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37th PARLIAMENT, 1st SESSION

Standing Committee on Foreign Affairs and International Trade

EVIDENCE

CONTENTS

Thursday, February 28, 2002

0930

The Chair (Ms. Jean Augustine (Etobicoke--Lakeshore, Lib.))

0935

Mr. Rocheleau

0940

Mr. Blair Doucet (President, New Brunswick Federation of Labour)

0945

0950

0955

The Chair

Mr. Yves Rocheleau (Trois-Rivières, BQ)

Mr. Rocheleau

1000

Mr. Blair Doucet

The Chair

1005

Ms. Dee Dee Daigle (Political Action Representative, Atlantic Region, New Brunswick Federation of Labour)

Ms. Carroll

Ms. Dee Dee Daigle

The Chair

Mr. Bill Farren (Member of the Executive Council, New Brunswick Federation of Labour)

Mr. Bill Farren

1010

The Chair

Ms. Aileen Carroll

1015

Mr. Blair Doucet

Ms. Carroll

Mr. Blair Doucet

1020

The Chair

Mr. Bill Farren

1025

The Chair

Mr. Blair Doucet

The Chair

Mr. Baker

1030

Mr. Blair Doucet

1035

Ms. Aileen Carroll

Ms. Carroll

Mr. Rocheleau

Ms. Dee Dee Daigle

Mr. Yves Rocheleau

The Chair

Mr. Bill Farren

Mr. Abbott

1040

Ms. Carroll

Mr. Bill Farren

Ms. Carroll

Mr. Blair Doucet

The Chair

Mr. Blair Doucet

The Chair

1045

Professor Rod Hill (Department of Economics, University of New Brunswick)

1050

The Chair

Prof. Rod Hill

Ms. Carroll

The Clerk of the Committee

Prof. Rod Hill

1055

The Chair

1100

Mr. Rocheleau

Prof. Rod Hill

Mr. Rocheleau

Prof. Rod Hill

1105

The Chair

Ms. Carroll

1110

Prof. Rod Hill

Ms. Carroll

Prof. Rod Hill

Ms. Carroll

Prof. Rod Hill

1115

Ms. Carroll

Prof. Rod Hill

The Chair

Prof. Rod Hill

The Chair

Prof. Rod Hill

1120

The Chair

Prof. Rod Hill

The Chair

Prof. Rod Hill

The Chair

Prof. Rod Hill

1125

Ms. Carroll

Prof. Rod Hill

Ms. Carroll

Prof. Rod Hill

Ms. Carroll

Prof. Rod Hill

The Chair

Prof. Rod Hill

1130

The Chair

Prof. Rod Hill

The Chair

Ms. Carroll

Prof. Rod Hill

1135

The Chair

Mr. Rocheleau

Prof. Rod Hill

The Chair

1140

Prof. Rod Hill

The Chair

Ms. Elizabeth Weir (MLA, Leader, New Brunswick New Democratic Party)

1145

The Chair

Mr. Rocheleau

Ms. Elizabeth Weir

1150

The Chair

Mr. Yves Rocheleau

Ms. Elizabeth Weir

1155

The Chair

Mr. Baker

1200

Ms. Elizabeth Weir

The Chair

Ms. Elizabeth Weir

The Chair

Ms. Elizabeth Weir

1205

The Chair

Ms. Elizabeth Weir

The Chair

Ms. Elizabeth Weir

The Chair

Ms. Elizabeth Weir

The Chair

Ms. Elizabeth Weir

The Chair

Ms. Aileen Carroll

Ms. Elizabeth Weir

Ms. Aileen Carroll

Ms. Elizabeth Weir

The Chair

Ms. Elizabeth Weir

The Chair

1340

Mr. Gerry O'Brien (Immediate Past-President, Saint John Board of Trade)

1345

1350

The Chair

Mr. John Furey (Second Vice-President, Saint John Board of Trade)

1355

1400

The Chair

Mr. Rocheleau

Mr. John Furey

Mr. Gerry O'Brien

Mr. Rocheleau

1405

Mr. John Furey

The Chair

Ms. Carroll

Mr. Gerry O'Brien

Ms. Carroll

1410

Ms. Carroll

Mr. John Furey

Ms. Carroll

Mr. John Furey

Ms. Carroll

Mr. John Furey

The Chair

1415

Ms. Carroll

The Chair

Ms. Carroll

The Chair

Mr. Baker

Mr. John Furey

Mr. Baker

Mr. John Furey

Mr. Baker

Mr. John Furey

Mr. George Baker

1420

Mr. Gerry O'Brien

The Chair

Mr. Gerry O'Brien

The Chair

Ms. Carroll

Mr. George Baker

1425

The Chair

Mr. Gerry O'Brien

The Chair

Mr. John Furey

Ms. Carroll

Mr. John Furey

Ms. Carroll

The Chair

Mr. John Furey

1430

The Chair

Mr. Gerry O'Brien

The Chair

Mr. Yves Rocheleau

Mr. John Furey

Mr. Gerry O'Brien

1435

The Chair

CANADA

Standing Committee on Foreign Affairs and International Trade

NUMBER 063

1st SESSION

37th PARLIAMENT

EVIDENCE

Thursday, February 28, 2002

[Recorded by Electronic Apparatus]

¿ (0930)

[English]

The Chair (Ms. Jean Augustine (Etobicoke--Lakeshore, Lib.)): Pursuant to Standing Order 108(2), these public hearings are on North American integration and Canada's role in light of the new security challenges, and the study of the agenda of the 2002 G-8 summit.

I want to welcome the witnesses before us this morning as the committee continues with its study of two very important agendas facing Canada in terms of its role in the world and in North America.

Committee members are eager to hear from citizens across the country on key foreign policy challenges in the G-8 in the North American context.

Canada is in the position of being president of the G-8 this year and host of the summit that will take place in June in Alberta. The major priorities for the summit have been identified as improving the world economic situation, building a new partnership for Africa's development, and pursuing the international fight against terrorism. Canada is putting particular emphasis on advancing an action plan for Africa.

The committee has been asked to report its findings and recommendations to the government by the end of April. Seeking input from Canadians is central to that purpose. This week, while we are here with you, one group of members is in Quebec. We will be hearing from the public in western Canada and Ontario to complete our cross-country hearings.

Given time and budget considerations, we are also using this as an opportunity to hear the views of Canadians on how they would like to see our North American relationships evolve. All aspects of Canada-U.S., Canada-Mexico, continental, and trilateral ties are on the table for discussion, as part of a longer-term study reporting later this year.

This is the beginning of the dialogue. More information in regard to both studies can be found on the committee's website. We invite additional input from Canadians and that it be submitted by mid-April for the G-8 study and by the end of June for the North American study.

¿ (0935)

Starting with us this morning are the Parliamentary Secretary to the Minister of Foreign Affairs, Aileen Carroll, member from Barrie--Simcoe--Bradford; and the Bloc Québécois member from Trois-Rivières, Mr. Yves Rocheleau.

We'll begin with the New Brunswick Federation of Labour. The witnesses before us are the president, Mr. Blair Doucet, and two members of his executive council, Mr. Bill Farren and Ms. Dee Dee Daigle.

Please begin your presentation. You have about 45 minutes with us; therefore we'd like you to spend about 10 minutes presenting and the rest of the time will be the back-and-forth questions from members to clarify or to have you make comments.

Thank you very much for coming.

Mr. Doucet.

¿ (0940)

Mr. Blair Doucet (President, New Brunswick Federation of Labour): Thank you, Madam Chair.

We appreciate the opportunity to present to the Standing Committee on Foreign Affairs and International Trade. As you have said, it's the first of the series, starting in Atlantic Canada, in Newfoundland, and happening throughout Quebec. I think the gist of our presentation will address that.

Rather than read our brief, which would definitely take me more than 10 or so minutes, I would like to present in the fashion of the New Brunswick Federation of Labour, looking at our issues in New Brunswick.

The New Brunswick Federation of Labour also prides itself on representing the unorganized, by speaking up for people who have the minimum wage, people who have seasonal work, and people who find themselves unfortunately on social assistance. So even though we have 32,000 members in our federation, we speak for many more than the 32,000 members we represent.

If I go back to the original free trade agreement between Canada and the United States...I think it's important that I revisit that in order to make the points I want to make this morning. As well, of course, you have our brief. It's there, and I know the committee will go through it and report on its findings or question us on the brief.

Originally we felt there was a lot of secrecy--and I say “we”, the then New Brunswick Federation of Labour, ordinary people, representatives of the ordinary people, and when I'm taking about ordinary people, that includes workers also. What was coming out and transcribed in the media for ordinary people, workers included, when we heard about free trade, the buzz around the coffee shops, and so on, was in fact the ability of workers, of people, to possibly purchase big-ticket items. That was carried extensively in the press. It became the small talk in coffee shops and workplaces, and so on, of people looking narrow-mindedly at the opportunity to save money in dealings with the United States.

I use an example of a bagel. We know how we all love bagels in this country and in the United States. Because of the cheaper opportunity to purchase there, we looked upon that, not thinking, of course, of where the dollar is today.

I don't think any of that actually ever happened, and as organizations we are glad of the fact that it didn't happen, because we would have lost more jobs in the manufacturing sector. But without a doubt, what ordinary people were thinking was, how can I save a dollar? They thought, this is going to be good for us.

I think the message was taken by the then Mulroney government that, regardless of what organizations said...and we had fears, of course. Our fears were of loss of jobs, loss of our social programs, and deregulation in order to compete.

That is a snapshot history of the original concept of free trade between Canada and the United States. Secrecy was what was really happening. I mentioned that, and I don't want to underscore or underplay that. As people got involved in their unions and listened a bit more, through their organizations they became somewhat educated. I have to say that I believe the federal government did very little to educate ordinary people who are workers in this country. Remember, those people rely a lot on their elected members to do well by them, but in fact maybe the other was happening at the time.

Education becomes a very important factor, and that again is why I'll welcome this committee here today. I think other people have to be given an opportunity. It's great to say you represent these people, but don't just listen to the talk down in the coffee shops and so on. I think there have to be open forums, opportunities for these people, but first they have to be educated.

You'll get into a conversation. To me, “How are you this morning?” is a loaded question. If you're talking about the workplace or the people I represent, I can go on for half the morning. But if you're talking about my personal feelings, my health, my answer would be rather cordial.

Let me use the example of what we feel took place with the original free trade agreement and what we refer to, through the congress, as deregulation. Probably the best example I can talk about concerning loss of jobs in our country was in Ontario, where the economy at the time was falling apart and businesses were moving to deregulated states in the United States of America. The playing field was very uneven.

Again, the worry for our social programs at the time was the worry about organizations, the people we hired to prepare presentations on our behalf and to educate workers. There's a long period of time when that starts and takes place. In some cases, people just want to turn it off because they are workers, they are ordinary people, and they want to go about their simple, everyday lives. Therefore, organizations will look after that.

I can recall--at times I was not involved--the talks about whether it is being prompted by our organizations. In fact, no. They knew. They had the foresight to know what we're living through today.

I can recall watching some of the dialogue on television during that period of time, and I'd have to say that the leader of the opposition, now Prime Minister Chrétien, said words like “No free trade agreement”. That was spoken.

We have now expanded. I'll get to the middle of the piece. When we went to the North American Free Trade Agreement, we included Mexico. Basically, I'm not going to run through what I just said. It's more of the same: big business agenda looking at where is the best place to make a dollar. There's no doubt that has happened. I think the format that's used.... I'll use a few examples.

In the courts, because of the trade.... I'll look at one example in Canada. I believe it was the Ethyl Corporation, but I could be wrong. There was a gasoline additive. An American company was trying to do business with Canada, and it was being refused because this additive was a carcinogen. In fact, when they went through the tribunal, of course it was settled out of court, and we ended up with that additive in the gasoline.

We go to an example out of Mexico, where waste was being dumped in their country. In fact, they went through the tribunal there and the Americans won.

¿ (0945)

Now, I'm sure there are all kinds of examples where we won and they won, but in fact the big always seem to come out on top, especially when jobs in New Brunswick--now we're talking about New Brunswick rather than Canada--are very important.

We are a province with a high unemployment rate. I come from northern New Brunswick myself, and even though statistics talk about a 20% unemployment rate, I will question that until the day I go where I don't want to go, because it's very, very high. There's a lot of seasonal work. We fish and we work in the woods. In northern New Brunswick there's very little industry, and I can tell you that 20% is not a realistic number. I would say that more like 50% or 60% of people are unemployed throughout the year.

We end up, of course, talking about the WTO and the North American Free Trade Agreement, talking about opening it up to the Americas and looking at other economic unions within our hemisphere. Again, there was a lot of secrecy, and that's why the people, as we've seen carried by the media...of course, it built to the fact of civil unrest, which was shown throughout our country. I mentioned Seattle, and I can mention Quebec. I happened to be in Quebec. I think in the case of the labour organizations and a lot of the social action groups it was very peaceful. It was built on sensationalism with a few we don't subscribe to, but we've also seen excessive force by the authorities around the fence in Quebec City. In fact, we see that in some cases big business was allowed inside the fence, but some of our elected members were not. We had some difficulty with that. We had some difficulty with what we believe...and hopefully this is a change, and we need more of this.

The secrecy that was taking place because of the talk in the coffee shops...and no matter how many presentations...people from organizations, whether they were the CLC, other labour organizations, or the federations of labour right across this country, we were being told we were not indicative of the people of Canada. I think that is totally false.

At least our groups--and I mentioned that the federations talk about who we speak for, the unorganized, the people on unemployment insurance, and the people on social welfare. We have only known business to talk about business and how they can maximize profits, and from my information they happened to be behind that fence.

Our worry is definitely today, and we see it happening in this province...and I can link it if you so wish. Our natural resources--one of them being of course the water resources and what we're presently undergoing in Moncton, in this province, and the issues around that.

Even though we're a small province, we are a province rich for its size in natural resources. I know this. There was no difference before free trade, but now it would make it very difficult for us to have secondary and tertiary industries as a result of our primary industries because we don't like to look at that level playing field, to look at deregulation, in order to bring business in so we can have jobs. We don't want to go there.

Let me give you a couple of examples. I happened to go on a North American-Swedish mining practices tour. I always had the feeling since the 1960s, when the Americans visited the moon, that anything should be obtainable. In fact, as I've seen miners throughout this country get killed by rockfalls in underground mines, I ask why we couldn't have some sort of overhead protection, because when you scale a wall or a back to make it safe, you do it manually.

¿ (0950)

Throughout Canada and the United States I've asked the same question in every place we visited. We couldn't find that type of concept, and in fact a lot of the miners and most businesses would say it would be too cumbersome and it would cut into their profits and productivity. But guess what? In one mine in Sweden I saw it. It was available to all people we saw on that tour, and it had been for 25 years. Needless to say, they had a new protocol, but we would have been happy with what had been for 25 years.

In a very regulated state, one of internal responsibility...and I don't mind talking about internal responsibility between workers and companies, but there has to be regulation. We cannot be under-regulated in order to compete in the world market. We're not against free trade. Don't ever take it that we're against fair trade with equal economic conditions.

Our premier at one time--not this premier, the past premier--advertised, openly advertised across our country: come to New Brunswick to set up business; we have the lowest compensation rates in Canada. How was that done? That wasn't an even playing field. That was done through regulation forced on us by government to keep them low on the backs of the workers.

We don't want to exploit, and we think there is certain exploitation today. I could say of Canada by the States, I could say of the States by Canada, and I could say of Mexico by both countries or the United States. We're hoping that a sharing and a dialogue will change that.

But first of all--and I come back to the point--you're going to have to educate people. You can't just go and ask for their input and expect to get it. You'll get it from the scholars and you'll get it from the organizations, but in order to let people in on the discussion, first you have to give them food for thought. That may come from our government people, our elected people, the people within the system, labour organizations, social action groups, and so on. But it has to happen because the feeling of secrecy, the perception, has to be no longer there.

Again, I welcome you and thank you for giving us this opportunity this morning.

What do we want out of that? Of course, we want better labour laws. I think it equates to equal playing fields. You don't want to end up moving to a country where they don't have any of the above. We want better laws for human rights. We want better laws for health and safety. We want our natural resources protected, not exploited, and we want environmentally friendly laws.

Certain things we don't want touched are our health care system and our education system. You may answer that you're not about to attack health care or education, but the fear is there, the perception is there, and the secrecy is there. We won't know what happens behind closed doors.

Finally, I'd like to congratulate the Canadian government for its move in dealings with Africa. We think it's in the right direction. We welcome that move, and we hope it proves out. As we say in rural New Brunswick, the proof will be in the pudding.

With that, I'll conclude my brief presentation. I hope it was brief enough.

¿ (0955)

The Chair: I was very generous with the time, and I let you complete your thesis. I felt that you had some important things to say, things you thought were necessary for us to hear, so we went way beyond the 10 minutes.

We'll now go to questioning, Mr. Doucet, Ms. Daigle, and Mr. Farren. We'll start with the member from the Bloc Québécois, Mr. Yves Rocheleau.

[Translation]

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

Good morning, Mr. Doucet. Congratulations on your excellent brief, which I read as I was listening to you. It touches on almost all the committee's concerns. I am particularly pleased to see that you are in favour of the possible establishment of the Tobin tax. I believe this would solve many of this world's problems. As you have stated, things are being held up by the existence of a great deal of hypocrisy, secretiveness and underlying agreement, pitfalls which mean that the authorities who are supposed to be responsible for this kind of initiative are taking a great deal more time than they should.

My question has two parts.

During your presentation, you referred to the water privatization project in Moncton. I would like you to elaborate, and I would like you to give us some of the background. What is the problem? Who is for it and who is against? How is it in the public interest to privatize the water in Moncton, as some would certainly have us believe?

Secondly, you say that we should fight terrorism alongside the Americans, but that we should not let ourselves be terrorized by American objectives.

If, as we are hearing more and more, the Americans decide to attack other countries such as Iran, Irak, and even the Philippines and Sudan, what should the Canadian position be in the face of such a reality?

À (1000)

[English]

Mr. Blair Doucet: Thank you.

Let me enlighten you concerning the situation in Moncton. Moncton some time ago had a lot of problems with their water. It was an old system. In fact, you couldn't go into a hotel in the Moncton area and brush your teeth with water from the tap; they had to provide bottled water for you. It became widely known that the system was antiquated and things had to be done. But of course it was always a public service.

Now, with an American company coming in and making a bid, and now privatizing delivery of water, it becomes a concern--number one, because a company doesn't come in to provide a public service. A profit has to be made either on the backs of the people--and that's where it ends up--or in the courts, through agreement where they can't make a profit, and we end up paying anyway through our taxation system.

The people of Moncton are concerned right now--through labour councils, through federations, through organizations--about selling off their delivery of that service, which in most cases is a public service.

On the second question, what should Canada do, we don't prescribe terrorism. There's no doubt what happened on September 11 was a terrible travesty. Is it a result of the economic conditions? I don't have the answers to that. We can have an opinion until the cows come home. Everybody's opinion is right at that time, and it's open for debate.

I think we have to look beyond the word of the United States at that time to decide whether we should be involved, whether it's fighting terrorism against Iraq or Iran. I think we have to look beyond one country. We are known as a peaceful country. I would hope we would maintain that role and promote it through other countries rather than just jump into the fray.

It was “the talk of the walk” in a lot of cases when this happened. I've heard some of it and I almost hate to repeat it. It was “Just go in and wipe them out”. Well, in fact, that's what's happening in a lot of cases in Afghanistan. Ordinary people are being killed as a result of it. Are we really accomplishing what we want to do? Who pays the price? Is it the terrorists? Yes, in some cases, when you get them--they have to pay the price. But it's innocent men, women, and children also who are paying the price in underprivileged countries such as Afghanistan.

We don't want that to happen. We hope we're a peaceful country. We advocate peace, and I believe there's a peaceful way of settling things.

[Translation]

The Chair: Ms. Daigle.

À (1005)

Ms. Dee Dee Daigle (Political Action Representative, Atlantic Region, New Brunswick Federation of Labour): I'd like to add a few words regarding the situation in Moncton, because I live in Moncton.

The people of Moncton are asking themselves a lot of questions that neither the mayor nor the city can answer. First of all, if the City of Moncton decides to privatize its water, what will the other cities of the province and of Canada do? Within the framework of the various trade agreements, there are many things we do not see. It is not just a question of the City of Moncton, because we do not know what will happen in the other cities.

There are different groups in Moncton. After what happened in Walkerton, there are people who are somewhat afraid of privatizing the water. Who will be in charge of ensuring that the water is drinkable and the people will not be at risk?

There is another group of citizens who set up a committee. The city decided to do business with an American company. We wondered if there was no other business from the Moncton region, from New Brunswick or even from the rest of Canada that could do the same thing. Why did the city only call on that business? This brings up another question. When a decision has to be made, it must not be made in isolation, but in consultation with others. We have no idea what is going to happen.

Also, the Moncton city councillors do not always agree. It is mostly Mayor Murphy who is pushing this thing, but there are also councillors who are trying to find answers to our questions.

Thank you.

Ms. Aileen Carroll (Barrie--Simcoe--Bradford, Lib.): Who will make the decision?

Ms. Dee Dee Daigle: The city council.

Ms. Aileen Carroll: At the municipal level.

Ms. Dee Dee Daigle: Yes. If we take the decision to privatize water at the municipal level, what does this mean for the Province of New Brunswick and for the other Canadian provinces? Could this force other municipalities to put the issue of the privatization of water on the table?

[English]

The Chair: Mr. Farren.

Mr. Bill Farren (Member of the Executive Council, New Brunswick Federation of Labour): I apologize for not speaking to you in your native tongue, but I'm limited in that regard.

I would like to emphasize where this has gone with the fear factor and the common person--and I say the common person, not belittling the working class. The common person out there on the street sees or feels the fear in privatizing water in Moncton in that this is new, foreign territory for Canadians. We've always had the privilege of having our utilities with that public infrastructure.

You can go across this country and see where private-public partnerships have not worked. In the province of British Columbia, for example, where they privatized the highway system, they have now gone into great expense to come back and redo that service themselves, because it wasn't working with the private partnership.

Look to what happened down in California this summer and fall when they privatized their hydro. Look at the chaos that was created there. You can go right through North America and you can cite these cases. When you have something that is vital to a human--I don't care what type of income bracket you're in. You could be a person sleeping in a cardboard box on the street or someone living in a very luxurious home; you still need water. That's a basic thing. That's the fear. And it's very justified in my mind and in the minds of a lot of other Canadians that the fear is very real. We're not seeing ghosts in the closets. The ghosts are well out of the closet from what we see and from what we've heard from other parts of this country, and from this continent, for that matter.

Mr. Bill Farren As Mr. Doucet mentioned before, it has to be an educational tool.

You asked what Canada should do if the Americans attack another country. It's the same thing with your water. We hope Canadians do this for the good. We don't want to turn around and attack another country because we're going to give them aid. Unfortunately, the only aid Canadians can give them is aid in the sense of our name. We are participating. We send over a few soldiers, but it carries a bigger clout. Everyone knows, on the global scale, that Canada is in it along with some other countries.

The reason we do it is not to correct the problems we see as being unjustified throughout the world, whether it's the World Trade Center or what have you. If we're doing this for those reasons, it might be one story. If we're doing this for the reason of helping the U.S. so they're going to give us something for it on the other hand, it's not morally right, let alone politically correct.

Those types of deals are done all the time. We feel if it's done, then we don't want any part of it. If the Canadians can justify why we're participating in a war like this, if it goes along with our social values and you educate us in that regard, then maybe we might want to jump in there.

It's the same with the water. If you educate us that this is the best--I don't know how the heck you're going to do it. If this is the best, then maybe we can do it.

Proper education, with no blind-siding, or doing a deal over here to get something done behind the scenes, has to be done. Fair and proper education has to be done, not a “slippery slope” idea where we'll only give half the information they need and won't tell them the other side of the story.

À (1010)

The Chair: Thank you, Mr. Farren.

Ms. Carroll.

[Translation]

Ms. Aileen Carroll: If I may, I would like to ask you a few questions.

[English]

The combination of the brief and your presentation is very informative. I'm very grateful, and I know my colleagues are, that you took the time to come and meet us. We get on the road and have to pick one place in a province. You're willing to travel to see us if you're not in town. You mentioned you're from north of New Brunswick in Bathhurst

I don't have a lot of questions. I am going to be a bit of the devil's advocate here.

On page 3 of your brief, with regard to globalization, you say “we are not against the American people as such”--it's evident from your remarks that you're not--“we are opposed to the disproportionate American leadership of global capital.”

I think the task ahead of us on many fronts, as politicians, and with you as labour leaders, is difficult enough without, in my view, setting up objectives that we can't do anything about. Let's battle the ones we have a chance of winning, influence the events we can influence, and make the best public policy we can together. It's a fact.

In my view, it's like being opposed to the weather. I would have preferred today to have the kind of weather where I could go out in the harbour and enjoy Saint John.

The Americans have a disproportionate amount of global capital. Being opposed to it, in my view, won't move us anywhere.

How are we going to cope with this? In the study we're doing, how are we dealing with the integration of our economies ? How far should it go? How far has it gone? What are the effects? What are your views on where it should go and where it shouldn't go?

I'd say I have difficulty thinking we can do something about it, just to provoke your response.

À (1015)

Mr. Blair Doucet: I'm not against wealth; I'm against certain ways wealth is arrived at--in dealings all equated to selling off some of our country, or having them come in for secondary or tertiary processing, or sending to the United States for it.

I look at Brian Tobin today in Newfoundland. I have to give him a lot of credit for the stance he's taking at this point--and I know it's just an analogy, but I think it may answer your question--in what he is up against with a major multinational company, INCO, with the Voisey Bay find in his hand and the pressures he must be under, because there are not a lot of jobs in Newfoundland, let alone in that area, and in fact holding out to say “Once it's mined, it will be processed here in Newfoundland.” When I hear that, regardless of party, it makes me want to sing. You can equate it to what we are talking about, when you have the wealth come in, and move it out, and you bend to the wealth. I have some difficulty with that. He's under a tremendous amount of pressure.

Ms. Aileen Carroll: You make an excellent point, and I don't disagree with it. I too represent an Ontario riding, but I'm a Haligonian by birth, and my family is there, so we probably share a certain lens. Therefore, as with Canadians right across the country, I want to see that era when all we did is ship out our natural resources come to an end. It increasingly has. We want value added. We want the processing here, the manufacturing here, the jobs here. I'm with you.

All I was trying to say is what I said: the amount of economic power that exists in the United States exists. We have to deal with it. That's all. All the other issues you have mentioned are very valid, and many of them I join you in.

Let me move to one other position. Then I'm going to let my colleague come back, because he's sitting over there with tons more questions. It's interesting to hear you describe the New Brunswick of recent years in a very different way from the way Frank McKenna did. I would say the view across Canada is he did make a lot of changes to the economy, and many think for the better. You see why we have to hear from everyone. Those were interesting points. From my perspective, I'm glad to hear you come down hard on chapter 11 of NAFTA. You join colleagues in other Atlantic provinces in so doing.

I have one other point. There are many, but I'm not allowed to talk too long. The chair smiles, but she's tough.

You and Mr. Farren talked about the need to educate. I was just writing down quick quotes, Mr. Doucet, but you said that first they have to be educated: “You have to educate people.” Mr. Farren, you said “You educate us that this is best.” Who is doing the educating? Who is presuming to do the educating? I would venture to say that if I, as a politician, used your language, I would be accused of being paternalistic if I was lucky; patronizing if I wasn't. Who will assume the role of educator?

Mr. Blair Doucet: Let me be short; I know Brother Farren is chomping at the bit, and I'll let him be longwinded. In fact, I think, it's a combination, and I mentioned that in my presentation. You don't go into a forum knowing when you go in that you already know the outcome because you can sway people in that direction. I think education is a partnership when it comes to issues with our country. I can tell you that if you invited the CLC for participation in education and gave us a time, I'm sure it would happen, because we want the people.

I have a limited education on what we're talking about, but I can tell you that there are some people.... Remember my first analogy about the big-ticket item. That was it. We drew a conclusion on that. It's best for me not to look at what are the results of job losses.

I think it's tedious and it's not going to be easy to accomplish, but you have to give it an opportunity. I'm saying yes, you would be, but if you did it in partnership.... Business will have their agenda and we'll have our agenda. At that time it becomes somewhat of a dialogue or a debate, but you have to know going in where the line is drawn. It might take a long while to reach a consensus, but I've served on boards and commissions and I know that consensus is a great way, rather than voting, because once the vote is taken.... I look like the small country. I've been able to convince, but dollars and cents I haven't been able to win.

Ms. Aileen Carroll: Thank you.

À (1020)

The Chair: We heard from Ms. Price of the Newfoundland and Labrador Federation of Labour. We also heard from Mr. Clarke in Nova Scotia. We have copies of their briefs, which we are studying.

I'd like to ask you to move a little bit, in terms of the discussion we're having right now, to the issue of our Kyoto commitment. Yesterday in Halifax the committee heard concerns from the spokespersons representing their various business organizations that ratifying the Kyoto agreement would hold back the economic development of this region and would cost jobs in this area. I wondered how you would react to that. What is your position? Have you talked about this? Have you discussed the ways in which the Kyoto agreement could in one way or the other influence this Atlantic region?

Mr. Bill Farren: Jobs always seem to be at the forefront when corporations get together. I work at the local brewery here, Moosehead Breweries. I've been there for 27 years, and we have seen technology do away with jobs.

I come from a business family. We operated a business for a number of year, and still do. I remember that whenever we had family discussions at the kitchen table, and there were many of them throughout the week, it was said that taxation and too much government was hurting us to a large degree, and if we could free up some of that red tape and do this and do that, then we would be able to go out and create more jobs.

My father, God love him, did that. He didn't hoard it and buy a bigger yacht or whatever. He created that. He spread it out, and a number of his business partners did the same thing.

In the brewing industry, as well as the mining and forestry industries, you now have companies saying we need this freedom to get out there and create more jobs and do more things, but, having been in the workforce for a number of years, I can say that doesn't happen any more. What we are seeing now is that we're taking those savings and buying new technology. In my plant they couldn't get the technology so they developed it themselves. They laid off a dozen people just with that one machine, and that was only on one 8-hour shift. That multiplies. That goes through the industry.

Forestry is the same way. We used to be out there with chainsaws. Now, I'm not saying we should stay in the Dark Ages. Companies have the right to go out and get this type of change, but they also have the social obligation to the workers to put these people out of a job in a gradual fashion and not just cut them off at the feet. But the corporations--and this scares me--come back and they say, well, we can't do that.

That's the same thing the pulp mills did in the early 1970s, when Trudeau came down and said, we're going to give you x billions of dollars to put environmental controls in. Industry went along with it and loved it. Oh, this Trudeau government, this Liberal government, is great, they said. We really love them. Look at what they're doing for us. And the people got roused up and said it was great because, as everybody knows, at that time pulp mills were among the biggest polluters. Once they got the cash in hand, oh dammit, they said, I'm sorry, in order for us to compete with our counterparts to the south and around the world we have to modernize. So to heck with the pollution and the controls all this money came in for; we're taking that and we're going to put it over here.

My brother might correct me a little on this, but labour has taken the stand in the last number of years, at least in this province, that we are not taking jobs at any cost any more. We want to able to see our planet live, not to mention ourselves and our children. In this city alone we have people who have died from the respiratory problems we're trying to address. So what are we going to do with it? Are we going to turn around and say, well, yes, we need the jobs even though this person over here or I am going to die from it? Well, I'm sorry, I'm no martyr, and I'd just as soon stay home without the job. Hopefully, the social programs haven't been totally depleted and I'll get a little bit of social assistance.

Those are the things this government has to deal with, the fact of whether we go to war with another country. These are the issues. Is this what we are really about?

We're in a contest here now in this province about using this Venezuelan Orimulsion fuel in a power plant. Well, for years the federal government, the provincial government, corporations, and everyone else have told us that natural gas is the way to go, boys and girls. Now they're saying, well, it's a lot cheaper to run this Orimulsion because we can get a 20-year contract and do it that way. Oh, and by the way, the carbons are going to go up. We're going to have 70% carbons, but we're going to deplete a little bit over here. The fact that we're even playing this game off when we have tax credits in the environment.... Come on. Are we committed to something or are we going to go someplace else with it?

Now, regulations can vary in different provinces, and you can have buy-in time for that. We've been polluting for this long--and I don't think I'll get shot for this one--but different provinces can have different buy-in times with heavy industry. Ontario is very well situated with nuclear energy. A lot of people don't like that, but it's a low pollutant, and I don't know what that is compared to the fossil fuels. Different provinces depend on different fuels a little heavier than others, so each one has a right to be represented at different levels--as long as we don't go into the year 3002 and say, okay, we've finally met our goal.

À (1025)

The Chair: Well, thank you.

The chair would ask the president that if anything was said that was not in agreement with the chair, he would forgive him.

Mr. Blair Doucet: We love Brother Farren, and I would never rain on his parade.

The Chair: We'll go with Mr. Baker for his input. If not, you can go to Newfoundland with Mr. Baker.

Mr. George Baker (Gander--Grand Falls, Lib.): I just have a small question and an observation, Madam Chair.

What we're saying here today is, of course, going live to Ottawa. I was thinking as you were speaking, Mr. Doucet...and I must say, Madam Chair, I want to congratulate Mr. Doucet for the contribution he's made to the labour movement and generally speaking to giving people an understanding that, as he pointed out, there was once upon a time not very long ago, in fact only a couple of years ago, that a government was bragging about the fact that you had the lowest social safety net in the country and, I observed, the lowest social services payments in the country, which was really nothing to brag about looking at the numbers.

But thinking about what Mr. Doucet was saying a few moments ago, especially with the forest industry, and this broadcast going to Ottawa.... Northern New Brunswick has made a great contribution to the economy of this country in exports per capita. And if you look at what is recognized as the poorest area of the province, northwestern or northeastern New Brunswick, where per capita I believe you export more than any other part of the country, there has been a great contribution that's been made by the people who work in the woods and the people who work in our primary industries over the years.

My question is, and it relates to something that's been mentioned by two of the people here today, do you have any comment or any advice to other nations in the world who would be contemplating moving from manual labour, say, in the cutting of forests with chainsaws, as you say, to heavy mechanization? Do you have any advice to the tree farmer and so on as it relates to the environment?

Would you say it's progress we've made in the forest industry as far as the environment is concerned, when you look at an area of forest land, no matter where in the world, after the trees have been cut and at what effect mechanization had on that piece of earth compared to what it was before when you had a human being cutting down a tree? Could you comment on that.

À (1030)

Mr. Blair Doucet: I happen to be an outdoors person. I have a camp in the bush. There's no doubt that technological change is a tough issue to fight. But related to the environment, I've seen the environmentalists, the groups such as the Conservation Council of New Brunswick, which I know is basically a watchdog there.... Again, speaking as an ordinary citizen who loves the bush, I think of the devastation I've seen in certain areas when highly mechanized machinery moves in. And it's not to clean up; it's to disrupt and maximize profits, there's no doubt.

In terms of whether it can be stopped, I'd like to go a little further by saying that it's there; it's coming in. But we're still living it today, and in fact there is another company presently that is looking to come in out of the Miramichi, which will replace a lot of jobs--woodcutters. If that's to happen, that's when you look at, yes, we export our raw products, but are we doing any secondary or tertiary manufacturing of that product?

I would hope it's not a losing battle, because we drastically need jobs here in this province, as does I think any province that exports its products completely. That's why I keep saying what I think of Tobin; he's doing wonderfully there. I hope he continues. I hope he doesn't bend to pressure.

But environmentally it's not friendly. Is there going to be another machine to come in and clean it up? I don't know. I haven't seen it. Then again, do we have the regulation to force companies to make sure they leave the forests in a manageable situation?

Some of the reports we get...it's not going to happen.

Until they found the usage for hardwood, we were going to run out of wood somewhere around 2006 or 2007. Will it still happen? I'm not sure. I can tell you there's devastation in the woods.

À (1035)

[Translation]

Ms. Aileen Carroll: Have you seen the Quebec film, L'Erreur boréale?

[English]

I would like to take you to page 10. I think we should note for the record that the New Brunswick Federation of Labour has stated clearly that they are opposed to identical immigration policies between Canada and the United States, given as that is rather right on the topic of the hearings on North American integration. Now with the discussion we've had, I wouldn't want to see that missed.

The Chair: Good point.

Mr. Rocheleau, a final question.

[Translation]

Mr. Yves Rocheleau: Regarding the privatization of Moncton's water, given that this is an essential service, is there a vigorous debate on the subject? Has a group been organized to pressure the City of Moncton authorities so that they think twice about this?

Privatization is not yet a feature of everyday life. In Quebec, for example, people speak from time to time about privatizing Hydro-Quebec, but the socio-democratic forces of which we are a part, immediately bring pressure to bear to ensure that we keep this jewel. I think it is the same thing for water. Is there at least a debate on the subject?

Ms. Dee Dee Daigle: Yes, presentations have been made at city council meetings. Also, two or three weeks ago, representations were made by the Coalition Against the Privatization of Water. More than 80 people registered for a workshop at the Université de Moncton.

I did not attend as I was out of town, but I spoke to several people who did go. The people of Moncton feel that the city of Moncton has not done its homework, that it has not done sufficient research. When we ask questions, particularly on NAFTA, on the ways in which this agreement opens the door to the privatization of water and on what other cities will do, no one at the City of Moncton can answer us.

Many questions remain. The coalition is becoming stronger and stronger. There are more members who are attending city council meetings and who are asking questions of the councillors and of the mayor.

Mr. Yves Rocheleau: You know that there is a school of thought personified by Mr. Ricardo Petrella--

Ms. Dee Dee Daigle: He is the one who gave the workshop at the university.

Mr. Yves Rocheleau:...that would like water to be considered as a world asset belonging to humanity and not to any private business, and that ideally, it should one day be managed by the United Nations. Everyone in the entire world must consider it as an asset given that it is an essential service and that moreover, it is a deteriorating asset. Drinking water is increasingly rare, and could soon potentially be the reason for wars.

[English]

The Chair: We don't want to end up in a world war.

We want to say how deeply appreciative we are of your presentation with us.

Mr. Bill Farren: May I make a brief comment that goes back to the MP from Ontario?

I want to touch on the educational part of it again. You're talking about the realization that the U.S. has so much economic power. It's not this that we fight against, but it's the idea of educating the smaller countries like Canada, compared to the U.S., of the benefits and disadvantages of getting into bed with such a large identity.

It doesn't go to anybody's benefit in this country when we don't have that education process.

At the time NAFTA was being adopted, the minister was asked a question about the provisions in the NAFTA agreement. He said, “Are you crazy? That document is too big. I'll never read all that.” When those statements are being made, what assurance does it give me as a Canadian that my best interests are being protected? You, as an elected person, have that right...not the right, you have that privilege. I'd say it was a privilege to educate me. In my elected position here, I have the privilege and the honour to represent the people who put me in this position, the same as you have in yours, and to educate them, as you must educate us.

À (1040)

Ms. Aileen Carroll: This is a great discussion. It's too bad we can't leave and go have coffee and just talk about it.

Mr. Bill Farren: Or Moosehead beer.

Ms. Aileen Carroll: Better still. Molson has left Barrie, so I guess I can go with a Moosehead.

I would just say that I think the education issue is a very big issue. I am just genetically inclined to mistrust information from any one source, whether it's the Canadian Labour Congress or the Government of Canada. I think there is an onus on me and on you to reach to a variety of sources of information. Only in that way are we really going to be able to input the process.

It's interesting that recent studies have shown--and this really upsets me--that on the question of civic literacy--that's the big term they use for being up on the issues generally--Canada is second to the bottom of the list, above the United States. We're second lowest in civic literacy. According to the experts who did the study, more and more of us just rely on television. Take a quick look, take CNN, get a 20-second jolt, and say you're educated. You're not; you're manipulated.

I don't say that just because it's CNN. It's one source. We have an onus, all of us, to pick up a newspaper, to do the things that will keep us up on the issues with a good, general knowledge of it. People relate that to low voter turnout. The lower your civic literacy, the fewer people get out and vote. Why? They don't think their politicians are impacting the process. All of it factors in.

Coming out and having the dialogue we have today is a very important part of that process, over and above the particular study and particular issues we're talking about.

Mr. Blair Doucet: It definitely is. To take that educational tool one step further, to take it away from the 20-second blip from CNN or CTV, to take it away from that byte....

It doesn't benefit Canadians to see that a round of these negotiations is going to a western province in a town where there's one road in and one road out. Why is that? So we can keep people like me that much further away from the process. Unless people like me get involved in the process, there's always going to be that uneducated one, and there's always going to be that distrust sitting there.

The Chair: Thank you very much.

We've been generous with the time. We've gone through the issue of education, but at the same time I think it's important that we talk about time management.

Mr. Blair Doucet: I just want to conclude, Madam Chair, by saying I just spent a weekend with my executive council, which Brother Farren is one of, and we do have to step on his parade every now and then.

Some hon. members: Oh, oh!

The Chair: Thank you very much. It was good meeting you.

This is a natural break, and our next witnesses are here, so we'll ask them to approach the table.

À (1039)

À (1044)

The Chair: We will now continue to hear our witnesses.

We have Professor Rod Hill from the Department of Economics at the University of New Brunswick. Welcome Professor. You have 10 minutes to present to us and then there will be questions from the members.

Thank you.

À (1045)

Professor Rod Hill (Department of Economics, University of New Brunswick): Good morning. I won't take my 10 minutes. I suppose the speakers always say that and then they ramble on and you have to cut them off.

I'll begin with some general remarks about the future of the North American relationship, one of the things you're looking at. The comments I'll make are partly those of a citizen as well as those of an economist.

Then I'll make some brief comments on the economics of some of the issues and questions raised in your background paper. Then you can ask me whatever questions it pleases you.

I guess the first thing that struck me when I read your background paper was that what are termed the issues and questions raised for public discussion in that background paper are, I think, truly frightening. I think they should be frightening for anybody who's interested in or cares at all about the future of our country and its continued existence.

We're now apparently being asked to think seriously about a customs union with the United States, or a common market, or possibly, eventually, even a full economic union. We're being asked to think about adopting the U.S. dollar and about the idea of what's termed a North American community.

I'm old enough to remember that 20 years ago these kinds of ideas would have been impossible to put forward and have them taken seriously. Virtually nobody did. I was around at that time and I remember. So I wonder, why are these questions being raised now?

I think the answer has nothing to do with the scanty economic merit of these ideas. It has more to do, I suspect, with the growing power in Canada of those who would generally prefer U.S. policies and institutions. Such people are, I think, quite likely giving up the idea that they're going to get those policies and institutions by winning a federal election in Canada. I think their agenda is to push for further integration with the United States, or what's sometimes euphemistically called “harmonization”, which often is just going to mean an adoption of U.S. policies. What frightens me is that the integrationists have the influence to get these things on the agenda.

I was once myself a believer in free trade. I worked on the Macdonald commission in the mid-1980s, which put a free trade agreement with the U.S. forward as a recommendation.

I supported the free trade agreement in the 1988 election, and I dismissed the claims people were making at that time that this could be the beginning of a process that leads to the end of Canada. But I've changed my mind.

While the free trade agreement did lead to greater economic interdependence with the United States, that in itself did not set in motion any inevitable process whereby further integration either has to happen or is desirable. That was my view in 1988, and I still believe it. But the victory in 1988 of the pro-free trade agreement side simply whetted the appetite of the integrationists for more. And their numbers and resources have grown since 1988 in a way I could never have anticipated. Indeed, as I recall, I didn't even believe in 1988 there were significant numbers of such people.

The majority of Canadians, I think, have just no interest in this integrationist agenda, no interest from either the political or the economic angle. And they must now, I think, recognize what's going on and say no to further integration with the U.S. I firmly believe we have that choice.

The integrationists will pretend to you that we will pay a heavy price for this. But the facts do not support their case. They will also try to narrow the focus of the debate, to focus it on the costs of not integrating further while ignoring the benefits of retaining our policy autonomy--benefits that are not easily quantified but of course are no less important for that.

The case against further integration, I think, has been greatly strengthened in recent years by research in international economics. Part of that has been spurred by the work of your colleague, John McCallum, which was published in 1995, ironically enough, in the American Economic Review.

I particularly strongly recommend to the committee that you talk to Professor John Halliwell of the University of British Columbia--the name is in my brief here. He's at UBC. I don't think you've been to Vancouver yet.

À (1050)

The Chair: No.

Prof. Rod Hill: No.

He's the expert in this area. He would be an immensely illuminating person to talk to.

Ms. Aileen Carroll: Is he coming before the committee?

Prof. Rod Hill: I'm sure he would be happy to appear.

The Clerk of the Committee: I will certainly add him to the list.

Prof. Rod Hill: I'll send him an e-mail and tell him I've given him some free advertising. You should look forward to that.

I'll give you a little taste of what he might tell you just so that you can think about it. My own thinking on these issues has been strongly influenced by his recent work.

He claims there's what he calls diminishing returns to additional openness, meaning additional integration into either the economy of another country or the rest of the world. In other words, more integration does not offer any substantial benefit, particularly in the case where you already have substantial integration. Clearly, that is the case between Canada and the United States.

This is still speculative, I think, at this stage, but this may be the reason it's so difficult, indeed even impossible, to find any evidence of aggregate productivity gains or gains in real wages as a result of the Canada-U.S. Free Trade Agreement. A considerable amount of time has passed, but people can't find that, although those were things that were expected back in the mid-1980s when the agreement was being thought of.

Helliwell writes this: “There may well be an optimal amount of openness, with a matching degree of national separation”--that is, separation of powers and policies between countries--“that gives continuing scope for national governments to make their own choices, experiments and mistakes.”

He goes on to add what I think is a very important point, which is not often discussed in these sorts of situations. What things such as the free trade agreement often promise is increases in living standards, increases in, if you like, output per person in Canada in some vague way. But Helliwell points out that increases in average income levels have actually very little influence on well-being as people assess it themselves. But he adds ...“both individual and community-level measures of education, health, employment and social capital have continuing payoffs.” That is, continuing payoffs in terms of people's own assessment of their satisfaction with life and their happiness.

So just to recap, that's saying if you look at what really affects people's well-being and their satisfaction with life, you'll see that average income levels are pretty unimportant, possibly of no importance, in a country in which average income levels are as high as they are here. The same does not hold for a country such as Nicaragua where there is a substantial amount of absolute deprivation. But if somebody comes along and tells you that some further integration into the U.S. economy is going to increase Canadian income levels by 5% or something like that, that 5% would be pretty well worthless in view of recent economic research. If you're comparing that 5% with the cost of attaining that, we could conclude that perhaps those are fairly substantial.

Helliwell goes on to say:

There is no need for haste in broadening the free trade agenda into areas that might impinge on the ability of local and national governments and of locally-based voluntary organizations to provide the education and health and maintain the horizontal linkages that seem to provide a secure foundation for individual and community well-being.

I'll just end with a final quote from Helliwell, one that I think addresses directly one of the things this committee is interested in. He says:

If Canada is faced with a foreign policy choice between a globally-oriented policy and one primarily focussed on continuing efforts to harmonize policies with the United States, I think the decision is obvious...the latter policy is likely to represent bad economics and bad politics.

I completely endorse his view.

So that's all I'm going to say by way of just a very general sort of statement. There are many specific things that you as individuals might be interested in, so I'd be happy to respond if I feel I can do so in an informed way.

À (1055)

The Chair: Thank you, Professor.

We'll now go to the questioning, starting with a member from the Bloc Québécois, Yves Rocheleau.

Á (1100)

[Translation]

Mr. Yves Rocheleau: Thank you, Madam Chair. Thank you for your testimony, Professor Hill.

You are a professor of economics. Given the value of the Canadian dollar nowadays, I feel like asking you what you think of the theory that we must at least give serious thought to a possible common currency for both Canada and the United States, and perhaps even for Canada, the United States and Mexico.

[English]

Prof. Rod Hill: Well, I read the chapter in your background paper that discusses the currency question, and I think the information there is really quite accurate and summarizes the issues well. My own view is that, first, the idea of a common currency is simply a non-starter. It states quite accurately in the discussion paper that the United States will never be interested in a common currency, so we might as well ask ourselves, are we interested in adopting the U.S. dollar? That's the real question.

There is a lesson, I think, to be learned from Europe, as is also pointed out in your background paper. The European creation of the euro was primarily motivated by a desire to further political integration in Europe, for European unity. I think that's quite clear. The economic arguments were secondary and quite often not very good. The lesson we can learn from that is that at least in the judgment of the European leaders, a currency is a sort of potent political symbol, and I agree. Adopting the U.S. dollar would be a potent symbol of the beginning of the end of our country. It would also mean of course that we were giving up one of the most powerful policy tools we have, namely monetary policy, to the United States, to a person who is accountable only to the U.S. Congress.

Why in the world would we want to do that? We would only want to do that if Canadian policy were so horrible that it was better to give control over to the United States. If the Bank of Canada had been run like the Bank of Argentina or something like that, then maybe that would make sense. I think the Bank of Canada has made some very bad policy choices in the last 20 years, but they were not nearly so bad that I'd be willing to see control of monetary policy handed over to a foreign country.

By the way, this is the sort of thing that begins the process of political integration, because at some point somebody's going to say, well gee, the Americans are making all these important policy choices for us, but we don't have any representation in Washington; maybe we should do something about that. If things go badly, it won't surprise me at all if by the end of my life I see those sorts of questions being seriously raised.

[Translation]

Mr. Yves Rocheleau: But people are saying more and more that the weakness of the Canadian dollar gives rise to or hides a rather significant lack of productivity in Canadian businesses. If I understand correctly, if the Canadian dollar were at par with the American dollar, this would reveal the weak productivity of many Canadian businesses. Is this true?

Secondly, what do you make of the testimony of important Canadians, particularly Mr. Paul Tellier, president of Canadian National and a great friend of the Prime Minister, who has openly said that we must seriously consider adopting the American dollar, given the weakness of the Canadian dollar?

[English]

Prof. Rod Hill There are two issues there, and I guess one which I didn't respond to properly in your first question.

The background paper that you have refers to a study published by the C.D. Howe Institute. It was done by Professor David Laidler, an old teacher of mine actually, on the purpose of the floating Canadian dollar. Laidler's arguments are good ones. Perhaps you should talk to him too if you're passing through London, Ontario.

The low value of the Canadian dollar does not really worry me. It's well known, if you look at the whole history of floating exchange rates, that there are problems with the floating exchange rate system sometimes. Sometimes the movements in the exchange rate are, in a real sense, too big. However, there are problems with any kind of exchange rate arrangement. There are problems with fixed exchange rates as well.

I don't think the low value of the Canadian dollar reflects productivity problems in Canada. It doesn't have anything to do with that. In fact, I'm aware of no theory of exchange rate determination that links those two variables.

There's a line or two in your background paper that says that swings in the Canadian dollar can plausibly be attributed to changes in world commodity prices. That makes some sense, because if you think about the way world commodity prices are determined, they're determined in a very different way than the price of automobiles. Commodity prices are much more volatile. They move around with the business cycle for rather obvious reasons.

The low value of the Canadian dollar now is helping to change the relative prices of Canadian goods and foreign goods in a way that is going to cushion the effects of changes in international demand on the Canadian economy.

It could well be argued, for example, that unemployment is going to be lower in Canada as a result of having a lower Canadian dollar than would be the case, say, if we had a fixed exchange rate with the U.S.

There's a second part to your question that I should address.

You referred to Paul Tellier's comments. As I recall, he claimed that the adoption of the U.S. dollar was inevitable. This was something that was going to happen, a law of physics working its way through.

When I see a word like “inevitable”--and further integration is inevitable, it's inevitable that we will adopt the U.S. dollar--I think it's a word, to put it politely, which is meant to give people the impression that we don't have choices over our institutions, and it is completely false. It's a way of trying to make your opponents think there's no point in even discussing something that's inevitable. It's like saying, “Shall the sun come up tomorrow morning?” It's inevitable, so why should we discuss that?

There is simply no reason why the Canadian dollar should disappear any more than there is a reason why Iceland's currency should disappear. There simply isn't.

Mr. Tellier and other business people perhaps don't care about some of the aspects that other Canadians might care about in terms of our policy autonomy. For a lot of people in the brokerage industry or in his industry, who cares whether there's a Canadian dollar or not? There are transaction costs to be paid there, so they might say their profits will go up. He speaks for his shareholders after all. That's his job, which is fine, but that's not the whole country.

So no, I don't think there's even an argument there.

Á (1105)

The Chair: Ms. Carroll.

Ms. Aileen Carroll Thank you, Madam Chair.

Let us never confuse the term “shareholder” with “citizen”.

Á (1110)

Prof. Rod Hill: Right.

Ms. Aileen Carroll: Thank you, Dr. Hill, for a very interesting presentation.

I think you hit bang on a number--or a series--of dynamics that are at play in this discussion. That is, earlier in your remarks you said there's a school of thought--and I didn't have your paper at that time--that is attempting to influence the direction in which we go on this question. They have no opportunity to gain political power, so other strategies will be employed. That's legitimate. We are an open society. As we discussed earlier with the members from the Federation of Labour, this need to educate includes an onus to access information sources different from the ones that may describe our set of beliefs. I think it's very good to have you come today and introduce that perspective to our dynamics.

I agree with you very much that if you use the word “inevitable” long enough, if it becomes a mantra--and in some sectors I would suggest it has--then it does imply a lack of choice, and that is heretical. There is a choice--very much so--every step of the way.

Today, I guess we're on our fourth day, and maybe I am looking to hear some conclusion. But I am glad to hear you put on the record today--and it's important to put it on the record, and I rarely get partisan in this committee, but I think it's important for the Bloquistes to understand--that there is no economic theory that links productivity with a low dollar. That, too, is misinformation that spins out.

So it's very good to hear all of the perspectives you brought forward. One could say that's because they converge with mine, and that probably would be true too--as do Mr. McCallum's. But still, you're an economics professor, so you bring that arm's-length distance and very much an expertise that I would not to the table. I appreciate it very much.

I think, too, the point you made about the huge political symbol that currency conveys, and that the merging of it within the EU is very much a necessary thing from the perspective of certain governments prior to their process of attaining the goal they want to attain--and the goal they have attained, insofar as currency union is concerned--is valuable. I think what you are saying, too, reflects the disquiet perhaps within the British citizenry as to which way they should come down on the question of joining the euro.

I guess really I'm just reflecting back the views you've expressed, but I think they're very important ingredients for our consideration, and I'm very glad you have come and spoken clearly about them. I think your background is interesting, particularly with the Macdonald commission. That, too, gives this committee a sense of how long you've engaged these issues. Some of us and some of our presenters are fairly recent to the issues. It doesn't deny their credibility, but one always has to assign considerable credibility to someone like yourself who has been studying these issues for some time.

Indeed, our currency is a huge fiscal tool. That's not a matter of opinion; it's a matter of fact. With it goes the control of our monetary policy. If you hand that over, you hand over sovereignty. I think, as we discussed yesterday.... It would have been great to have had you here at the same table with Dr. Frank Harvey from Dalhousie. It would have been a marvellous discussion.

Prof. Rod Hill: I don't know him.

Ms. Aileen Carroll: Maybe we'll have to give you copies of his papers so you have a sense of other views that are coming forward.

He and I would disagree in a number of areas, which I'm sure wouldn't keep him up at night. But one of the areas where we do agree is that the word “sovereignty” is getting bandied about--before, in my view, we've really come up against the barricade where, if you stay on this side or go on the other, you've really come into a question of sovereignty. I think what's happening and is being spun out is that sovereignty is being diminished earlier than I would think--and Dr. Harvey would think--it really has become an issue. But I think you have today clearly defined an area that is sovereignty, where, if we make decisions there--and they're ours to make--we have relinquished sovereignty or we have retained it.

Prof. Rod Hill: Yes, and of course one can't fall for the kind of line I see in the National Post--which I subscribe to for some mysterious reason--that says, well, if we give it up voluntarily, that's an exercise in sovereignty, so we've retained our sovereignty by giving it all away, you see, because it was a free choice.

Á (1115)

Ms. Aileen Carroll: Absolutely, and you hear that in Ottawa, that it's a matter of choices.

Prof. Rod Hill: I don't quite buy that line.

We've talked a little bit about the dollar, but I think the issue of, say, a customs union with the U.S., which would be the next step of the integrationist argument, is equally problematic. It's maybe a little more dangerous because it's less obvious, while the currency is something everybody sees in front of them every day. Seeing your trade policy being set in Washington is not exactly all that obvious.

As well--and again, it's scary that we should even be discussing this--if you even think about how a customs union might be negotiated with the U.S., I can imagine all sorts of other things that it would involve too. As was rightly pointed out in this background paper, the Canada-U.S. Free Trade Agreement and NAFTA did not get Canadian industry exemption from U.S. countervail and anti-dumping actions.

I recall quite well that the Canadian economists who were much in favour of promoting a free trade agreement back in the mid-1980s were very much concerned about this issue. I remember talking with one of them who had spent most of his professional life concerned with this issue. He was horrified that when the free trade agreement was negotiated, we just didn't get this, but he said, well, it's the best we're going to get, so I guess we'll have to sign onto it. Now the argument would be, well, we have to go yet another step further before they'll give that to us. But at what price?

Just look at the softwood lumber dispute right now, for example. I'm not an expert on that dispute, but it's just an illustration of how in this case provincial policies are having an impact on international trade and are at least perceived as having an impact on, say, the well-being of the U.S. industry. Well, suppose you were to get some sort of exemption from U.S. trade actions; what price would they demand? In terms of the way wood is priced in this country, the U.S. lumber industry would presumably demand that permanent changes be somehow locked in. That would just be one thing, and there would be all sorts of other things on the table. It would be a tremendous mess. Either that or you wouldn't get exemption from U.S. anti-dumping legislation.

The Chair: But, Professor, I think it begs the question about the issue of a community of regional cooperation. What about North American cooperation, including Mexico in some other areas apart from the one or two we've mentioned, customs and the dollar issue? How do you see this North American collaboration, cooperation, and partnership evolving in the context of your presentation?

Prof. Rod Hill: This relates to what's called in here a North American community kind of idea, which gets beyond just strict economic relationships. I'm a little mystified as to why that's on the agenda. I don't really see its importance.

The Chair: I refer, for example, to Mexico's president talking about social cohesion and looking to the north because of our agreements and to the view that it's important for us to work together. Do you see any way in which we could begin to think of ourselves as North Americans, or do we see ourselves--I don't want to use the word “isolationist”--as acting as Canada without seeing ourselves in the context of North America? This is what we're probing for.

Prof. Rod Hill: I see no reason that we should start thinking of ourselves as North Americans. Again, that's a kind of integrationist mindset.

If you look at the facts, and this is one of the things that I've got from Helliwell's work, the flow of information, and communication, and social networks within Canada is quite dense compared to between Canada and the United States. In other words, there's a lot of evidence that shows that Canada is a real nation; it's a real community in a certain sense. The North American community does not exist in that those flows of information, and movement of people, ideas, and communication is rather sparse north-south.

Á (1120)

The Chair: But through September 11 and the aftermath of that, it seems to me that the approach we need to take as a result of what affected us all on September 11 has called for something a little bit more.

Prof. Rod Hill: I really don't agree. One thing that I noticed was missing from your background document is--maybe not missing entirely--instead of thinking of ourselves as North Americans, why don't we think of ourselves as citizens of the world, either Canada or the world? Where has Pearsonian internationalism gone?

I agree that we ought to think about relations with Mexico, but we ought to think about relations with Colombia or with Egypt, or with any other place in the world. There's nothing special about Mexico just because it happens to be on the same geographic continent. I think we should think of ourselves as citizens of the world rather than promoting the idea that we're North Americans in some sense, because we're not.

I think we should strengthen our own internal community; there's lots of work to be done there. We have lots of examples of small mindedness, of regionalism, of those kinds of problems in our country. I think we could do some work at home, but I think we could also strengthen our own view as citizens of the world. I think that's again a way to help preserve the long-term viability of this country. I think the idea that people come up with of a North American community is just another way of getting at this integrationist idea along another dimension. That's all it is. And I don't think I'm being paranoid.

Could I just add one more thing. It seemed to me that in the last six months since September 11, what went on in the United States has been seized upon in a very crass and opportunistic way by the integrationist forces to just redouble their clamour. In fact, the way I feel personally--I'm speaking again now as a citizen, not an economist--is that it's simply redoubled my view that it's more important than ever to keep our distance from the United States.

The Chair: The idea for a community of regional cooperation was advanced by a former foreign minister, Lloyd Axworthy. I think Lloyd cannot be accused of wanting Canada to adopt wholly U.S. policies.

Prof. Rod Hill: I wouldn't accuse him of that, no.

The Chair: But because of economic and other reasons, I think it's important for us to not dismiss as solely integrationist any kind of discussion where we can work in a continental sense.

Prof. Rod Hill: I would have to think about some specific thing you would have in mind. This is one aspect of the discussion that I haven't followed in any real detail myself. So I'm not really sure what we mean by cooperation in terms of culture and education. It seems to me we have quite a bit of cultural influence from the U.S. here, but we don't have very many links with Mexico.

The Chair: But should we?

Prof. Rod Hill: No, I don't think there's anything special about Mexico that you couldn't say about Venezuela or Chile or Nigeria or some place else.

Á (1125)

Ms. Aileen Carroll: Let me just jump in there. You make a good point in what you've said about the events of September 11 having perhaps provided fuel to the integrationists' fire--

Prof. Rod Hill: Well, at least in certain dimensions, such as militarily.

Ms. Aileen Carroll: And that brings me to some of what we discussed in Halifax as well. If we are going to look at North America--and the subject of this study is to do so--perhaps in light of your comments we should be saying “public hearings on the North American integration as contrasted with Pearson's approach of multilateralism”. But for right or wrong, this is the study we're engaging in. Maybe it's an example of a group being influenced just as you described, but I think the reason we're introducing Mexico in this conversation is that maybe there's a commonality--I'd ask you just to comment--between Canada and Mexico, if only because we share a continent with an elephant and get impacted in different ways. Or maybe there are some similar ways when the elephant rolls over.

Prof. Rod Hill: Sure, I guess there is commonality in that sense. I guess it's not obvious to me, if you think, say, about an analogy with Europe, that Mexico and Canada together are in any way a real, reasonable counterweight to the United States. It's not that you can have, say, some alliance of common interests with Mexico that will be somehow enough to even out the relationship within a North American community, whether it's an economic community or whatever you want to call it. While we may have some common interests like that, I don't think they're enough to counterbalance the disparities in size and power that exist in North America.

As well, it seems to me that probably a lot of bilateral issues between the U.S. and Mexico are quite different in nature from bilateral issues between Canada and the United States. Mexico, as a developing country, has special problems, and its relationship with the United States as well as the issue of Mexican immigration, legal or illegal, into the United States are going to be things--

The Chair: Do you see Canada as not having any role in this, any relationship? You just brought one issue up, and that is the movement of people.

Prof. Rod Hill: No, not directly. That's something the U.S. is, I guess, directly interested in, in terms of its immigration policy. But I don't see that it directly concerns us, unless there's something I'm missing here.

The Chair: It just seems to me I'm getting the message it's all or nothing; we just go about business as usual. And in the context of not only the economic sense, but also in terms of relationships, immigration, border issues, movement of people, services, etc., I think there is a role. There has to be some kind of role. I'm just trying to find out if you see any connection whatsoever. It seemed to me you were saying we should just pull the drapes and look after our issues--see ourselves in a global sense and not see that continental sense. I'm just grappling with some of the things you're saying.

Prof. Rod Hill: There are obvious continental realities that we have to take care of, so it's extremely important that we maintain friendly and collegial relations with the United States.

Many of the border issues that are outlined in your discussion paper are, I think, things that can be sorted out by reasonable people in terms of expediting the flow of goods and business travellers across the border and things like that. Those are really administrative issues that can be dealt with. There are issues of upgrading infrastucture or allocating more people to border control to make sure that those flows take place without hindrance.

Well, sure, that's something we should of course be concerned with. But I would be most concerned if we had the United States, say, having any influence over our immigration policy or our refugee policy.

Á (1130)

The Chair: Oh, I would be concerned too.

Prof. Rod Hill: Those are things you would have to worry about if you were thinking about, say, going back to the idea of a common market, where you would have a free flow of workers across the border and European-style things where there'd be a North American passport and anybody who was a resident of the United States could come and work in Canada and vice versa. I don't think you could ever reach such a situation without in effect giving up control over who was going to be in Canada--in effect, our immigration policy.

Again, I go back to the issue of, what's in it for us? What benefit would we get by these measures of further integration? I don't think there's anything to be had. I'm not suggesting it's all or nothing, but I essentially think that the status quo is a reasonable option if we want it--or essentially the status quo.

The argument I'm sure you'll be hearing and one you hear all the time is that the Canadian economy has become more and more integrated with that of the U.S. and that this sets up these pressures, these forces, that are going to mean that more integration is either necessary or desirable. I don't think that's true at all.

The Chair: Thank you.

Ms. Aileen Carroll: I just have one quick point, Professor.

Would the events of September 11, which have understandably so wounded the psyche of the elephant as described...? In your view, what we're reading and understanding in open dialogue with the Americans about their plans to create a secure perimeter...given their options, where in their view the perimeter either goes around the continent or cuts across the 49th parallel, and given that 87% of our trade goes to the United States--the “is's” rather than the “ought's”, perhaps--in your view, that ought not trigger any change in our stance. It should not, obviously, as you already said, create a compulsion on our part to integrate further without thinking it through as to why we're doing it.

But generally speaking, your conclusion would be that there's no need to make any changes as a result of the changes I and others would see in the American approaches. The level of contentment they had before is no longer there vis-à-vis the border. It isn't, so how do we deal with that?

Prof. Rod Hill: This is getting outside of any area of claimed expertise of mine, but there are levels of cooperation in terms of police, intelligence, and such things that could be done to help reassure them about what is going on in Canada.

But it seems to me that if we're concerned about the flow of goods, the flow of automobile parts or whatever, across the border, that's a very different issue from the issue of, say, who might be allowed into Canada as a refugee, someone who might then try to sneak across the border. It seems to me that there are ways...again, let me go back to my earlier statement about sorting out administrative problems about expediting the flow of goods across the border. There are issues that could be dealt with, such as the flow of frequent business travellers, who could be given special documents to travel back and forth, and issues of, say, people going into the United States as tourists.

There are quite different elements to what's crossing the border here. The Americans are going to be largely concerned about that third group, people who are just crossing into the United States.

I think those issues are of marginal economic importance to Canada. If people have to wait an extra hour to get to be tourists in the U.S., that doesn't really do us any harm. If the flow of just-in-time goods in the automobile industry is disrupted, that's going to cause a lot of trouble. I don't see that there should be any important connection between those two things. I just don't see that.

Á (1135)

The Chair: One final question to Mr. Rocheleau.

[Translation]

Mr. Yves Rocheleau: I ask this question not of the economist but of the informed citizen that you are, a Canadian citizen and a citizen of the world. If, in a few days, in a few weeks or in a few months, the Americans decided to attack what they call the rogue states, that is to say Irak, Iran, perhaps Somalia, perhaps the Philippines, what would your reaction be, as an informed Canadian citizen, in the face of such an initiative?

[English]

Prof. Rod Hill: My reaction as a Canadian is that I would hope the Canadian government would firmly oppose any such actions, clearly and without any conditions, period.

This is sort of a general statement that touches on not only this issue but also trade issues. A lot of people stress that it's particularly important for relatively small countries--Canada is not really a small country; it's a big country geographically, but in terms of population it's not that big--to ensure the rule of international law. I'm sure all of you have heard this many times. That holds not only in terms of international trade but also in terms of other kinds of international law, like the United Nations charter.

We've spent millions of years as human beings on this planet living by the law of the jungle. It was really only in the 20th century that we had some attempt to put in place some framework of international rules that would attempt to constrain, as best one can, the big powers in the world. It's very much in our interest to try to pursue and to strengthen such a system of rules.

When you have a situation like we have now, in which, as you're alluding to here, the United States is threatening to simply drop those rules in the wastebasket and to carry on doing whatever it wants, the Prime Minister is probably right when he says we really can't stop them if they want to do that. But we sure should not support that.

We also must be very careful that there are not linkages or connections being made--for example, the United States saying, “You'd better support us in this particular area, or we will punish you in this particular area”. If the kinds of treaties and trade agreements and so on that we've signed with the United States are worth the paper they're printed on, then they are protecting us against that kind of arbitrary power. We'd better make sure we use those mechanisms, or whatever protections we have under the World Trade Organization, to make sure those economic relationships would not be damaged by our independent actions on the diplomatic front.

The Chair: Thank you very much, Professor. That was thought-provoking.

I would imagine that our staff would get in touch with the references that you have given to us in terms of individuals who can help us along with that discussion.

We're very pleased that you joined us today. Thank you very much.

Á (1140)

Prof. Rod Hill: My pleasure.

The Chair: Our next witness, Ms. Elizabeth Weir, is a member of the legislative assembly and the party leader from the New Brunswick New Democratic Party.

Welcome. It's a pleasure to have you here.

Ms. Elizabeth Weir (MLA, Leader, New Brunswick New Democratic Party): Thank you very much, and welcome one and all to Saint John.

I thank you for the opportunity to make some very brief comments to the members of the committee. I know you have a fairly broad mandate in terms of looking at issues around the relationship between Canada and the United States and around some of the other questions that you have in terms of your mandate. And I've just reviewed your first study report.

As I said, my comments are going to be very brief, because as elected members you know we have about 10,000 things a day to do, and I have to be in another part of the province at some point today.

I guess my plea to the members of the committee in terms of your work would be this. As it appears that there are new issues to be examined in terms of our relationship with the United States, I think there are some key and contentious public policy questions that are outstanding and still need to be addressed. I know we're talking about a post-NAFTA period of time, but in fact we're still beginning to live NAFTA, so we're not quite after NAFTA yet.

I really want to speak to a kind of case study that's taking place here in the province right now that really raises some issues about the vulnerability of Canadian values and Canadian public policy and the absence of, I think, enough protection and scrutiny of some of these questions.

You may be aware that the City of Moncton is currently in negotiations with a company, USFilter. It's owned by Vivendi Water, one of the worldwide multinational companies that is in the business of delivering the control of water services. In some cases, they control national systems. For example, the country of Niger has handed over its complete water system to Vivendi.

Anyway, the City of Moncton is in negotiations for the management and the operation of the infrastructure and upgrading of its water system, and it appears to be on the verge of signing a contract with this company. It will be the single-largest private water deal in Canada.

I am very concerned about the implications of this agreement in terms of questions around the ability of Canadians, Canadian municipalities, to continue delivering public services and whether or not this agreement may trigger the infamous section 11 in the investor rights in NAFTA.

There has been virtually no public scrutiny whatsoever of this agreement. Recently, the provincial government has ordered the city not to sign the deal because quite clearly they haven't been complying with the provincial Public Purchasing Act. I've asked the Minister of Business New Brunswick, who is responsible for trade policy, to examine it from a NAFTA implication.

You're sitting in the oldest incorporated city in Canada. I know that our friend from Newfoundland may have different...but yes, it's an incorporated city. Our infrastructure in the city is older than Moncton's.

Our city, however, has taken the view that we will, as a city, continue with the upgrades and the work that need to be done on sewerage using a system of public tendering, public services. The question is whether or not, by entering into the agreement with USFilter, the City of Moncton will allow section 11 to be triggered. And then we will be vulnerable to American companies arguing that they have lost profit opportunities and that they have a right to bid on doing the work for other municipalities.

I'm raising this issue because there has been virtually no scrutiny whatsoever from that end of this agreement. That could have potential implications, not just for citizens of my province but right across the country. One of the distinguishing features of our development as a country has been our understanding that there is a place for public services, and in many ways those public services could be delivered more efficiently.

As a case in point, we were the incubator for public-private partnerships. We have a youth offender facility in the Miramichi, and the citizens of New Brunswick are going to pay, over a 30-year period, $70 million to the Wackenhut Corrections Corporation. We won't own the building at the end of the 30 years. We could have built it ourselves and owned it for $20 million. So our experience with public-private partnerships is shaky at best.

I really want to flag this because it seems to me there is simply an absence of screening for agreements that have very broad public policy implications. I'm not necessarily arguing that this is a federal or provincial responsibility, but clearly, in terms of ensuring our own values are sustained, there are questions we still have to address, aside from whatever we're going to look at in new relationships.

I know that's very brief, and clearly you may have questions, but I really want to flag that as a kind of case in point of work that still needs to be done, and I think should be done, before we look at some of these other questions about new relationships.

I was able to catch some of the questions and presentations from the previous presenter. Obviously, if there are any other questions you have around our position here, I can speak from my own experience in the legislature.

The pulp and paper sector is, of course, the largest sector of our economy. We have traded internationally, not just with the United States, since the early part of the last century, in terms of our own pulp and paper industry. Our view of economic development is certainly quite broad and has some long history here, aside from family and trade relationships with the northeast of the United States as well.

But my really brief message is that we still have work to be done, in terms of those questions around NAFTA that are unresolved and pose a real vulnerability to Canadian values.

Á (1145)

The Chair: Thank you. That was very clear. The Federation of Labour was our first witness, and the water issue was one of the issues at the top of their list.

We'll go around the table for questioning. Then maybe we'll engage you in a couple of other issues that are outside of this. We hope we can get you off the seat by 11:30 a.m.

Mr. Rocheleau.

[Translation]

Mr. Yves Rocheleau: Thank you, Madam Chair.

Thank you for your presentation, Ms. Weir. Your friends at the New Brunswick Federation of Labour have made us aware of the issue of water privatization in Moncton. One thing in your brief intrigues me. Regarding this issue, what is the attitude or what is the New Brunswick government's role, given that this is their primary area of jurisdiction? Given the mentality of the federal government of Canada, if the New Brunswick government does not deal with this, the door could be left open for a new intervention which would certainly be denounced by Quebec.

The Quebec government, when Mr. Bouchard was at the helm, had adopted a very clear position concerning the privatization of water. In Quebec, there are also plans afoot to sell drinking water from Sept-Îles, if memory serves me well. Some people want to send this water abroad, to another continent, on huge ships.

Therefore, what is the provincial government's role in this file?

Secondly, what is your opinion concerning the federal government's behaviour—and I'm thinking particularly of Mr. Pettigrew—as regards the interpretation or the application of section 11? Are you satisfied? I am aware that Mr. Pettigrew has stated that we would not allow section 11 to be enforced as some have suggested, but in practice, it seems to me that this is just talk and that it's rather meek at that.

[English]

Ms. Elizabeth Weir: To answer your first question on the role of the provincial government, our provincial government is on the record as opposing bulk water exports. The Minister of the Environment has sent a letter to the City of Moncton reminding them that in these dealings the issue of the ownership of water is vested in the crown in the province. So whatever Moncton is negotiating at the table, they can't negotiate away the ownership of the resource, most of which is a watershed outside the municipal boundaries anyway.

The concern is, though, that nobody really knows what's being negotiated at the table. This has all been done with representatives of the City of Moncton and Vivendi's lawyers, who I assume are very good. Only since it has become a public issue has.... I think the government's just been sleepwalking on this whole question and some of its potential implications.

I've asked the Minister of Business, New Brunswick, who does have the trade policy arm, to review this from possible chapter 11 and other implications. We haven't had any response yet. We're also caught, as a province, with very limited resources. Often, whatever is hottest on the political agenda gets the attention, so there's that question.

On article 11 and the assurances from the federal minister, what kind of screening mechanism is there? There seems to be no obligation when you're entering into an agreement that could trigger section 11. There's virtually no agency and no requirement that this deal be sent for review prior to signing. We know, as a multinational corporation, once the signature is on the dotted line, liability is broader.

In our situation we're concerned because Saint John is unique, because through our charter we are an independent entity, whereas the other municipalities in the province are creatures of the province. They get their money for the most part, aside from some property tax revenue, through provincial transfers. So it probably wouldn't be much of an extension if Vivendi sued at some point because they couldn't get enough water into their system, or they claimed the deal had been breached. My guess is they would look to join the Province of New Brunswick in any kind of action. So our citizens would have potential financial liability, as well as other issues of sovereignty.

There is literally no outside review of this deal being done at all. I guess that's my concern. If we say we're going to ensure that section 11 isn't used arbitrarily, there must be some kind of mechanism for reviewing; otherwise agreements will get signed and liability will be triggered--and section 11.

Á (1150)

The Chair: Mr. Rocheleau.

[Translation]

Mr. Yves Rocheleau: What strikes me in what you have said is the secrecy surrounding these negotiations. It is typical of that milieu, as we saw in the case of the Multilateral Agreement on Investment. It is almost a fluke. We discovered that section 11 was generated within the framework of the Multilateral Agreement.

The same secrecy surrounds the negotiations on the Free Trade Area of the Americas. We must be very careful when we talk about Vivendi because they are a major player on the planet today. We know that Vivendi bought Seagram last year, I believe, a very big Canadian company that was listed on the TSE 300 index.

When we're dealing with that kind of a stakeholder, we must be very cautious, and I think you have every reason to be worried. I suppose those people are in Niger. They are probably French. It is a French company.

I congratulate you, because this could create a precedent. That is where the danger lies both for Canada and for Quebec. If Vivendi is successful in this, others could be successful afterwards.

[English]

Ms. Elizabeth Weir Absolutely. I was actually in the chair doing some parliamentary training when I was handed this quite glossy brochure about some of their privatization initiatives. I opened it and read this glossy description of the agreement they had literally just signed with the officials from Vivendi. I don't want to denigrate the legal skills of the representatives of the City of Moncton, but we know the devil's in the details, and you can be sure the details are going to be on Vivendi's side in those negotiations.

I think there's a real gap here in the protection of public policy. I'm not necessarily arguing for some kind of trade police to be brought in all the time, but surely in a contract like this that has such broad potential implications in terms of liability and sovereignty, there should be some requirement for some kind of external review before it is signed. Given the nature of the agreement, this should probably happen at the federal level. I really just wanted to flag that. It's a public policy issue that's outstanding.

Á (1155)

The Chair: Thank you.

Mr. Baker.

Mr. George Baker: First of all, I want to congratulate the witness. She has certainly been very successful in this province in her political career. I must admit, I've followed some of her statements and they're very impressive.

Getting to the issue that was brought up concerning Moncton and water, there are quite a few Canadians who believe we should allow water to be exported to the thirsty people of the world--especially where they have no drinking water--in large amounts. Of course, the position of all of the political parties in Canada, including mine, is vehemently opposed to this. Some companies have prepared proposals to export bulk water for agricultural purposes to parts of northern Africa that need water.

Of course, these things are not possible because of the positions of all the governments in Canada. But at the same time, we have to recognize there are groups of people who believe, for very good reasons, that perhaps we should be providing water to people who don't have adequate water supplies, for agricultural purposes or for drinking.

Let me ask you this question, though, and it comes from a question put to you by the Bloc. The policy of the Government of Canada is, of course, influenced by the political parties in the House of Commons and their opinions. The opinion of the Bloc in the House of Commons is that the federal government should never interfere with the power of the provincial government to regulate water. The Bloc says the federal government should not put their finger on interfering with anything that's the responsibility of the provincial government, and the federal government dare not pass any law or get involved in any agreement concerning water, or stopping the export of water, because that's a provincial government responsibility.

The member for the Bloc can, of course, correct me if I'm wrong in this interpretation, but I don't think I am, unless he is here today proposing that the federal government actually interfere with the power of the Government of Quebec to regulate its own water.

The federal government, in preparing legislation to stop the export of bulk water, has to go to each provincial government with cap in hand and say “Will you please sign a piece of paper saying that you agree with no exports of bulk water”? because under the Constitution of Canada we only have control over water that crosses the border--for example, the Great Lakes. We have no power at all as a federal government over waters within provincial borders.

What do you think of that reality in Canada and the opinions of some of our major political parties who say that the federal government should not have control or power over provincial...or under the Constitution of Canada, which says that every bit of water on the ground, on top of the ground, or under the ground, within the border of any province of Canada, is totally a provincial government responsibility?

Â (1200)

Ms. Elizabeth Weir: Well, let me approach it from this perspective--and of course as a provincial politician and someone who chose provincial politics because I believe passionately in the areas of provincial jurisdiction and how they affect the lives of ordinary people, I'm not prepared to abdicate provincial power over water, especially to a federal government that has virtually no environmental enforcement of the resources it currently has under its jurisdiction.

Our government does a dreadful job, for the most part, on air quality and water quality, but it's a damn sight better than what the federal government has done with its areas of jurisdiction in the province. I've been there, done that, and seen it. So to me, it isn't just a question of who has the authority but who is going to make sure or has more of a commitment. At least we live here.

However, clearly this has to be an issue that politicians of all stripes, federally and provincially, need to address with some vision and some goodwill. It seems to make no sense to me that we have a patchwork quilt of drinking water standards across the country. This is one example where there needs to be national coordination and national standards set. I do support that. But in terms of the capacity to make decisions about the resources, I certainly would not agree with giving the federal government any more jurisdiction over our water resources than it has.

We're sitting in a province where we have very limited access to natural gas, which the citizens of Canada gave billions to develop and which is now going into the northeast United States so that they can have jobs and generate energy. So I think it really depends on your view of the country, resources, and the sovereignty of citizens, but I'm afraid I'm on the side of the provinces on this one. But I certainly believe we do need to try to address in a more thoughtful way some of these questions that too often get captured in family feuds, to the detriment of the resource and the interests of citizens.

I'm sure I've disappointed you in my response.

The Chair: Thank you.

Were there time, we would ask you to reflect on some things we heard yesterday from the Atlantic Institute for Market Studies regarding the transportation challenges that face--

Ms. Elizabeth Weir: I can only imagine what you heard.

The Chair: --this region and ask if you could just throw some light on--

Ms. Elizabeth Weir: In terms of trade?

The Chair: In terms of trade, in terms of the transportation links, in terms of the transportation routes and what needs to happen, who pays, and how that collaboration and cooperation could occur....

Ms. Elizabeth Weir: Well, again, we're living in a province where the body count grows by month because of the state of the Trans-Canada Highway. On the other hand, this provincial government decided to suck $100 million out of its budget last year and create a contingency fund.

So they don't exactly have clean hands either, taking goods in and out of, essentially, Halifax. It was to the detriment of the environment, public safety on our road system.... The roads are being beaten to pieces by the trucks, but the province has to take some blame here too, because in New Brunswick we allow a higher load on pulp trucks than is allowed in the province of Quebec, for example, which has much better road construction standards as well. So there are no clean hands around the table, I think, when it comes to the state of the highways.

Â (1205)

The Chair: I think we were focusing our attention between the route that would take goods and services through the region into Maine and into, possibly, the United States.

Ms. Elizabeth Weir: The section about the new route across Maine.

The Chair: Yes. Who do you think should pay for this?

Ms. Elizabeth Weir: If we have a national highway system, then certainly this is one of the things that we have access to as citizens, so it's all of us. But I'm not necessarily in agreement that a road through the Maine woods is of any great benefit to the people of New Brunswick, speaking very parochially here.

The Chair: Finally, say something about Kyoto as well.

Ms. Elizabeth Weir: It should be signed. We need to get on board.

The Chair: And the province is...?

Ms. Elizabeth Weir: Well, who knows where the province is? As I said to somebody, anyone who thinks climate change is not well under way just had to walk outside yesterday here in Saint John--we have never had weather like this--and ask yourself what it's doing to the ecosystem in the Bay of Fundy.

The Chair: Thank you.

Ms. Aileen Carroll: A quick question.

I would add, to those who don't think climate change exists, I've got a couple of bridges I could sell them too.

Ms. Weir, I would admit right at the outset that I knew nothing about the privatization of water issue in Moncton until it came forward today. One should, therefore, probably not do what I'm going to do and make a comment but rather wait and do their homework. My proclivity is usually to do that, but the opportunity will be gone then.

Since you're happy with the jurisdictional set-up on water, as you conveyed to my honourable colleague, Mr. Baker, what are you going to do at the provincial level if a municipality makes a deal with an American company to privatize this water? Which provinces are going to go? They are your creatures, by the Constitution.

Ms. Elizabeth Weir: Exactly! Although I'm happy, as a citizen, with the province's domain over water, I'm not necessarily happy with the track record of the provincial government on this question. Again, like so many, it's an area of mixed jurisdiction when we're dealing with both trade policy and some of these resource questions.

I said it before. I think the province has been absolutely asleep at the wheel. Under the Public Purchasing Act they've now put a halt to it, but it would seem to me that we need some other mechanisms on the side of the province, and I'm arguing probably at the federal level, to have some kind of “filter” on these contracts before there's any kind of commitment. This is something I'm going to continue to discuss with the minister and with the premier. We've got a case in point here, and I don't think people were aware of some of the consequences.

Ms. Aileen Carroll: I'd venture to say your case in point is probably a learning lesson, perhaps, right across Canada. It's not just in New Brunswick.

Ms. Elizabeth Weir: Hopefully, it's not going to be bad.

The Chair: Thank you very much for joining us today. I know you must have a heavy schedule, so we're pleased you found the time for us.

Ms. Elizabeth Weir: Well, we all have important work to do in terms of public policy. I wish you well in your deliberations, sorting out some of these thorny questions that continually bedevil us as Canadians.

Thank you.

The Chair: Thank you very much.

We will break now for lunch. We come back at 1 p.m., when we'll be filming, at the request of the group that's before us, the Board of Trade from Saint John.

Thank you.

Â (1235)

· (1337)

The Chair: Order, please.

We will begin the afternoon session with witnesses from the Saint John Board of Trade: John Furey, second vice-president; and immediate past-president, Mr. Gerry O'Brien.

Welcome, gentlemen. This is the conclusion of our day in Saint John, and we're very happy to have you before the committee. We have one hour with you. You have maybe 10 to 15 minutes for a presentation to us, which you may divide up however you wish, following which you will be quizzed or have an exchange with the members around the table.

Mr. Yves Rocheleau is the Bloc Québécois member; Ms. Aileen Carroll is Parliamentary Secretary to the Minister of Foreign Affairs; the Honourable George Baker is the minister from Gander, Newfoundland; and I'm Jean Augustine, member of Parliament from Etobicoke--Lakeshore in Toronto.

So welcome.

· (1340)

Mr. Gerry O'Brien (Immediate Past-President, Saint John Board of Trade): Thank you.

First of all, I'd like to welcome all of you to Saint John, Canada's oldest incorporated city.

We represent the Saint John Board of Trade, and on behalf of Bill MacMackin, our president, I wish to express his regrets as he was unable to be here due to the fact that he's out of town on business. They looked for someone who was in the position in the past and they found me. Usually, past presidents are hard to find.

We'd like to take a few minutes to give you an idea as to the history of our board of trade and how it has been involved in the business community, and as well, how we have worked with government in the past.

A number of initiatives have been led by the Saint John Board of Trade. For example, we led the fight against the tax-included pricing in the HST. We were a leader in trying to implement a national shipbuilding policy, the transfer of the Saint John airport to the local airport authority, and various other initiatives that have taken place over the last number of years.

One of the ones I have a great deal of respect for is the primary health care initiative, which was undertaken in Saint John. It was really a provincial initiative, but it was a coalition of many facets of our community and sectors, from the soup kitchens right through to the business community, which is funded substantially by the business community.

We're very proud of our involvement in our business community, and we're pleased to have the opportunity to speak to you today. There are a number of issues that relate to Saint John and to New Brunswick that we believe must be considered.

Now that we're past our history lesson, we are going to speak on approximately three issues: the issue of the softwood lumber, the airline issue with respect to Saint John and all small communities in this country, and the issue of Canada's borders and their effect on business. John Furey will deal with the latter two. I will deal with the shipbuilding issue.

I must say the issue with respect to softwood lumber has to be considered very seriously with respect to the province of New Brunswick. We understand there have been a number of initiatives that have now exempted, in the short term, the softwood lumber industry in Atlantic Canada. This must continue.

The Atlantic provinces have historically been market driven with respect to their softwood lumber industry. Approximately 75% of our lumber products come from private lands, representing over 75,000 woodlot owners across the region. Nothing has changed since 1996, and therefore we wish to convey the view that this position must be maintained in that the Atlantic lumber industry is to be exempted from the U.S. action. This is a huge issue in our region, and it's very important for the economy of this city and this province.

Saint John is a community whose employment and economic well-being are highly dependent upon the forest products industry. It is also the terminus for ships from lumber operations that supply pulp and paper and tissue operations employing over 900 citizens, with an annual payroll of over $75 million. Saint John is also the hub of rail, sea, and road movements of lumber to the United States from across the Maritimes. The majority of vessels departing from the Port of Saint John are in fact transporting lumber and forest products to both U.S. and Caribbean destinations. The railways and our region's significant trucking industry also depend upon the unfettered transborder exchange of wood products that has characterized our region for generations.

The cancellation of our region's long-standing fair and free trade status with our U.S. neighbours would bring significant and unjustified hardship to our community. We ask you to please consider the following important points in the softwood lumber trade discussions as they continue with the United States.

The U.S. has initiated no charge or complaint regarding unfair stumpage subsidies in Atlantic Canada.

· (1345)

Atlantic Canada has a much different timberland ownership pattern than the rest of Canada. The predominance of private land ownership makes Atlantic Canada more reflective of the U.S. land patterns; therefore the one-size-fits-all solution for Canada ignores that which has earned us a free, fair lumber trader status in the past. Atlantic Canada should not be penalized for being the most market-driven part of the country.

The due diligence of our region's lumber producers through their voluntary certificate of origin program is clear evidence of our hardworking efforts to respect and protect our legitimate free trade status in softwood lumber trade with the U.S. No other jurisdiction in the country has undertaken this level of export monitoring and accountability.

The certificate of origin program has undergone in the past a rigorous third party audit by the International Organization for Standardization. More importantly, this monitoring process is regularly reviewed by U.S. Customs and the U.S. Department of Commerce. Most recently, the U.S. Department of Commerce recognized our made-in-the-Maritimes due diligence program as a model for monitoring cross-border trade.

Atlantic Canada's 7% share of the softwood lumber trade with the U.S. pales in comparison with the estimated 54% market share held by British Columbia; however, the loss of our 7% share would bring severe and unjustified issues of economic health and unemployment in our region. We therefore ask for your support in continuing the efforts of the Government of Canada to ensure that Atlantic Canada maintains the status it now has.

Thank you.

· (1350)

The Chair: Thank you.

Mr. Furey.

Mr. John Furey (Second Vice-President, Saint John Board of Trade): Thank you very much.

With respect to air access issues, an economic development consultant last week gave me a great analogy. Air access routes today are analogous to river access routes of 200 years ago. Their importance lies in the fact that trade and commerce follow whatever route of access happens to be existing at the time.

Atlantic Canada, particularly smaller markets in Atlantic Canada like Saint John, are currently at an economic disadvantage, a competitive disadvantage, with respect to access both in terms of number of routes and in terms of pricing issues. That is a crucial issue to local economic development, and that's why we'd like to speak to you on it today.

There can be no doubt that for most of the country we have a virtual monopoly situation with respect to the provision of air services. In our view, monopolies rarely, if ever, provide for optimal levels of customer service or pricing, and this is no different in the example we have before us.

Our submission is that competition breeds service. We will not see improved levels of service, both in terms of numbers of flights and pricing issues, until such time as we have competitive service not just in major markets in the country but also in the smaller markets, one of which we represent today.

So I'd like to give you a number of alternatives that we feel would be best suited to provide the necessary competition, both on a national basis and on a regional basis, particularly as they affect the small marketplaces.

The first of these is to simply allow cabotage. The current situation in the Canadian airline industry is that foreign carriers are prohibited from carrying Canadian passengers between two Canadian destinations. While that may have had laudable policy goals in years past, it does not fit with our current environment.

Our position, our suggestion to you, is that strong consideration be given to lifting these rules and to allowing cabotage to allow foreign competition, if that is the only source of competition that smaller marketplaces can access.

An alternative to cabotage--and I stress this as an alternative only--is to allow foreign carriers to own and operate wholly owned Canadian subsidiaries. The current limitation of ownership on a foreign carrier is 25% of a Canadian airline. Whether through allowing cabotage or allowing wholly owned subsidiaries, we need that foreign competition, particularly in smaller marketplaces.

Saint John, as an example, suffers from a relative lack of access to Canadian destinations, but it's particularly important that we have a great deal of difficulty making ready connections to our American marketplaces. For these reasons, we think the solution lies in foreign competition. Saint John, in particular, needs ready air access to American marketplaces.

We prefer allowing cabotage, instead of simply allowing foreign carriers to operate Canadian subsidiaries, because cabotage would result in a faster remedy to the situation. It might take time for American or foreign carriers to decide to establish Canadian subsidiaries, but it would take relatively less time to make the decision to run routes between Canadian destinations.

The third potential solution, or partial solution, to this problem in Atlantic Canada is essentially an anti-trust resolution. One possible alternative would be to break the regional carriers away from the only national carrier we currently have, and to allow these two or more independent entities to compete in the same marketplace. So in the context of Atlantic Canada, Air Nova and Air Canada would compete in this marketplace.

Again, I cannot stress strongly enough the importance of ready air access to the continued economic development of this region, and in particular the Saint John area. For these reasons, we ask that you strongly consider one, or perhaps more than one, of these suggestions we've put before you as a possible resolution of these competitive issues.

If you have any questions on those topics, we'll be more than pleased to answer them as best we can.

I realize we're probably very close to the end of our time, so I'll be very brief on the final issue we've been asked to present on.

I characterize this not so much as a security issue, but as a transportation of goods issue. It is undoubted that in the post-September 11 world, both Canadian and American authorities are placing a great deal more emphasis on security than prior to September 11. That is as it should be; no one disagrees with that. We feel there is an important secondary issue to be considered here. It's a national issue because it affects all economies across Canada. We feel it affects New Brunswick, as an exporter, in a particular fashion.

We're asking you to take the necessary steps to ensure that the Canadian-American border remains permeable, so the free access of our exporters to the American marketplace and the free transport of goods across that border are impeded as little as possible.

As an aside, I noted in news reports this morning that an extra 100 National Guardsmen will be patrolling the Maine-New Brunswick border starting in March. Long lines will become longer and long delays will become longer. That has the very real potential to harm our economy. In particular, it could have a very detrimental effect on the export of fresh products--fresh fish in particular. So we're very concerned about that.

Our position--and I believe this is a position that has been adopted by the Canadian Chamber of Commerce as well--is that we support greater integration of Canadian security efforts with those of our American neighbours, to ensure that, whether real or perceived, America does not feel the need to establish larger and larger border contingents that will necessarily interfere with the free flow of goods across the border.

· (1355)

We have enjoyed in Canada the privilege of having the longest undefended border in the world with our largest trading partner, probably since the War of 1812. All we're asking is that consideration be taken to make sure we take the necessary steps not to lose that privilege.

Again, we're pleased to answer any questions you may wish to direct to us. Thank you very much for the opportunity to speak to you.

¸ (1400)

The Chair: Thank you.

We'll go to Mr. Rocheleau.

[Translation]

Mr. Yves Rocheleau: Thank you, Madam Chair.

Thank you for your presentation, gentlemen. I have one question concerning transportation that I will put to Mr. Furey. Has the disappearance of Canadian had an impact here, in New Brunswick, particularly in Saint John?

[English]

Mr. John Furey: It certainly did. Perhaps to the largest extent, the disappearance of Canadian Airlines affected our access, obviously, to other points in Canada, which indirectly affects our connections to American destinations.

But the loss of Canadian Airlines is not the sole issue we face here. Even prior to the loss of Canadian Airlines, we had difficulty with most of our major marketplaces, many of which still remain in the United States of America. So as a small market community, it has always been extremely difficult for us to export goods or even transport expertise in the form of personnel back and forth from our marketplaces through places like Toronto, or in some cases Halifax. It's just that it was an added problem before, and from the southern New Brunswick perspective, we have always felt that we needed more penetration into the American marketplace, or vice versa, for American carriers to be able to come to Canada.

So, yes, it has been an added problem. We have lost flights as a result of that, but I wouldn't want to be taken as minimizing the need that existed even prior to the demise of Canadian Airlines.

Mr. Gerry O'Brien: Just to add to that, in my business I act for a number of companies from the United States, and we have a number of companies in Saint John that do business in the United States. In particular, with respect to the companies that would consider expansion or consider establishing in Saint John, the lack of air access to the eastern seaboard of the United States has created major difficulties in encouraging these people to come to Saint John.

For example, I have a client out of the midwest of the United States. They can get to Bangor, Maine, virtually as quickly as they can get from Bangor, Maine, to Saint John, because they have to drive. This is a severe economic disadvantage to Saint John, and to New Brunswick in general certainly. Those are actual examples.

Our historic trading lines have been north-south for many years, as opposed to going east-west within Canada. Further disadvantages to carrying on business in New Brunswick or in Atlantic Canada should be remedied.

[Translation]

Mr. Yves Rocheleau: I want to make sure I understand correctly. Does this mean that the Saint John, New Brunswick, region has certain needs in terms of a direct link with some American cities such as Boston or New York, and that not only can you not satisfy that need for a direct Saint John-Boston or Saint John-New York link, but you have to go through Air Canada, which goes through Halifax, Montreal or Toronto, in order to allow you to trade with the United States? Is that the problem?

¸ (1405)

[English]

Mr. John Furey: This is exactly the problem. We have been seeking for some time, through initiatives of our local airport authority, supported by the Saint John Board of Trade, to encourage an American carrier to establish a link with Saint John. We have not been successful in doing so to date, but we view it as an item of critical importance.

It doesn't have to be Boston, it doesn't have to be New York, but it must be a hub in the American system in the northeast. One alternative that has been explored is Manchester, New Hampshire--but any airport on a major American hub. In our view, this is a necessity to continue economic development.

As Mr. O'Brien has pointed out, we have very real examples where American companies have experienced a disincentive in expanding to Saint John because of the lack of access. I personally have had to bring people in from various parts of the United States. It takes more than two days to fly from most parts of the United States to Saint John, New Brunswick. In this day and age, this is a competitive disadvantage we would like to see remedied.

From a non-business perspective, from the perspective of the broader public, I'd like to point out that the demise of Canadian Airlines has not seen dramatic increases in fares but dramatic decreases in the availability of seats for seat sales. Even in comparison to other marketplaces in Atlantic Canada, Saint John no longer enjoys access to the same number of seat sales we had seen previously. Addressing your question on the demise of Canadian Airlines, this has been an added impact.

The Chair: Merci.

Madam Carroll.

Ms. Aileen Carroll: Thank you, Madam Chair.

But if we harken back to before we had Canadian Airlines in the Maritimes and we only had Air Canada, were there direct flights from Saint John to New York or Boston then?

Mr. Gerry O'Brien: Oh, yes.

Ms. Aileen Carroll: There were. It was pre-Canadian.

Mr. Gerry O'Brien: Yes, it was pre-Canadian. Now I'll be going back in history.

Ms. Aileen Carroll: I know. I'll be going with you.

Mr. Gerry O'Brien: Initially, we had Eastern Provincial Airways, EPA. Eastern Provincial provided service within Canada. However, there was a flight every day to and from Boston.

Ms. Aileen Carroll: And that was with Air Canada.

Mr. Gerry O'Brien: With Air Canada, that's correct. But that was before deregulation as well. We had much better access to the eastern seaboard of the United States.

As John has mentioned, on top of this we have a number of very large businesses in this community that do a lot of business in the United States. They're moving high-priced executives from Saint John to Boston, or Saint John to wherever in New England, and these people having to take an extra day becomes a very high cost for businesses to bear.

Ms. Aileen Carroll: The whole airline debate has heated up considerably. I'm really pleased you've taken advantage of our hearings to offer input from the perspective of Saint John. You make some very good points on cabotage.

If there was a change in federal legislation that allowed the wholly owned subsidiaries to leave the Air Canada umbrella and compete--and Canadian Regional Airlines would be one too--would this be satisfactory? Do you think Air Nova, for example, would be an effective competitor to Air Canada? Can these regional airlines compete? I shouldn't call them regional because they may be losing their regional status. Is there enough business? What do you think?

Mr. Gerry O'Brien: There have been studies done. Prior to the demise of Canada 3000, the Saint John Board of Trade, together with the entire community, was successful in attracting CanJet, another regional airline, into Saint John.

No sooner did we get it when it merged with Canada 3000. I'm wondering if it is happy it did. But in any event, we were successful in bringing CanJet to Saint John. It was very much a community effort.

The service only lasted for a month after the merger, and it was very unfortunate because the bookings CanJet had out of Saint John--and that was just for Canadian travel. They were overwhelmed. They couldn't believe how many advance bookings they had.

So the market is there for Canadian destinations. Obviously it has to be market driven. In other words, if supply and demand were the only determinant of whether we could have service to the United States for whoever would provide it, we believe very strongly that there would be service coming from the United States or going to the United States, either provided by a foreign airline or a local airline.

There are some things happening at this time that I'm not prepared to discuss, but people are looking very hard at finding someone who will provide that service to Saint John in particular.

¸ (1410)

Ms. Aileen Carroll: Thanks very much.

On the transportation issue, which has historically always had such an impact on our economic development here, I want to ask you about containerized shipping vis-à-vis new American security requirements. I posed that question in Halifax. I can't recall to whom. I don't think it was the Atlantica group, but it was to one of the presenters, because I was surprised nobody brought it to our attention. I was expecting to hear lots about this and what that is going to mean, how it's going to impact Saint John and Halifax.

We did not hear from the Halifax port authority, so to be fair, they probably would have mentioned it, but they didn't come before us.

What are your concerns? If you have concerns on that, how is it going to impact?

Mr. John Furey: Well, this is not a question that as a board of trade we discuss, so I guess what you'll get is a personal viewpoint.

Ms. Aileen Carroll: That's for the record. You're allowed to wing it because I did ask you a question on the expertise you brought to the table.

Mr. John Furey: In any port city you will have a duality of concerns. You will have security concerns, no doubt. You will have business concerns about the cost of additional security requirements, not only in terms of the cost you know about--what you pay for additional security at your port or whatever the case may be--but the opportunity cost, if your shipments are delayed, what business have you lost, what business reputation have you lost.

By no means am I an expert or the right person to propose this, but one solution I've heard spoken of is a broader system involving containerization, and I'm sure that's what you're speaking of, where security is implemented at the outset. There is a set procedure for sealing containers so that there is no possibility, or limited possibility, to interfere during the course of travel, and then at least during the journey security concerns are somewhat diminished. There's an expense to that, and the question is, who bears the expense?

I would suggest that just as the public at large pays for increased security presence at our borders, increased policing, increased military presence, wherever that may be required, if the security measure is required as a result of increased security requirements in the wake of September 11, that also should be borne in a societal context and not by individual exporters, who, quite frankly, may not be able to continue in business if they cannot meet these extra security requirements.

I don't know if that's exactly what you were looking for, but that's one perspective on it.

Ms. Aileen Carroll: I just wanted to...and I didn't realize I was being unfair.

Mr. John Furey: No, no, I'm not suggesting you were being unfair at all. I just wanted to point out at the outset that we're here to represent the Saint John Board of Trade, which is the voice of business in the greater Saint John area, and I don't ever like to pretend to represent an issue that in fact we haven't....

The Chair: I think it's important to say that the Saint John port authority is in Ottawa right now, while we're in their territory. They're presenting there, and it's one of those things.

¸ (1415)

Ms. Aileen Carroll: Madam Chair, they're presenting to one of the standing committees? Transport?

The Chair: Yes, I guess it's the transportation committee. I'm sure they'll be sending us a brief, and we'll also have the opportunity to read what they said to the transport committee. We'll have to put all of that into the mix.

Mr. Baker.

Mr. George Baker: I might say to the junior minister, the parliamentary secretary to the minister, that she need not--

The Chair: Remember this is broadcast now.

Mr. George Baker: Yes, we're going live to Ottawa. That's why I'm saying it. She need not feel as if she's being unfair in addressing a question to Mr. Furey because Mr. Furey is a graduate of Osgoode Hall Law School and was one of our prominent lawyers in Newfoundland until Saint John, New Brunswick, stole him. So you need not be afraid of being unfair to John Furey.

I also want to congratulate Mr. O'Brien and the Saint John Board of Trade. What other board of trade or chamber of commerce in Canada would be appearing before two parliamentary committees at the same time? I would suggest to you that there is no other board of trade or chamber of commerce in this country that's been as active as the Saint John Board of Trade.

I think the Saint John Board of Trade has, over the years, represented the Atlantic region outside of the place that perhaps doesn't need promotion. I'm referring to Halifax. You speak sometimes for a lot of other communities in Atlantic Canada that need the strong voice that the Saint John Board of Trade brings and that Mr. O'Brien has been involved with over the years.

I want to ask you a fairly simple question. Here you have Saint John, New Brunswick, one of our great exporting ports and locations in the country for forest products and for various other things. And here you have an airport that, because of what Mr. Furey refers to as a monopoly situation in the airline industry.... Your major service is in Dash-8s, I presume. Could you explain to the committee, and to those people in Ottawa who will be monitoring this broadcast and reading the transcripts, what the disadvantages are to having a Dash-8 service into an airport when businesses are expecting to be able to transport goods and supplies?

Mr. John Furey: Mr. O'Brien, please feel free to come in on this as well.

The answer is extremely simple, Mr. Baker. There is not the capacity on a Dash 8 to carry any goods of any substantial quantity. It effectively precludes any cargo handling whatsoever via air.

Mr. George Baker: So what you have is a situation where an airline has decided it's going to operate solely out of one city in Atlantic Canada, namely Halifax, Nova Scotia. Everything else from New Brunswick, as I understand it, is actually fed into Halifax as a feeder, and you have to go east before you can go west. Isn't that correct?

Mr. John Furey: Or north or south.

Mr. George Baker: Or north or south. I mean, you have no choice. I imagine the frequency is fairly adequate, but the size is inadequate.

Mr. John Furey: That's correct.

Now, I don't want to be unfair. I don't know the exact number, but we do have a number of connections per week to Toronto that are direct, larger flights. They are not significant, but I would not want anyone at Air Canada to be upset at any perceived misrepresentation. It does exist. It is not sufficient for purposes of any air cargo whatsoever.

Mr. George Baker: I take note of the fact that I was just trying to make reservations to get to other parts of Canada, and I can appreciate the difficulty.

The Chair: Mr. O'Brien.

¸ (1420)

Mr. Gerry O'Brien: Our position is that whatever expanded service we might achieve as the result of airlines coming to Saint John, it should not be because Saint John is disadvantaged; it should not be because we should have it or because we're in Canada and we deserve to have it. We're saying it should be market driven. In other words, if it isn't profitable and people aren't using it, then we don't deserve it.

But as John Furey indicated earlier, number one, for business travel between Saint John and the U.S., Saint John and Toronto...business travel is inordinately high, and in terms of fares, the service is not great. We pay more per mile, I suggest, than most places in this country.

So we are not saying to you that we want air service for the sake of having air service. If the airlines can't make a profit on it, fine. If it means we have to use a Dash-8 or a small jet as opposed to a larger aircraft, fine. In order for us to expand and grow, as we have over the last 12 to 15 years in our economy, in our business community, we need the access. If we have it, we can make it happen.

Also, artificial barriers like regulation, etc., have been a problem of many of the regions of this country for a long time. Until free trade, we were at a disadvantage because our natural north-south relationship was not being recognized. So I think we have to recognize that we are not looking for a welfare case here. We're willing to pay for it.

The Chair: Before I let you go, I have two questions that I want to put on the table. One is that the committee will be in Washington next month, just before the U.S. Commerce Department makes its final determination around the softwood lumber issue. I think there's a deadline of March 21.

I'm sure you've seen Mr. Pettigrew recently on television, and he is determined that we'll take this dispute either before a NAFTA panel or the WTO. Do you support the government's decision? What would be your reaction to this move?

Mr. Gerry O'Brien: Well, you're sitting here looking at two lawyers. They'd probably go to the wall.

I think it is important that we do take a stance on this, because, very frankly, we are this country of 29 million people.

It seems to me that in trade relations with the United States, how many times do we hear Canada complaining about unfair trade practices with the United States? It seems to be a one-way street. If I'm wrong, please tell me. We are the major supporters of the United States. We've been major supporters of them in many efforts that they've undertaken in the last years. By golly, I think they owe us.

The Chair: Secondly, this morning we listened to an economics professor, Professor Rod Hill. His presentation is still circling around my head. His arguments were that further economic integration with the U.S. would not be to the benefit of this region or to Canada as a whole.

Do you have a different perception than this? What do you see as major benefits or major downsides to any kind of stronger North American linkages? Because he definitely did not see us in terms of a North American linkage. He saw us as being a child of the universe, that we should be more global in scope.

Ms. Aileen Carroll: To be fair, Madam Chair, he did say he felt we had reached the point of saturation, where after this it was a matter of the laws of the...[Inaudible--Editor].

Mr. George Baker The chair is just looking for an argument.

¸ (1425)

The Chair: Go ahead.

Mr. Gerry O'Brien: I saw an interview on CTV with Pamela Wallin and the former premier of the Province of Alberta, the Honourable Peter Lougheed, who everyone believes is a very small “c” conservative--maybe other types too.

I was shocked when he said the use of the Investment Canada Act recently has been irresponsible. In other words, it has really been a non-factor. He believes that globalization is very important in terms of the world economy and the Canadian economy; however, there are certain areas of our economy that must be guarded. One thing referred to, I believe, was water. We have to be very guarded in the management and sale of our natural resources.

I must admit, that interview came on at midnight and I had no intention of watching it, but it was so contrary to what I expected that it was very interesting.

I'm very much a free market person and I believe in laissez-faire and as little government as possible, yet I do believe that for our country we have to guard a number of our areas of national importance.

The Chair: The North American relationship...?

Mr. John Furey: I didn't hear Mr. Hill's presentation, but if he is saying that as a country of exporters we should keep our eyes open to the world market, I absolutely agree with him. If he is saying we ought to ignore opportunities to preserve relationships with our single largest trading partner, the United States, I disagree with him. I'm not sure exactly what he said, in fairness to him.

It is imperative that we preserve the ability to maintain our trading relationship with the United States. For further and continued economic development, it is equally imperative that we continue to explore other marketplaces but not give away our existing relationships.

Ms. Aileen Carroll: Here I go, pulling you outside of your area of expertise, but nevertheless--

Mr. John Furey: That's okay. We're lawyers. We'll pretend to be experts at anything.

Ms. Aileen Carroll: You're a jack of all trades.

You've come to give the free trade perspective, and you've done it very well. I am very grateful for the time you've given us and the good insight.

I guess the issue keeps coming up, both within political circles in Ottawa and in hearings today and over the last couple of days, as to how far we can go before we face issues of sovereignty. So I guess I'm moving you--and I'm being upfront--off the economic into the political.

You come as citizens of New Brunswick and citizens of Canada. Are you concerned? Is there a point where we perhaps are putting sovereignty at risk? Do you think the sovereignty issue is being bandied about, perhaps in a manner that's not careful enough? I would like to hear your response, if you don't mind.

The Chair: That's pushing in their direction without using the “s” word.

Mr. John Furey: I can think of a specific example that applies to what you're talking about. An action has recently been taken by a gasoline additive manufacturer from California--and I don't know the name of the company--under the NAFTA. The action involves a Canadian regulation that is different from the American regulation. The Canadian regulation prohibits this additive, and under NAFTA this action has been started for damages.

One view could be that we absolutely need that ability to preserve different standards. Perhaps in Canada we feel that we have a higher sensitivity to environmental issues, or perhaps to any other issue, and if trade issues impact on that ability to legislate in a different direction, that is a concern. That's one point of view.

The other point of view would be that we are absolutely not prohibited. We do not give up sovereignty in any way, because it's merely a cost, and the clear advantages of a free trading relationship with the United States far outweigh the limited circumstances in which this type of action could be taken.

Again, you're getting a personal viewpoint because we have not canvassed that issue, but I subscribe to the latter, that while there may be limited circumstances where these types of actions arise and it's put forward as a challenge to Canadian sovereignty, to the ability of the federal government to legislate in areas that may invite challenges under NAFTA, it may well, but that's merely a cost of doing business.

¸ (1430)

The Chair: Mr. O'Brien.

Mr. Gerry O'Brien: In terms of the sovereignty issue, I think we also have to look to Europe. In the European Community they have gone much farther toward economic union and general union than we have, yet I don't see a major threat to sovereignty. There's a sovereignty of each of those countries.

Some, such as maybe Norway, who have chosen not to go into the union feel very strongly that they.... I think that's related to oil. But I don't think we should allow the sovereignty issue to override what is good for our economy and good for our citizens in terms of economic growth, and so on.

The Chair: Mr. Rocheleau, do you have a question?

[Translation]

Mr. Yves Rocheleau: Regarding sovereignty, you spoke to the issue of borders, saying that the situation is very difficult nowadays regarding the transportation of goods. What do you think of the scenario, the plan or the hypothesis of a North American perimeter surrounding Canada, the United States and even Mexico, to address the entry of people mainly? One could imagine that Americans would then be present on Canadian territory to watch out for their own interests. Just how far can we go in terms of concessions that affect sovereignty?

[English]

Mr. John Furey: I think In some respects we have already gone that far. The precedent that I think of is the establishment of the DEW line through NORAD, which involves the stationing of some American presence on Canadian soil. It's not unprecedented. I don't believe it necessarily involves a large contingent of American personnel. What it requires is satisfying American authorities that what we do in Canada with Canadian resources will meet muster. If we can do that, and that's what we're suggesting, then I don't believe there is the need for an increased American presence in Canada.

I'm not sure if that answers your question, but the answer is, I don't think it's necessary.

Mr. Gerry O'Brien: Surely for two countries that are very similar in terms of most aspects of our lives, isn't it a matter of developing a common standard, one that is acceptable to both countries? Surely if we can't agree on a common standard for the safety of our citizens and our nation, we can't agree on anything.

Some people may believe the United States would want to have a much more stringent standard than the Canadians, but there has to be a common standard that can be met in terms of the continental area. Then we could have the free flow of our goods going north and south.

We are their largest trading partner, even though sometimes the President forgets it, but we will continue to remind him. But the fact is, if we can't come to a common understanding with respect to the safety of North America, then we have a real problem, because as we all know, we are very reliant on the United States for the safety of this continent.

¸ (1435)

The Chair: Thank you very much. This is a good note to end on and to complete our day in this province and in this city. So we thank you very much for your presentation, and we'll now call our meeting to a close. Thank you all.

The meeting is adjourned.