate in jurisdictions in a way that is favourable to our two nations.

At the same time, as you delineate a whole series of things such as GPS, DTM, data collection, biometrics, gamma rays, GLONASS, etc., etc., I'm saying, “Oh, my God! Freedom of information, privacy, Charter of Rights” and so on. Can you somehow wrap around that for me the whole issue of sovereignty and our charter and how you see all of this playing? On a rational level, I think what you're saying is fine. To the Canadian citizen, I think a lot of this creates in the mind a little bit of stress.

Mr. Stephen Flynn: I'm certainly sensitive to that. Clearly one of the issues of globalization that we're most struggling with is the risk of cultural homogenization and to some extent economic marginalization in many parts of the world. These are very real issues that deserve a continued and very serious conversation.

One of the happy things we see from the European experience is, contrary to the belief that there was going to be mass movement and watering down and so forth, most people stayed put because they love their homes, they love their neighbours, they love their language, and they love their arts. Those are what bind us often to a community, more than that we have an inspector with a uniform who's setting an artificial line, to some extent. There really are substantive ways in which we identify ourselves as to who we are as a people. I think that is sometimes lost in the showy parts of things.

As a practical matter, I just want to say that when we're talking about the data we're presenting, it's the issue really of the timing of when that data is presented, more than the issue of privacy concerns being somehow constructed. Nobody can cross an international border without fessing up identity and the purpose of going into that other jurisdiction.

• 1745

What we have now is a system where we do that right at the base of the bridge, when we have technology that clearly could allow the transmission of that information much earlier. So it's not additional information as much as getting the information in a useable format that allows risk management and allows validating legitimate as legitimate.

Frankly, part of what drives me and what has left me with so few sleeping moments since September 11 is I fear this new world very much puts—and we saw this to some extent play out in the U.S. context—enormous pressure on basic civil liberties and on who we are as a society.

When you assume that it's impossible to intercept a terrorist and the means of terrorism, you essentially have two things happen. One is, when a terrorist commits this act, you have to rush very quickly to try to put that terrorist out of business, and you almost sell your soul to accomplish that task, because they could strike again. But probably more sobering for me is when you assume you cannot do that again, you have to assume the enemy is within—that fifth column kind of idea—and all of a sudden, all kinds of power has to be handed over the state to police yourself.

All of a sudden, we paint with a very wide brush people of certain ethnic groups as being people who have to be checked and so forth. Frankly, the kinds of checks I go through in each airport I don't feel so comfortable about all the time. I think, well, somebody should be able to figure out that I'm in the service of my government, not in the business of tearing it down, and we ought to be able to find a way to make that work more effectively.

When we feel insecure, we are at the greatest risk for our civil liberties. America right now is feeling very insecure. Some of the things we could do to be helpful are about acknowledging that this information is given early, even if it's inside another jurisdiction, because it makes more sense to do so.

For cargo that's coming through Halifax only for the purpose of going to the United States, having that Coast Guard customs inspector in Halifax seems to be a much more sensible way to approach this. It's not for Canadian goods; it's for goods going via Canada to the United States. It makes good economic sense to do that, so we need to make good regulatory sense as well about how we manage it so that we don't stop all the trains coming across the border, causing real gridlock.

I can't resolve this issue, obviously, in the Canadian construct, but as somebody who was there in New York on September 11, who went down to ground zero on the Monday after, it is impossible to convey, for those who went through this, just how vulnerable people feel. This was a catastrophic event. The numbers are coming down now, but we're talking about 3,000-plus people—innocent people—lost. The fact is it could happen as easily today as it happened then, and the United States, just by virtue of being on the top of the heap, is ultimately going to be the target, most likely, and by just your being in the neighbourhood, you're vulnerable as well.

We just have to realize the urgency of trying to do something sensible and quick in order to restore a sense of balance in how we address this problem, and not leave it to the more draconian kinds of responses that are in play as well. Canada can be a breath of fresh air in a civil, constructive dialogue, but it won't help if it's defensive and sort of hoping it all will go away.

The Chair: Thank you.

Ms. Jennings.

[Translation]

Ms. Marlene Jennings: Thank you, Mr. Chairman.

Thank you very much for your presentations. I'd like to clarify a few things before I put my questions.

First off, Mr. d'Aquino, you stated that 25 per cent of all refugee claimants in Canada had arrived in Canada after transiting through the United States. A few weeks ago, I attended a meeting of one standing committee at which an Immigration Canada agent was testifying. According to his figures, that proportion is closer to 50 per cent. I think it's important to correct your numbers.

Mr. d'Aquino, you maintain that the Americans harbour a number of misconceptions about Canada and the state of security at our borders, airports, and so forth. You argue that these misconceptions adversely affect trade between Canada and the U.S. What are you doing, as Executive Director, and what is the Council doing to clear up these misconceptions held by the U.S.?

• 1750

Secondly, you also stated that you and your sectors had truly been caught up in the broad vision of free trade during the 1980s and that Canadians were now finally convinced of the importance of free trade. However, it's no secret that some stakeholders are opposed to globalization and even to a certain extent, to trade with the United States. These stakeholders argue that the United States is hegemonic and imperialistic.

What steps is Canada's private sector taking to counter this claim? In my opinion, here in Canada, this faction seems to hold sway. What is the private sector doing to convince Canadians that trade with the United States and Mexico is a positive thing, that the bilateral or multilateral agreements that Canada has negotiated or is in the process of negotiating with other Latin or South American countries would be good for Canada and for the people of these nations, and that it is a positive step for Canadian businesses to get involved in trade in developing countries?

I should also like to ask Mr. Rhéaume some questions. You stated that trade between Canada and the United States had increased by 140 per cent in recent years. I don't recall over how many years exactly. According to Mr. Flynn, a total of six million containers arrived in the U.S. last year, a good portion of these via Canada. Does the Conference Board of Canada have any figures on the volume of trade or goods exported from Canada to the U.S. or arriving from another country and shipped via Canada to the U.S.? What percentage of these goods are produced in Canada, or arrive in Canada from another country, and are then shipped to the U.S.?

I'm asking all of my questions at once because the chair always has a tendency to cut me off. If I ask a question, and then immediately wait for an answer...

The Chair: I stop you after 20 minutes.

Ms. Marlene Jennings: ... I don't have the opportunity to ask you another question.

Mr. Flynn, I'm very intrigued by your suggestion that inspection zones be created, particularly with regard to customs. Considering the number of people moving through our airports... When I arrive at Dorval International Airport to board a flight for Washington, Chicago or Los Angeles, after I receive my boarding pass, I immediately proceed to U.S. customs and immigration. U.S. customs and immigration officers are stationed at Dorval.

If the Canadian and U.S. governments have managed to put in place systems and agreements governing the movement of airline passengers, I don't see why the same innovative approach couldn't be taken in the case of the movement of goods, whether by boat or by truck.

• 1755

I just wanted you to know how much I appreciated this suggestion. As soon as you started talking about this, the light bulb went on. Each time I travel to the U.S. on a flight from Dorval, I clear customs and immigration at the departure point, not in Washington, Los Angeles or Chicago. U.S. immigration officers are on duty in Dorval. Sometimes, I'm slightly put off by some of the questions they ask me, given how our Charter of Rights and Freedoms differs from their Constitution, but it's nevertheless convenient for me and for other Canadians.

I don't really have any questions for you. I just wanted to thank you for your timely suggestion that warrants further consideration by the committee.

Thank you.

Mr. Thomas d'Aquino: We've heard a number of very good questions which have conveyed a variety of messages.

[English]

A number of questions were asked, and they were very good questions. Let me just very quickly respond to the matters you raised with me.

When I used the quotation that 25% of our refugee applicants came from the United States last year, I believe I was drawing from a speech given by the Minister of Foreign Affairs in New York just a couple of weeks ago.

Mrs. Marlene Jennings: He was wrong.

Mr. Thomas d'Aquino: I do know that on a document we have here, it says the outlook for 2001 is that 45,000 refugee claimants will enter Canada, and it says almost half of those will come from the United States.

I'll have to go back to Mr. Manley's speech and see who in fact is right.

Mrs. Marlene Jennings: No, he was wrong.

Mr. Thomas d'Aquino: He was wrong?

Mrs. Marlene Jennings: We're talking about over the last decade, and it's always been running between 40% and close to 50%.

Mr. Thomas d'Aquino: Thank you very much. I stand corrected and I appreciate that.

Mrs. Marlene Jennings: And I'll correct Mr. Manley.

Mr. Thomas d'Aquino: The second point was the issue of perceptions and what we are doing about it. This is a matter of great concern to us. I wrote to the Prime Minister about ten days ago and pointed out to him that we were creating in the council something called the CEO Action Group on Canada-United States Cooperation, made up of the chief executives from among the fifty largest exporters, the fifty largest importers, and the fifty largest investors in the United States. We outlined a seven-point program and in fact really proposed a partnership with the Government of Canada, that we do this as a partnership.

The plan is too elaborate, but just let me tell you that what it involves is using private sector leaders in conjunction with public sector leaders to go to various platforms in the United States to ensure that the Americans are aware of what we have done and what we are doing, to try to deal with some of those misperceptions.

Now, we're not going to go to the producers of The West Wing and excoriate them for producing a program suggesting that terrorists had infiltrated the United States across the Ontario-Vermont border. I've used that extensively in the last couple of weeks. But this calls for a major initiative working with our embassy, our consulates, and the governors of the various border states.

Mr. McPherson, who signed the joint letter to the Prime Minister and President Bush, told me just this afternoon that he had had conversations with the Governor of Michigan, who said that given the enormous importance of Michigan vis-à-vis Ontario and Quebec and New York, he was in favour of getting together other northern governors to deal with the issue of the Canadian border. We have a long way to go.

Third, on the globalization protesters, I was in Seattle, I was in Quebec City, I was in Washington, I was in London, I was in Salzburg, and I was in Davos.

The Chair: And you skipped Qatar.

Mr. Thomas d'Aquino: I skipped Qatar. I knew there would be no protesters in Qatar to speak of.

We're dealing here with a very serious movement that I think has only somewhat been cooled down by the events of September 11. As you know, behind it are some very fundamental questions that I think you as parliamentarians should be asking all the time.

Protest is fine. Not agreeing with positions that governments take is perfectly fine and justifiable. What worries me most about the anti-globalization movement is that many of its adherents—not all, but many—have chosen the streets over Parliament. They've chosen extra-parliamentary means of trying to achieve their ends. I don't want to name them, but you know who some of them are. They're people I've debated in this country for years. When they appear in Seattle and say “Our goal is to shut the WTO down,” that, to me, does not sound very much like an individual interested in bringing about change in a democratic and parliamentary forum.

• 1800

Parliamentarians, business leaders, prime ministers, and media representatives must be much tougher at making the distinction between those who seriously want to achieve change and those who are really out to overthrow the order, whether the order happens to be the WTO, the IMF, the G-20, or whatever the case may be. We've been too easy in not making that distinction, and that's a goal that not only business people must address.

Business has been decidedly very silent on the virtues of globalization. We must be much more active. We must re-find the zeal that we found in the defence of open societies and open trade in the 1980s. We must do it again with regard to globalization, and not leave it just simply to those who scream the loudest and those who are prepared to hurl Molotov cocktails.

Again, the fundamental question I ask is, if you feel so strongly about this, then why don't you use the parliamentary system? After all, this is not Qatar, Mr. Chairman. This is not North Korea. When people say to me, “My government doesn't speak for me in Canada,” or that our institutions will not allow it, I just simply don't buy it. I don't think we should give such a large ear to those who choose extra-parliamentary means and who, frankly, hold Parliament in contempt and disdain.

Mrs. Marlene Jennings: I don't want to pick a bone with you, Mr. d'Aquino, but I've read statements you've made in national papers, and I wonder if some of the statements you have made over the years haven't contributed, to a certain extent, to a certain level of contempt that Canadians have for the government.

Government is being bashed by the private sector: “Get out of the way. Let us do it. We don't need government” and the whole bit. When I say “you”, I'm talking about the private sector, industry. That's a message we have heard from significant sectors of private industry, leaders in the private sector, over the last two decades particularly. That also fosters a certain fertile ground for the attitude that government is useless, Big Brother is just big government, and little government is better, and as much as we can, we should turn things over to the private sector, because the private sector does everything properly.

So the private sector has a certain responsibility as well, in the fact that a significant number of Canadians have bought into this and think government is useless, doesn't represent them, and doesn't hear them.

Mr. Thomas d'Aquino: I don't want to pick a bone either, but I think, with respect, you would find those kinds of statements, as you've put them forward, as rare as hens' teeth among the private sector in Canada. What you've heard from the private sector is criticism of governments, of opposition, of people they don't agree with. But I'll tell you something right now: no business leader I am associated with holds Parliament in contempt. No business leader I'm associated with says “Our governments don't speak for us; therefore let's tear down the WTO, the IMF, or whatever you want to tear down.” It's not in our DNA to say that.

And if you don't believe it, read my book on parliamentary government, written some twenty years ago. It was written as the first study of the organization I head. It preaches the virtues of parliamentary government. I have used that argument, and so have many of my colleagues. There is not disrespect for the institutions of government. There may be disagreement with what some governments say, but that's a huge difference.

• 1805

Mrs. Marlene Jennings: No. We'll have to carry on this conversation outside the hearing, because what your views are personally and the tone of the views we have heard from the private sector over the years are substantially different from the views you personally have just expressed.

I sat on the industry committee for four years. I just stopped sitting on it in September to come to this committee. I know the private sector loves government when we cut taxes. They love government when we provide financial backing for projects they don't want to get into, because they can't develop a successful and profitable business plan, meaning they won't make as much money as they want to, so then they come to government and say, “Will you give us the money to do it?”

So we'll continue this, and we will, definitely.

Mr. Stephen Flynn: Let me just make a quick intervention on two fronts.

The Chair: We are now twenty minutes into Ms. Jennings' time, so we're going to have to move this along, because you already are supposed to be somewhere else.

Mr. Stephen Flynn: Yes. My quick point is, if you want to change perception, you have to have actions, and that's probably a governmental function for this issue. Sooner versus later will change perceptions in the U.S. quite handily.

The Chair: But you have to have action in a context where the people on the other side are going to take note of the action. I think the Canadian perception is that whatever we do, nobody is going to pay attention.

Mr. Stephen Flynn: Not right now.

The Chair: It's difficult to get the attention of American legislators, because we've been dealing with our congressional colleagues for years on this, and we'll go down there and they'll tell us, “Oh, you guys do such and such.”

Mr. Stephen Flynn: You'd get a lot of attention right now.

The Chair: I hope so.

Monsieur Rhéaume.

[Translation]

Mr. Gilles Rhéaume: Someone asked me if I knew the approximate value of the goods produced in Canada and exported to the United States. The figure is in the neighbourhood of $175 billion a year. That's an impressive figure indeed.

As for the value of good shipped in containers to the U.S. either from the port of Halifax or the port of Vancouver, we don't have those figures. It's impossible for us to say what the overall value of these containers would be.

Ms. Marlene Jennings: Mr. Flynn quoted a figure to us. He said that six million containers arrive in the United States, some through Canada.

Mr. Gilles Rhéaume: That's right.

Ms. Marlene Jennings: Let's assume that one million containers are shipped from abroad to the U.S and arrive via Canada. If we look at the overall number of containers, as well as at the volume of goods shipped by train, truck or boat, we should be able to arrive at some kind of estimate as to the number of containers loaded with Canadian goods that move across the Canada-U.S. border.

Mr. Gilles Rhéaume: I have to say that the volume is low compared to the volume of goods shipped by truck. The trucking industry...

[English]

Mr. Stephen Flynn: I might be able to help out here. As to truck traffic, unfortunately I haven't got it broken down, but 11.5 million came across U.S. borders, 2.2 million rail cars, and 6 million maritime containers. That's for transoceanic trade. Half a million of those 6 million came via Halifax and Montreal.

The Chair: Thank you all very much. We appreciate your evidence very much.

Just to finish on Ms. Jennings' point about the airport clearance in Canada by American authorities—you're probably familiar with this—we've advanced by now. You can get one of the justice department passes—I had one for a while—which will allow you quick treatment by American authorities. You have to go in and have them look into your background, and you have to assure them that you're going to get that. Then you have to find out a way to make your hand go into their machine, because it never works, but that's another problem.

Mr. Stephen Flynn: I get mine in Vancouver.

The Chair: I had mine too, but I never could make my hand cooperate with the machine, so I gave it up.

Thanks very much, colleagues. We're adjourned.