FAIT Committee Meeting

Notices of Meeting include information about the subject matter to be examined by the committee and date, time and place of the meeting, as well as a list of any witnesses scheduled to appear. The Evidence is the edited and revised transcript of what is said before a committee. The Minutes of Proceedings are the official record of the business conducted by the committee at a sitting.

For an advanced search, use Publication Search tool.

If you have any questions or comments regarding the accessibility of this publication, please contact us at accessible@parl.gc.ca.

Previous day publication Next day publication

37th PARLIAMENT, 1st SESSION

Standing Committee on Foreign Affairs and International Trade

EVIDENCE

CONTENTS

Tuesday, April 16, 2002

1530

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

Hon. Pierre Pettigrew (Minister for International Trade, Lib.)

1540

1545

1550

The Chair

Mr. Stockwell Day (Okanagan--Coquihalla, Canadian Alliance)

1555

The Chair

Mr. John Duncan (Vancouver Island North, Canadian Alliance)

Mr. Pierre Pettigrew

1600

Mr. John Duncan

Mr. Pierre Pettigrew

The Chair

Mr. Pierre Paquette (Joliette, BQ)

1605

Mr. Pierre Pettigrew

Mr. Pierre Paquette

Mr. Pierre Pettigrew

Mr. Pierre Paquette

Mr. Pierre Pettigrew

1610

Mr. Pierre Paquette

Mr. Pierre Pettigrew

Mr. Pierre Paquette

Mr. Pierre Pettigrew

Mr. Pierre Paquette

Mr. Pierre Pettigrew

Mr. Pierre Paquette

Mr. Pierre Pettigrew

1615

Mr. Pierre Paquette

Mr. Pierre Pettigrew

Mr. Pierre Paquette

Mr. Pierre Pettigrew

The Chair

Mr. Pierre Pettigrew

Ms. Diane Marleau (Sudbury, Lib.)

Mr. Pierre Pettigrew

Ms. Diane Marleau

Mr. Pierre Pettigrew

1620

The Chair

Mr. John Harvard (Charleswood St. James--Assiniboia, Lib.)

Mr. Pierre Pettigrew

1625

The Chair

Mr. Svend Robinson (Burnaby--Douglas, NDP)

Mr. Pierre Pettigrew

Mr. Svend Robinson

Mr. Pierre Pettigrew

Mr. Svend Robinson

Mr. Pierre Pettigrew

1630

Mr. Svend Robinson

Mr. Pierre Pettigrew

Mr. Svend Robinson

Mr. Pierre Pettigrew

Mr. Svend Robinson

Mr. Pierre Pettigrew

Mr. Svend Robinson

Mr. Pierre Pettigrew

Mr. Claude Carrière (Director General, Trade Policy, Department of Foreign Affairs and International Trade)

Mr. Svend Robinson

Mr. Claude Carrière

Mr. Pierre Pettigrew

Mr. Svend Robinson

The Chair

Mr. Svend Robinson

Mr. Pierre Pettigrew

1635

Mr. Svend Robinson

Mr. Pierre Pettigrew

Mr. Svend Robinson

Mr. Claude Caron (Acting Assistant Deputy Minister, Corporate Services, Passport and Consular Affairs, Department of Foreign Affairs and International Trade)

Mr. Svend Robinson

Mr. Pierre Pettigrew

Mr. Svend Robinson

Mr. Leonard J. Edwards (Deputy Minister for International Trade, Department of Foreign Affairs and International Trade)

Mr. Svend Robinson

Mr. Leonard Edwards

Mr. Svend Robinson

The Chair

Mr. Sarkis Assadourian (Brampton Centre, Lib.)

1640

Mr. Pierre Pettigrew

Mr. Sarkis Assadourian

Mr. Pierre Pettigrew

Mr. Sarkis Assadourian

Mr. Pierre Pettigrew

Mr. Sarkis Assadourian

Mr. Pierre Pettigrew

The Chair

Mr. Bill Casey (Cumberland--Colchester, PC)

Mr. Pierre Pettigrew

1645

Mr. Claude Caron

Mr. Bill Casey

Mr. Claude Caron

Mr. Bill Casey

Mr. Pierre Pettigrew

Mr. Bill Casey

Mr. Pierre Pettigrew

Mr. Bill Casey

Mr. Pierre Pettigrew

Mr. Bill Casey

1650

Mr. Pierre Pettigrew

Mr. Bill Casey

Mr. Pierre Pettigrew

Mr. Bill Casey

Mr. Pierre Pettigrew

Mr. Bill Casey

Mr. Pierre Pettigrew

Mr. Bill Casey

Mr. Pierre Pettigrew

Mr. Bill Casey

Mr. Pierre Pettigrew

Mr. Bill Casey

Mr. Pierre Pettigrew

Mr. Bill Casey

Mr. Pierre Pettigrew

The Chair

Mr. Stan Keyes (Hamilton West, Lib.)

Mr. Pierre Pettigrew

1655

Mr. Stan Keyes

Mr. Pierre Pettigrew

Mr. Stan Keyes

Mr. Pierre Pettigrew

Mr. Stan Keyes

Mr. Pierre Pettigrew

Mr. Stan Keyes

Mr. Pierre Pettigrew

Mr. Stan Keyes

The Chair

Mr. Stockwell Day

Mr. Pierre Pettigrew

1700

Mr. Stockwell Day

Mr. Pierre Pettigrew

The Chair

Mr. Pierre Pettigrew

The Chair

Mrs. Marlene Jennings (Notre-Dame-de-Grâce--Lachine)

Mr. Pierre Pettigrew

Mrs. Marlene Jennings

1705

Mr. Pierre Pettigrew

Ms. Marlene Jennings

Mr. Pierre Pettigrew

Ms. Marlene Jennings

Mr. Pierre Pettigrew

Ms. Marlene Jennings

Mr. Pierre Pettigrew

Ms. Marlene Jennings

Mr. Pierre Pettigrew

The Chair

Ms. Francine Lalonde (Mercier, BQ)

1710

Mr. Pierre Pettigrew

Ms. Francine Lalonde

Mr. Pierre Pettigrew

Ms. Francine Lalonde

Mr. Pierre Pettigrew

Mr. Pierre Paquette

Mr. Pierre Pettigrew

The Chair

1715

Mr. Pat O'Brien (London--Fanshawe, Lib.)

Mr. Pierre Pettigrew

Mr. Pat O'Brien

Mr. Pierre Pettigrew

The Chair

Mr. Svend Robinson

1720

Mr. Pierre Pettigrew

Mr. Svend Robinson

Mr. Pierre Pettigrew

Mr. Svend Robinson

Mr. Pierre Pettigrew

Mr. Svend Robinson

Mr. Pierre Pettigrew

Mr. Svend Robinson

Mr. Pierre Pettigrew

Mr. Svend Robinson

Mr. Pierre Pettigrew

1725

Mr. Svend Robinson

Mr. Pierre Pettigrew

Mr. Svend Robinson

Mr. Pierre Pettigrew

Mr. Svend Robinson

Mr. Pierre Pettigrew

Mr. Svend Robinson

The Chair

Mr. John Duncan

Mr. Pierre Pettigrew

Mr. John Duncan

Mr. Pierre Pettigrew

Mr. John Duncan

1730

Mr. Pierre Pettigrew

Mr. John Duncan

Mr. Pierre Pettigrew

Mr. John Duncan

Mr. Pierre Pettigrew

Mr. John Duncan

Mr. Pierre Pettigrew

Mr. John Duncan

The Chair

CANADA

Standing Committee on Foreign Affairs and International Trade

NUMBER 069

1st SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, April 16, 2002

[Recorded by Electronic Apparatus]

¹ (1530)

[English]

The Chair (Ms. Jean Augustine (Etobicoke--Lakeshore, Lib.)): I would like to call the meeting to order.

From the Journals of the House of Commons, February 28, 2002, pursuant to Standing Order 81(5), the main estimates for the fiscal year ending March 31, 2003, were deemed referred to the several standing committees of the House as follows: to the Standing Committee on Foreign Affairs and International Trade, Foreign Affairs votes 1, 5, 10, 15, 20, 25, L30, L35, 40, 45, 50, and 55.

We are beginning our first meeting in consideration of the main estimates of the Department of Foreign Affairs and International Trade.

I would like to make clear to the committee that we have ten minutes for each member. The first speaker from each party has ten minutes of questioning after the minister speaks.

We welcome Minister Pettigrew to our committee. Minister, you may proceed.

Hon. Pierre Pettigrew (Minister for International Trade, Lib.): Thank you very much, Madam Chair.

Before I make my statement, I would first like to congratulate you, Madam Chair, very warmly on your election as chairperson of this committee. This is my first appearance before your committee since you became chair. I wish you the best of luck in following up on the work of our colleague, the present Minister of Foreign Affairs.

[Translation]

Madame Chair, members of the committee, as you know, the past year has been quite eventful. It has been a year of tragedy and triumph; a year in which Canadians lost their comforting sense of splendid isolation; a year that reminded us how important our democratic values are and how crucial it is that we engage the rest of the world and help spread our ideas, and our ideals.

On the trade front, there have been some disappointments, some frustrations and many successes.

In the year ahead, my officials and I intend to address and resolve many of the disappointments and frustrations. More importantly, we will continue to build on past successes and capitalize on new opportunities.

[English]

I should have introduced to you, Madam Chair, and to the members of the committee the two individuals who are accompanying me at this table today. I would like to introduce our Deputy Minister for International Trade, Mr. Len Edwards, who was here last year as well.

[Translation]

I am accompanied by Mr. Claude Caron, who is the Department's Director General of Finance. He is here to help me answer any questions about figures, because he is the one who manages the finances of our department.

[English]

As some members know, this morning I released a document entitled Opening Doors to the World: Canada's International Market Access Priorities 2002. It is more commonly referred to as the CIMAP report. Given the overwhelming importance of trade to our economy, securing access to new markets is essential to our long-term prosperity. The document released today can be described as a blueprint for our actions to reduce and eliminate trade barriers and thereby advance free and fair trade. You have it here. I think you all have copies.

The report sets out the range of initiatives the government will pursue in 2002 at the multilateral, regional, and bilateral levels, and provides details on specific obstacles to be tackled in various markets. Of course, given Canada's great success as a trading country, our list of priorities is quite long. Today I will mention our key trade policy and trade promotion priorities. I encourage everyone to consult the full CIMAP report to get a more detailed review of some of the objectives.

Given that Canada's exports represent 43% of our GDP, and 82% of our goods and services exports go to the United States, it is understandable that our number-one priority is managing our trade relationship with the United States. It is also understandable that since September 11, ensuring that we have a safe, effective, and efficient border has become the overriding task. It is clearly of the utmost importance to our economic health.

Most members are well aware of the Government of Canada's concerted efforts to work with the United States to facilitate the free movement of people and goods across our common border, while taking steps to ensure the security of the citizens of both countries. The efforts led to the signing of our border accord last December.

Another priority related to our relationship with our United States neighbour is our ongoing work to ensure continued access to the United States market for Canadian softwood lumber. Canada's forest products industry has demonstrated it is more productive and more competitive than its United States counterpart. Unfortunately, instead of making an effort to compete, the United States lumber industry has used its political muscle to try to change the rules of the game.

Thanks to the World Trade Organization, we have challenged and beaten the United States several times in the past. I firmly believe we can do so again.

The perpetual cycle of litigation is costly, ineffective, and is very destabilizing for the economies of many communities across Canada. It hurts too many families. As we work to remove the unfair and punitive barriers to Canadian softwood, we will also pursue our talks with the United States government to find a permanent solution to this longstanding dispute.

Of course, the cornerstone of our trade policy remains the WTO. I will take a moment to underline the remarkable success we had at Doha last year.

[Translation]

In Qatar, Canada and the 141 other WTO members succeeded in launching a crucial new round of trade talks. Known as the Doha Development Agenda, these negotiations will address the needs of poorer countries, while fostering greater prosperity for developing and developed countries alike.

However, while Doha was a great achievement, it is sobering to think that it is only the first step in a long process. One of our most important priorities in 2002 will be to push these WTO negotiations forward, to promote Canadian interests in such areas as agriculture, services and industrial products.

Because, if there's one thing that is absolutely clear, it is that a small country like Canada needs a rules-based international trading system. We have demonstrated time and again that, when we meet on equal ground, we can take on and beat the biggest countries in the world.

Another priority is the Free Trade Area of the Americas initiative. We are working hard to build the largest free trade zone in the world by 2005. It will be a market with tremendous potential for Canadian businesses, large and small.

That is why Canada will seek to begin sectoral market access negotiations by May 2002. To move this process forward, we will also work to establish an institutional structure for the FTAA and continue to enhance the participation of civil society in the FTAA process.

Even as we engage in multilateral efforts to liberalize trade, we also complement these efforts with regional initiatives. We will, for example, build on our bilateral achievements in Latin America, where last year we signed a new free trade agreement with Costa Rica, by pursuing our trade negotiations with the central American four: Guatemala, Nicaragua, Honduras and El Salvador. We will also continue our discussions with Singapore.

At the same time, we will continue to pursue many other objectives around the world, seeking to eliminate barriers to goods and services, whether they be in Mexico, the European Union or Japan.

¹ (1540)

[English]

Some may regard this as an overly ambitious agenda, but I am confident we can attain our objectives. I am strengthened in this conviction by the important achievements accomplished last year. After all, many skeptics thought the WTO talks in Qatar would fail. Farmers were discouraged about the United States ban on Prince Edward Island potatoes. Cynics scoffed at the idea of exporting wine from Canada to Europe, and compared it to selling coal to Newcastle. But we either succeeded in or are in the process of finding a satisfactory resolution for every one of those issues, and many others besides.

Canada also successfully spearheaded the campaign for transparency in the free trade area of the Americas negotiations, giving citizens access to the draft negotiating text--a world first. The list goes on and on.

But what do these achievements mean in real terms? What impact do these victories have on the lives of hard-working Canadian men and women?

Next month I will be presenting Canada's third annual state of trade report, and providing an in-depth analysis of the benefits and successes we have experienced in our international trade. I don't want to scoop myself, but I've seen some of the numbers, and they indicate that we did very well last year, despite the economic difficulties witnessed around the world.

To give you a bit of a sense of what's in store, I will say that Canada registered yet another record trade surplus in 2001. The state of trade report will also note how the composition of Canadian trade is changing. For example, in just ten years we have seen our exports of machinery and equipment go from $29 billion to almost $100 billion.

[Translation]

As one would expect, all of these numbers mean more jobs for Canadians. And since our exports are increasingly in high-skill sectors, it means that Canadians are benefiting with high-wage jobs.

I am very pleased to report that Canadians increasingly understand the benefits of trade. More than eight out of ten Canadians recognize that trade has become more important to our prosperity than ever. They are aware that our trade performance was a critical factor in bringing our economy through this recent period of uncertainty.

In 2001, even in the face of tremendous uncertainty, Canada's impressive trade performance had immediate job-creating benefits for Canadians. Indeed, 167,100 net new jobs were created in Canada last year, linked in part to trade with the world. In fact, an estimated one of every four jobs in Canada is linked to our export success in global markets.

But Canadians do have a typically balanced view on trade. While they overwhelmingly support our trade agenda, they want to be assured that our key values are respected. In fact, it is a deep-rooted commitment to those very same values that has led the Prime Minister, myself and others in the government to link economic development, openness and the promotion of democratic values to trade.

That spirit was behind the democracy clause signed the hemispheric leaders at the Summit of the Americas. Our Canadian values helped put international development at the heart of the Doha talks. And it our values that have inspired the Prime Minister to make the Action Plan for Africa such an important component of the G-8 Summit in Kananaskis.

¹ (1545)

[English]

For all these reasons, trade promotion will continue to be a priority for this government, both for me personally and also for the dedicated and professional trade promotion experts at the Department of Foreign Affairs and International Trade. The Prime Minister set the tone for trade promotion in 1994 with the creation of the Team Canada trade mission concept, and that focus has been maintained to this very day.

Indeed, during our recent Team Canada mission to Russia and Germany, Prime Minister Chrétien, most provincial premiers, and I were able to help several hundred Canadian business people open doors to these markets and thus greatly enhance their prospects for success. In addition, in November Team Canada travelled to Texas and California to attract more job-creating investment into Canada.

Later this week I will be leading a trade mission to India, yet another market with great potential for Canadians. I'm very happy to share with you, members of the committee, that this is the largest-ever trade mission led by a minister to leave Canada. There will be more than 100 business people participating in that trade mission to India, which is very significant, and we have good prospects for excellent business during that trade mission. So I'm very much looking forward to it--hoping that my cold will be gone by then.

The Department of Foreign Affairs and International Trade is also constantly engaged in promoting Canada and Canadian businesses through our impressive network of trade commissioners, working in embassies and consulates around the world. In this regard, I am happy to report that surveys reveal that our clients, mostly small and medium-sized businesses, are highly satisfied with the Trade Commissioner Service.

But I want to emphasize as well the importance of investment promotion. We have plenty of evidence that Canada is the best place in the world in which to do business. Members have seen the KPMG study released in January. Canada has the lowest costs for manufacturing enterprises. We also have the best-educated workforce, the lowest regulatory barriers to entrepreneurship in the OECD, and the most favourable business tax regime, not to mention political stability, a clean environment, a highly educated workforce, and a strong social safety net.

The KPMG study is not the only one to describe Canada as a very attractive site for investment. According to the Economist Intelligence Unit, the EIU, Canada ranks as the second-best place in the world to invest for 2002-06. While the Netherlands garnered first position, Canada outpaced the United States, the United Kingdom, and Switzerland, which are third, fourth, and fifth.

According to the Economist Intelligence Unit, Canada's ranking is due to our strong macro-economic environment and market opportunities, an increasingly liberalized policy framework, and excellent infrastructure. The Economist Intelligence Unit notes that Canada's attractiveness has also been enhanced by tax cuts.

¹ (1550)

[Translation]

The New Canada's excellence, based on ingenuity and knowledge, goes beyond our innovative industries, our exceptional workforce, and the creative power of our research and development. The New Canada is captured in the imagination of our artists, the influence of the words and ideas of our cultural communities. It is reflected in our cosmopolitan country, the many and varied people who are the human face of the New Canada. It is reflected in our values, which underlie our notions of fairness, our commitment to health care, education and equality of opportunity. These are compelling attractions for companies and entrepreneurs to make Canada their new business destination.

I am telling you this because I believe it is the responsibility of each of us to inform the rest of the world about the New Canada. In so doing, we will help to attract more foreign investment, get more businesses to set up shop here in Canada, and create jobs here in Canada.

[English]

The world is increasingly interconnected, Madam Chairperson. To succeed in the global marketplace, to enjoy the prosperity that Canadians claim as a birthright, Canada must be a leader among trading nations. Fortunately, we have hundreds of dedicated professionals engaged on our behalf.

As the volume of trade and the number of agreements increase, departmental officials are being called upon to play key roles around the world: helping with WTO negotiations, implementing the “smart border” declaration with the United States, and supporting the ongoing efforts of Team Canada. Thanks to their hard work and the dynamism of Canadian business people, we are very successful at the moment and Canadians are reaping the benefits. But we cannot let up. The competition is fierce and unrelenting. Equipped with our 2002 market access objectives and the proof of our competitiveness, I am confident that we have the plan that will lead to more successes in the months ahead, for the good of all Canadians.

Merci beaucoup, madame la présidente.

The Chair: Minister, thank you very much.

We'll go directly to questioning and we'll start with the official opposition. I understand Mr. Day and Mr. Duncan will split the ten-minute question time.

Mr. Stockwell Day (Okanagan--Coquihalla, Canadian Alliance): Thank you, Madam Chair. As indicated, I'll make a few comments and then my colleague will be asking some specific questions of the minister.

I just want to say right off that in the past, in another life, I've enjoyed working with the minister, co-chairing a committee of social service ministers. With the minister present representing the federal government, we achieved an increase to the child benefit without any incursion into provincial jurisdiction. It was a major achievement. I say that to recognize the minister's capabilities, and also to show that I'm not blindly partisan, as I now shift the tone of my remarks to some other issues.

I do appreciate working together, but the softwood lumber file, which my colleague will be addressing specifically, has of course resulted in economic chaos and financial adversity, certainly for thousands of my own constituents and for tens of thousands of Canadians. We'll address that specifically.

I'd like to leave the minister with some comments in terms of the future approach I'll be taking to advise him and his officials. I will be asking if he'd be able to bring forward, in the days ahead, the template that he or his official used to evaluate the significant expenditure of hard-earned taxpayer dollars on each of the programs within his jurisdiction. It's a template that I hope would, at minimum, include the clearly stated goals of each program and a list of the evaluative measures that are used as the program progresses, and then will be applied to each program in audited results of the outcomes at the end of each fiscal year or at the end of the program. I would suggest that they clearly are needed in any government undertaking or business undertaking.

Especially related to the comments the minister just made, if Canada is indeed the most favourable place in the universe to invest, I do wonder why the ROI and the markets themselves don't reflect that and why there's a huge pressure from within Canada for the foreign investment totals to always be on the increase so people can take dollars out of Canada. That's just a reflection in terms of the evaluative measures I'd like to see coming forward, and I'll be more specific with the minister in the days ahead.

I will ask my esteemed colleague, the member from North Vancouver Island, to continue with direct reference and some questions related to softwood lumber.

Thank you, Mr. Minister and Madam Chair.

¹ (1555)

The Chair: Thank you.

Mr. Duncan.

Mr. John Duncan (Vancouver Island North, Canadian Alliance): Thank you.

You made reference, Minister, to your trip to India and Pakistan, April 21 to April 26. I assume you'll be attending the softwood summit in Vancouver on April 29, called by the Premier of British Columbia.

On two or three occasions the federal government has promised a stakeholders meeting and it's never occurred. It was supposed to happen prior to negotiations. When will the minister be calling a very important national meeting like the one called by the Premier of British Columbia?

Mr. Pierre Pettigrew: First of all, thank you very much.

I would like welcome Mr. Day to this committee, to congratulate him, and to wish him good luck in his new responsibilities. I also cherish some very fond memories of our past collaboration together on the social union of Canada. I hope we can do the same things in how we're reflecting Canada's interests abroad in foreign policies that we did on social affairs.

Without going into the specifics, I would like to have at least one comment on why it is that the market is not always reflecting the extraordinary story of Canada in the 1990s. I think we have a branding problem. Good stories take a long time to permeate international public opinion.

Because there is so much going on, people don't speak about Canada a great deal and it takes a long time for good news to come out. Very few people know that only a third of our exports are related to commodities, whereas 20 years ago it was two-thirds. Very few people know that we export 46% of our GDP and that manufactured and high-tech goods make up two-thirds of what we export. We exported only 25% of our GDP 10 years ago.

These stories are surprising even to Canadians. So it is important that we better inform the economic decision-makers around the world. This challenge is certainly welcomed by my department and myself. But as I mentioned, all parliamentarians have an important role to play here.

When we are in Canada, it is normal for the opposition to question this and that. But when we go abroad, we have a great story to tell. When we are abroad it is very important that we focus on the positive improvements we are experiencing, and I have had very good, constructive experiences of this with many of the members with whom I have travelled. It's important to position Canada as it is and give the country credit for some of the good things that have happened.

As for the softwood lumber question Mr. Duncan has posed, yes indeed, I will be participating on April 29. I am very grateful to Premier Campbell for accommodating my schedule to allow me to participate, because on the first date he proposed I would have been in India. Unfortunately, I will not be going to Pakistan; I had to cut my trip short in order to be at the softwood lumber summit in British Columbia.

You said that in the past the federal government was very often asked to hold a meeting of stakeholders. I want to reassure you that whenever industry has wanted a meeting with me, either collectively or individually, it has happened. I have travelled to B.C. regularly. I know that often in the House some members in the opposition were asking.... We called the industry and the softwood lumber people. They told us that they didn't think the time was right or that they believed we understood the file well and that they haven't changed their positions since the last time.

We are quite open to a meeting on softwood lumber like the one B.C. is organizing for April 29 at the national level, but our industry needs to be open to it as well. The softwood lumber summit of April 29 will be very useful, and I'm looking forward to being there. We will already have a good half of the industry there, and I would be quite open to making sure that we continue to consult the rest of the country as well.

º (1600)

Mr. John Duncan: We're now hearing from the senior minister from British Columbia, who is talking a lot about softwood lumber, that there will not be any announcement until early May to help forest workers, stakeholders, and so on. The only conclusion one can come to is that once again the Canadian government is waiting until events that are controlled by our American partners unfold. So my question is, number one, who's in charge, you or Mr. Dhaliwal? Number two, why are we once again waiting until the U.S. makes its move before we do what is necessary for our constituency, which is the forest workers and the stakeholders?

Mr. Pierre Pettigrew: First of all, my colleague Herb Dhaliwal is not only the political minister for British Columbia but also the Minister of Natural Resources. As far as I know, softwood lumber is a natural resource. So that explains his interest in the file, both by his political responsibilities to British Columbia and the fact that softwood lumber is a very important part of his responsibilities as the minister who works with the provinces on natural resources.

As to my other colleagues involved in the file, in Canada we have a system of ministerial responsibility. The Minister of Industry has a number of tools, and the Minister of Human Resources Development has a number of tools. My responsibility as Minister for International Trade is to negotiate with the United States and, working with my colleagues, to make sure we have the best possible Canadian position.

As to what needs to be done, we have been working on this very closely with industry in the past few months and years. We're looking at options for the government, and we're consulting regularly with individual industry members here and there.

Unfortunately, I have to tell you that there has been no change in the dynamic in our discussions with the United States in the sense that it remains where we left it when we broke off the negotiations on March 20, the day before they gave us that 29% punitive measure.

But we are very confident in our legal case. We do believe that we have a solid case. We had one at the WTO in the past. We do not think that NAFTA will be more of a problem than it was at the WTO--on the contrary. NAFTA's decisions are binding, as you know. So we're very confident. We are on the track we had identified. It is a two-track strategy. One was discussions and trying to identify a solution. Unfortunately, the dynamic around that one has not changed in the past few weeks, and I regret that. But on the litigation front, the legal expertise I'm getting is very confident that Canada's case is strong.

The Chair: Thank you, Minister.

We've used up our ten minutes.

We now go to the Bloc.

[Translation]

Mr. Pierre Paquette (Joliette, BQ): Thank you, Madame Chair.

Thank you for your presentation, Mr. Minister. We have many questions. I think that I will first put all my questions and then let you answer them. My questions will focus on three issues. The first question deals with the negotiations for the Free Trade Area of the Americas.

In the departmental document entitled Report on Plans and Priorities, I was surprised to note that no mention is made of consultations with civil society. I know that this issue is discussed in the document that you tabled this morning. We are often left with the impression that these consultations are more about public relations than real consultation, particularly since—and my questions will focus on this issue—we still do not know what positions Canada is taking in the negotiating process for the Free Trade Area of the Americas on services, dispute settlement and intellectual property.

I would now like to turn to the issue of investment, where our position, I must confess, is not very strong. We read that Canada is not seeking to reproduce the mechanism found in NAFTA in the FTAA agreement. “Is not seeking to reproduce” doesn't mean that we are absolutely against using this mechanism again. I would also like to have some further clarification on this matter, particularly since the Canada-Costa Rica Free Trade Agreement refers to the 1998 Agreement on Investment, which is more or less a reproduction of chapter 11 of NAFTA. In my opinion, the Canadian positions on this matter are contradictory.

In the report, you also mentioned that you are going to try to further clarify the investment provisions of NAFTA with the Americans. What we got in July is, in my opinion, completely inadequate. I would imagine you have been told that the Canadian Association of Journalists almost gave the code of silence award to the Department of International Trade because it was so difficult to find out what was going on in the arbitration panels established under chapter 11 of NAFTA. Indeed, the Department of Justice wound up with the award for its Bill C-36, but your department was the runner-up.

When will we find out what the Canadian positions are?

º (1605)

Mr. Pierre Pettigrew: Given that the publicity was good, I'm almost sorry that we didn't get it.

Mr. Pierre Paquette: There is good publicity and bad publicity, especially for somebody who boasts about being transparent. I think that's the image you would like to have.

When we will find out about the Canadian proposals? Can you guarantee that the draft negotiating texts will be made available on a regular basis? You boast, and rightly so, about the fact that the texts were made public in July 2001, but these are texts that...

Mr. Pierre Pettigrew: Thank you for congratulating me once again.

Mr. Pierre Paquette: Moreover, here in the Committee we put a lot of pressure on you to do that.

These are texts that date back to November 2000, according to the information we have received. That means the texts were written a year and a half ago. I would image that there have been some changes since then. Can you guarantee that the texts will be made available on a regular basis? I know that a meeting of international trade ministers is scheduled for next October. Could we have access to these texts before the next meeting? I am making this a request because we need to have a real public debate on the issues involved in the Free Trade Area of the Americas.

My second question pertains to the Canada-Israel Free Trade Agreement.

Mr. Pierre Pettigrew: You said that that was your first question. I thought that you had just asked me more like 14 questions.

Mr. Pierre Paquette: The second question is simple.

Mr. Pierre Pettigrew: No problem.

º (1610)

Mr. Pierre Paquette: Does the Canada-Israel Free Trade Agreement make any distinction for products that come from the territories that have been occupied by Israel since 1967? It seems to me that this is contrary to the spirit of the Agreement. Canada does not recognize the occupation. It seems to me that we should be asking for certificates of origin, as the European Union does, so that we are in compliance with our positions on the issue. Once again, it seems to me that what we do and what we say are in complete contradiction.

I have one final question to ask you. This question deals with the softwood lumber file.

You were questioned many times in the House about whether or not you are about to propose a plan to assist both the industry and the workers. You did not want to answer. I would like to know whether you agree with the statement that any federal government plan to assist the softwood lumber industry, regardless of what it contained, would not have an impact on the cash deposit rates before the initial administrative review by the Americans in 2004. Consequently, we would already have the WTO and NAFTA response with respect to our claims that we do not subsidize our softwood lumber industry—which I totally agree with—prior to the administrative review. Given the situation, it seems to me that the reluctance often demonstrated by our officials and government members to implement an assistance program because of the potential consequences that it may have, is not founded.

These are the three questions that I wanted to ask you.

Mr. Pierre Pettigrew: I will begin by answering your third question. In fact, I have given most of the answer already. Any measures we eventually take to assist the industry can be set up so that we are not vulnerable to allegations. Some types of assistance measures could be viewed as subsidies to the industry. It all depends on how things are done. That is why we have to look at all the different options and measures available. We cannot apply just any form of assistance, because U.S. allegations could be varied according to the program we implement.

Mr. Pierre Paquette: But before there is any decision by the U.S. authorities, and before any subsequent measures are implemented, we could still review the issue in 2004.

Mr. Pierre Pettigrew: I understand that, but we are a government with a vision, and since we still intend to be the government in 2004, we want to be absolutely sure that in 2004 we can live with the measures we take today.

Mr. Pierre Paquette: Unless you negotiate downward.

Mr. Pierre Pettigrew: Secondly, as I said, the Canada-Israel Free Trade Agreement provides for rules of single origin, under which Israel, the West Bank and Gaza make up a single customs zone. No distinction is made in the rules of origin, or in product origin.

Mr. Pierre Paquette: Europe had to intervene to force them...

The European Union prohibited juice imports originating from occupied territories. But Israel provided Israeli certificates of origin that made no distinction...

Mr. Pierre Pettigrew: These rules of single origin, which are in compliance with the Paris Protocol, signed in the wake of the Oslo agreements, has made it possible for Palestinian exporters to get free access to the Canadian market.

Canada has always been opposed to the establishment of Israeli settlements in occupied territories, because we believe that they constitute an obstacle to peace. Canada subscribes to the UN resolution requiring the withdrawal of Israeli armed forces from those territories.

º (1615)

Mr. Pierre Paquette: I would submit that there is an inconsistency here. If Israel withdrew from the occupied territories, then the Cooperation Accord with Palestine would apply.

Mr. Pierre Pettigrew: You asked me a significant number of questions on the FTAA. I wrote some of them down. If I forget any, it is by mistake and not because I am trying to avoid them.

I am truly astonished. You do not really believe that we consulted civil society. You think it was just for show. That does not really do justice to the role that Canada played in integrating all the consultations and dialogue with civil society in the Americas. Like me, you have travelled throughout the Americas, in Latin America, and you have seen the ground we covered with our colleagues from the hemisphere, in our discussions on civil society, in our dialogue with civil society.

I remember that, in Toronto, when I was chairing the ministerial meeting preceding the one held in Buenos Aires on the FTAA, I invited civil society in the Americas to participate in a meeting parallel to our ministerial meeting. I succeeded, in some cases by ruse, in getting colleagues who wanted nothing to do with civil society to participate in a meeting where 21 out of 34 ministers had agreed to take part in a dialogue with civil society. That was a first; it had never been done before.

You must acknowledge that we are committed. At the meeting in Buenos Aires, we succeeded in institutionalizing civil society within the framework of the FTAA. Once again, this was a truly Canadian initiative and we went to great lengths to convince our colleagues.

You talk about transparency. The opposition asked questions, of course. But it was Canada's agenda, it was our will. I can believe that you want to take the credit, because you asked a question. Just because you ask a question, it does not mean the government disagrees. We did not have transparency and a published version of the text of the negotiations because of pressure from the opposition. It was primarily because we were convinced and completely committed to wanting the text of the negotiations to be made public that they were. We have convictions that do not come solely from questions from the opposition, but that stem from the way we view trade negotiations, transparency, and globalization. I wrote a book on that, in which I say that it would be to our advantage to move in that direction.

So do not tell me that the opposition raised questions. I was there long before you were even a Member of Parliament.

Mr. Pierre Paquette: I hope I will not be here as long as you.

Mr. Pierre Pettigrew: Well, that will depend on the voters in Joliette.

[English]

The Chair: Excuse me, Monsieur Paquette, you have used up your time.

I've also been a very patient chair. The conversation has not gone through the chair. So we will try to be civil, and I will call your attention to that.

M. Pierre Paquette: Ce n'est pas M. Paquette, c'est M. Pettigrew.

The Chair: We'll move on then to Madame Marleau, and I'd like the chair to be included in the circle here. Thank you.

Mr. Pierre Pettigrew: Madame Chair, I do regret the spontaneity of some of my....

Ms. Diane Marleau (Sudbury, Lib.): Madame Chair, through you to my honourable colleague, I want to talk about Mexico and NAFTA and also some of the things that I've seen.

I've just come back from Mexico City with the committee, and one of the things I've realized is that we signed NAFTA and we really haven't done very much to work more closely with Mexico. We've done a few things, but not a lot. I look at what happens with the European Union when they sign agreements with less-developed countries. They have generally gone in with other programs to help the less-developed country attain a more level playing field, but we haven't done that with Mexico. The Americans obviously have not done it either, but I believe we should not always wait for the Americans--and in this case, we should not wait for them at all, because they may never do this. We should put forward a program to work more closely with Mexicans, and if the Americans wish to join us, so be it, so that Mexicans can better benefit from this trade agreement, and as well, Canadians themselves will benefit more if Mexicans are brought up.

I would really like us to consider, and I hope this committee will recommend, a fund of some sort, for university exchanges, for a lot of things that would enhance our cooperation between the two countries and enhance the free trade agreement that we have with the three of us. What do you think of that?

Mr. Pierre Pettigrew: I welcome that suggestion.

I remember in my first job when I joined the cabinet as Minister for International Cooperation, I had gone to Mexico and worked on the education front, and I did see the huge potential that is there. We do have some--

Ms. Diane Marleau: But very little.

Mr. Pierre Pettigrew: --but very little, and I would certainly agree with you that should it be possible. We should increase those budgets.

As trade minister, I will be leading a trade mission to Mexico in early June, which is another way of working more closely with the Mexicans. So I will be visiting Mexico with a Canadian trade delegation in early June, but I do agree with you that it's a great partner. NAFTA has helped Mexico a great deal, but there is more potential in that relationship and in a number of other angles.

Ms. Diane Marleau: Madam Chair, the Mexicans seem to be trading almost exclusively with the Americans. They are becoming their second greatest trading partner, after Canada. I think they're quickly overtaking us, if they haven't overtaken us already.

Mr. Pierre Pettigrew: No, they're miles away.

Ms. Diane Marleau: Well, they're getting there.

So I ask you, I know you're going to do a trade mission, but are there other ways in which Canada can enhance our direct trade with Mexico? Yes, a trade mission, but there must be other ways so that they are trading more directly with us as well.

Mr. Pierre Pettigrew: Yes. The trade mission is certainly one of those tools, and let me be clear with you on this here: When the Mexicans do better in the American market, I don't see that as a zero sum game. I think it is good for Canada that Mexico is doing well. I think it is good for Canada that Mexico is now opening up and progressing, because they're partners, they're friends, and they will buy more Canadian goods when they can afford it.

So I am a great supporter of Mexican development, and I don't see this as a race as to who has the biggest volume of trade with the United States. Of course, we should work hard at improving and increasing our access to the American market all the time, and we've moved up substantially in the last few years and I'm very proud of that. But when the Mexicans do too, it's not negative for us, because it means that the 85 million of them will progress, develop, and have the capacity to buy more Canadian goods as well. But we must make sure that we do that. That's why I've decided to lead a trade mission there in June.

Ms. Diane Marleau: Thank you.

º (1620)

The Chair: Thank you.

All right, we have five minutes left on this side. Mr. Harvard.

Mr. John Harvard (Charleswood St. James--Assiniboia, Lib.): Thank you, Mr. Minister.

I want to ask you a couple of questions around the trade relationship we have with the United States. I don't have to tell you it's robust; it's the biggest in the world. As Canadians, we enjoy the fruits of that relationship, but as you know, it's very frustrating as well. I think they pushed us around on softwood. When it comes to agriculture they still hound us on the Wheat Board. They have what I would call obscene agricultural subsidies, and if anything, if you look at the Farm Bill in the United States, it might get even worse.

Given these frustrations and developments, is it time to re-examine our relationship with the United States, with the view to somehow making it work a little more smoothly?

My other question is on the dependency we have developed on trade with the United States, where it's 87% of our GDP, or something. In one way it's very nice. It's a very handy market, and a lot of businesses have made a lot of hay out of that market just down the road. But I'm wondering if we have become over-reliant on it. If so, can the government do anything to reduce that dependency a lot?

I know it's very hard to tell a businessman, “Maybe you should turn down this deal. It's fat and juicy, but maybe for the sake of the country we shouldn't be so dependent.” You know, it can backfire to some extent.

In order to perhaps offset that huge reliance on the U.S. market, have we done anything as a government to build trade elsewhere--for example, on the European continent? Is a free trade agreement with the Europeans possibly in the cards? That's what I would like to know.

Mr. Pierre Pettigrew: Thank you very much, colleague.

You've described the United States trade relationship very well. It is one that is very successful, bears a lot of fruit, but that brings along from time to time frustration, and that is the nature of the beast. I am extremely frustrated, of course, with softwood. That's clear. I've said a great deal about that.

Let me express myself on the Farm Bill. We made an agreement in Doha in November to eliminate or phase out, as we said--the words are important here--export subsidies in agriculture and to reduce substantially domestic subsidies, and the Americans just ignore completely what we've established in Doha.

So it's all very nice to negotiate and triple it, and then they say fine, we'll just double what we've already tripled. It's not a big commitment, and I don't like that.

I was very proud of my colleague, the Minister of Agriculture, last week in Washington. He expressed it very well, very loud and clear. On the Wheat Board they've been at it eight times--eight times! Now they seem to say they want to go at it a ninth time. We'll win. We've won eight times. We'll win again. But that is of course very frustrating.

Are we too reliant on the United States market? If you look at any country on the planet with a general developed economy a bit like ours, they sell 80% of their trade 1,000 miles from their border, and the problem in Canada is that 1,000 miles from the border there's only the United States. It's our blessing, because it's an extraordinary market, a very rich market and one that likes to consume a great deal.

So we are no different from any of the countries on the planet that export normally around 1,000 or 1,500 miles from its border. But that creates a geographic problem. Are we trying to offset it? We're both working and doing the best possible job we can in the United States, because it's an extraordinary market in which we have a lot of success. But you will notice that the vast majority of the Team Canada that Prime Minister Chrétien leads, or trade missions that the Minister of International Trade will lead, go elsewhere than the United States. We conduct some in the United States, but the vast majority will be like the one I'm leading in India or anywhere else.

On the EU and free trade, that has been raised in the past. There has been resistance, unfortunately, from the European Union side. I deplore it. I do believe that we should really try to improve our access to the European Union market. I will continue to discuss it at the next European Union summit in Toledo, Spain, where I will be on May 8 accompanying the Prime Minister. We will discuss it. We are conducting studies right now in my department, and the European Commission is as well.

Let me conclude with the United States and the European Union. We have now the WTO negotiations coming up. I have my list, and my department is working on what Canada's objectives are for improving our access to the European Union through the multilateral negotiations of the WTO. And it will be the same with the United States.

There's something very important that people did not realize about the trade ministerial of the FTA that was held in Buenos Aires last week. The Americans put on the table their dumping and trade laws, and if they put it on the table in Buenos Aires with the FTA they will have to put it on the table at the WTO. And that is for Canada a very promising venue, which will take time, but down the line it could be quite significant in improving our access.

º (1625)

The Chair: Thank you, Minister.

Mr. Robinson, you have your ten minutes.

Mr. Svend Robinson (Burnaby--Douglas, NDP): Thank you, Madam Chair, and thanks to the minister for coming back to the committee.

I have a number of questions. My first question actually flows from the minister's statement, and in particular the section he has called “exporting Canadian values”. The minister referred to the democracy clause signed by the hemispheric leaders at the Summit of the Americas.

A few days ago there was an attempt to overthrow the democratically elected government of Venezuela led by Hugo Chavez. Many countries in the region spoke out strongly against that attempted military coup: Peru, Colombia, and others, including Mexico. The United States shamefully supported the attempted coup. So much for a democracy clause. But Canada's silence was absolutely deafening, Mr. Minister.

What is Canada's position and what was Canada's position with respect to the attempt to overthrow the democratically elected government of Venezuela? And what does a democracy clause mean when we're silent?

Mr. Pierre Pettigrew: I'm sure you had the opportunity to discuss it with the minister responsible, the Minister of Foreign Affairs.

Mr. Svend Robinson: You're bragging about the democracy clause. I'm asking if it means anything.

Mr. Pierre Pettigrew: You are asking a question that is really the prerogative of the Minister of Foreign Affairs. He will be here tomorrow, so I will beg your patience. I will ask our people to make sure he knows of your interest in the question.

Mr. Svend Robinson: Let me ask a general question then. What does the democracy clause mean when there's an attempt to overthrow a democratically elected government?

Mr. Pierre Pettigrew: Listen, I'm the Minister for International Trade. I was involved in the issue on the free trade area of the Americas. The trade agreement was part of the democracy clause. It was under the umbrella covered by the democracy clause that gives it some further significance and substance. For a country that would not pass this criterion of the democracy clause, you will have the opportunity of discussing it with my colleague, the Minister of Foreign Affairs, tomorrow.

We have a great advantage that all the countries of the hemisphere really support, which is the free trade agreement of the Americas and access to the free trade zone. We have a problem with the free trade zone too, but it's another point.

º (1630)

Mr. Svend Robinson: We've seen that the democracy clause is a joke, certainly when it comes to Venezuela.

Mr. Pierre Pettigrew: It's not what a lot of people think, Svend. I don't think it's a joke.

Mr. Svend Robinson: I want to move to another issue.

A Canadian businessman, James Sabzali, was recently convicted, among other things, for selling water purification supplies to Cuba. He was convicted under the U.S. Trading with the Enemy Act.

I want to ask the minister a very specific question. Does the minister believe the extra-territorial application of United States law, in the context of the U.S. blockade, is in accordance with the American commitments under NAFTA?

Mr. Pierre Pettigrew: There is something I missed there.

Mr. Svend Robinson: The Americans say they believe in free trade.

Mr. Pierre Pettigrew: Yes.

Mr. Svend Robinson: Yet they're applying their law extra-territorially under Helms-Burton.

Mr. Pierre Pettigrew: We've always questioned that right. We've always said we did not believe extra-territoriality was acceptable.

Mr. Svend Robinson: Right.

Is it in fact in accordance with the NAFTA agreement? If not, are we prepared to file a complaint under the NAFTA complaint provisions?

Mr. Pierre Pettigrew: You can answer the member.

Mr. Svend Robinson: Will the minister answer, or Mr. Caron?

Mr. Pierre Pettigrew: No, Monsieur Carrière will answer the question.

Mr. Claude Carrière (Director General, Trade Policy, Department of Foreign Affairs and International Trade): Mr. Robinson, the United States has waived the application of the various titles so there is no applied inconsistency.

Mr. Svend Robinson: As a result of being convicted under the Trading with the Enemy Act, a Canadian faces the possibility of a lengthy term in prison for activities that in part result from sales while he was in Canada as a Canadian citizen. Is it in accordance with NAFTA?

Mr. Claude Carrière: I don't think there is a connection.

Mr. Pierre Pettigrew: We do not see the link.

Mr. Svend Robinson: You don't see that this has nothing to do with free trade at all. If they're imprisoning a Canadian who wants to sell water purification supplies to Cuba, is that free trade?

Mr. Pierre Pettigrew: No, but....

A voice: He's not trying to sell them through Canada.

The Chair: Maybe I'll take a minute to introduce Mr. Claude Carrière, who is the person with the answers.

Mr. Svend Robinson: We can come back to it. Perhaps the minister can look at whether it is in conformity with NAFTA.

The Chair: Yes. Move on, Mr. Robinson.

Mr. Svend Robinson: I want to move on to another area with respect to the dedicated professional men and women who work within the department. Price Waterhouse released a study that demonstrated that in fact foreign service officers in Canada make significantly less in terms of pay and benefits than their domestic and international counterparts.

I want to ask the minister what action he's prepared to take to respond to the very serious concerns that have been raised by PAFSO, as well as by the Foreign Service Community Association, on issues that particularly affect spouses and partners of foreign service employees. For example, the fact that Canadian spouses and partners who contributed to the employment insurance fund are ineligible to collect EI if they're unemployed either at post or on their return back to Canada is blatantly unfair, as the minister I'm sure is aware. It has been identified as a concern for many years. Pay and benefits are far below what's acceptable for the dedicated professionals within the department.

What concrete steps is the minister taking to respond to the Price Waterhouse study and to the concerns that have been raised by foreign service officers, spouses, and partners?

Mr. Pierre Pettigrew: We made an improvement in the conditions of our foreign service officers last year, and I can tell you that I meet with them and talk with them on every one of my trips. I am extremely impressed with the quality and professionalism of our people. Every time I've had the opportunity I have expressed myself to the President of the Treasury Board on what we can do to improve their situation, given the fact that they're very well trained, they speak the languages, and they know the cultures. We've invested a great deal in them, and it's important that we make sure that--

º (1635)

Mr. Svend Robinson: What about the specific issue of eligibility for employment insurance? Is the minister prepared to have a look at that specific issue and report back to the committee on that?

Mr. Pierre Pettigrew: Sure, I will look at it.

You don't mind if Mr. Caron speaks on this, do you?

Mr. Svend Robinson: No.

The Chair: Mr. Caron.

Mr. Claude Caron (Acting Assistant Deputy Minister, Corporate Services, Passport and Consular Affairs, Department of Foreign Affairs and International Trade): Yes, Madam Chair. The department is having discussions with other central agencies, including Treasury Board, to see about the possibility of making those changes. Those are fairly complex discussions, but there are discussions underway at this point.

I'll also point out that the department has recently made a strong commitment to addressing any of the issues identified in the article in terms of compensation and so on. The President of the Treasury Board has been very supportive as well.

Mr. Svend Robinson: I just have one other question, if I may, for the minister. It's on the issue of access to affordable drugs, particularly to fight against the epidemic of HIV/AIDS. Dr. Peter Piot, the executive director of UNAIDS, has described HIV/AIDS as the biggest threat to the continent's development and the quest to bring about an African renaissance. This is obviously of concern for the G-8 summit on Africa.

I want to ask the minister a very specific question with respect to access to affordable generic drugs for countries that don't have the domestic capacity to produce those drugs. As the minister is well aware, this is an issue of great concern. It was an outstanding issue left over from Doha, namely a commitment made to address it by the end of 2002. I want to ask the minister what Canada is doing to ensure that there will be an effective use of compulsory licences for producing generic medicines for export to developing countries and least-developed countries in need of more affordable drugs. Very specifically, what are we doing to ensure that those countries that don't have the capacity to produce affordable drugs are able to import them under compulsory licences from countries that do?

Mr. Pierre Pettigrew: As you know, this was one of the achievements of Doha. I was very pleased at Doha that we made these clarifications on TRIPS. At this moment there are ongoing discussions on this very topic at the council, which is chaired by my predecessor.

Mr. Svend Robinson: What's Canada's position at the council? Are we supporting these changes?

Mr. Leonard J. Edwards (Deputy Minister for International Trade, Department of Foreign Affairs and International Trade): What we are doing, Mr. Robinson, is working with our colleagues from all countries, including the developed and the developing world, to clarify the relationship between the TRIPS agreement and the declaration that took place at Doha.

Mr. Svend Robinson: I was asking a specific question about access to affordable generic drugs for countries that don't have the capacity to produce them. This issue was one of the issues that was supposed to be specifically addressed, and I'm asking a very specific question through the chair: what's Canada's position on this issue? Are we supporting the right of these countries to have access or not?

Mr. Leonard Edwards: I do not know what our position is at this particular time because we are engaging in this discussion at the council, and I will have to clarify what our position is.

Mr. Svend Robinson: Perhaps the minister could report back to the committee.

The Chair: Thank you, Mr. Robinson. You've gone past your ten minutes. We've been very generous with you.

We'll go on, then, to Mr. Assadourian.

Mr. Sarkis Assadourian (Brampton Centre, Lib.): Thank you, Madam Chairman.

Mr. Minister, my question is along the lines of the NDP and Bloc Québécois questions, but mine is a more general one.

Last week, when the Prime Minister was in Africa, he tied foreign aid to promoting democratic values. Countries that want to join the EU have to follow certain guidelines, including that they have no territorial claim on another country, that they have human rights and democratic values, and that they have no oppression, torture, and capital punishment. Are there any general guidelines for who can qualify to join the FTAA? Is it just a matter that if you live in this geographic area, you can join, or do you have to meet some other requirements, such as democratic values? That's my first question.

Last month SNC-Lavalin signed a contract with Libya for a $4.5 million water diversion program. As far as I remember, the UN called it the largest engineering project in the world. Earlier we discussed free trade with Israel and the Palestinian Authority. They said that there would be no benefit from this. But what are we doing to improve trade between Canada and the Arab world, which numbers about 300 million? It is a huge market. We've had success in Libya. We have good trade with Qatar, Kuwait, and Saudi Arabia based on oil. But we have to diversify this trade. What are we doing to diversify trade in this region?

Those are my two questions.

º (1640)

Mr. Pierre Pettigrew: With regard to your first question, on the free trade area of the Americas, all countries of the hemisphere that are democracies can participate in it. That means that the 34 countries in the hemisphere can participate in it, and actually do. At the moment all countries but Cuba meet the criteria. So it is geographic plus democracy.

As for the other countries in the Arab world, I had hoped to lead a trade mission there. I don't know when it will be possible for me to do that. Last year I went to the Maghrib countries, Morocco and Algeria, and I found it to be very helpful. It has really opened doors for a lot of our business people. I hope very much to be able to go on a trade mission to the Middle East and the Arab countries, because we appreciate the potential there is in that region.

Mr. Sarkis Assadourian: Jordan and Egypt, for example, have no territorial claim against Israel. They have signed a peace treaty. I think we should do what we can to reward the peace process. Otherwise, we will go back to square one. They might break their relations with each other, and then nothing is gained and everything is lost.

Mr. Pierre Pettigrew: We have many commissioners in that region who are very dynamic. Our trade commissioners are an extraordinary presence, and they are already able to help Canadian business in that region.

I think you are absolutely right to establish a link between that and the peace process. I think you're right that we should do anything we can to reward the stable countries that are helping in the development of peace in that difficult region.

Mr. Sarkis Assadourian: This is my final question.

I was in Qatar a couple of weeks ago. They complained that we have no embassy in Qatar even though we do a huge amount of business with them. I believe they're served from Kuwait. They were surprised that we have embassies in some countries that have less than 10% of the trade we have between us and Qatar. They asked me to pass the message on to you, so I am passing on that suggestion.

Mr. Pierre Pettigrew: Thank you very much. I heard that before when I was in Qatar. We do cover Qatar from Kuwait for the time being. As you know, there are costs involved. But thank you for passing on the message.

Mr. Sarkis Assadourian: Further to my point, they said that the trade between Canada and Qatar covers more than the cost involved to open an embassy.

Mr. Pierre Pettigrew: It is the case everywhere, I hope.

The Chair: Thank you.

We go now to Mr. Casey for your ten minutes.

Mr. Bill Casey (Cumberland--Colchester, PC): To follow up on Mr. Robinson's question about the Price Waterhouse study about the employees, one of the comments in it says 160 jobs are now filled by employees parachuted in--often higher-paid lawyers, economists, and commerce officers. What is the logic of parachuting employees in, rather than replacing them and putting them on staff? And what percentage of those are foreign affairs and what percentage are international trade?

Mr. Pierre Pettigrew: I will let Monsieur Caron go a little deeper into it, but Foreign Affairs and International Trade work more and more with representatives from other governments in Ottawa.

As you know, as part of the globalization phenomenon and the interconnectedness of our society, more and more departments will have representatives in our embassies abroad; therefore, they become colleagues of our foreign service officers. Now, what is the logic of the situation you describe? You will understand that they called my attention numerous times to it, that sometimes you will have someone who in the bureaucracy here will have had a higher level and therefore sometimes works under a foreign service officer in an embassy and earns more money.

The situation is that in the foreign service--I don't know if it's 10 or 20 years ago--the union negotiated the elimination of all classifications but two. We only have two classifications in the foreign service--two levels--instead of seven that will be equivalent here. So very often you will have this situation. That was a choice made some time ago. It does create the difficulties you're talking about. But I'll let Monsieur Caron be more specific.

º (1645)

Mr. Claude Caron: First of all, I'll point out that the copy of the report a newspaper obtained was a preliminary document that has not been vetted by the parties who sponsored it; that includes the union. It contains some inaccuracies, and I don't have the details to point them out to you. I'll just stress essentially that the way to look at the comparability of our foreign service with other countries' is to look at a complete compensation package. This is what, in the version of the report released, is a bit deficient. But the final report will be issued subsequently.

On the question the member raised specifically, Madam Chair, there is a lot of effort being put at the moment within the department and with the Treasury Board into addressing many of the issues you raised. On the question of the other officers being parachuted into the jobs, one of the issues the department is facing at the moment is a significant shortage of career foreign service officers. It's an issue of demographics. To address it, a number of items have been put together into an action plan the department is proceeding with, including increased recruitment, a review of the classification system to add more levels to provide for a more normal career progression for the members of the foreign service, increased training, and a number of other initiatives.

Mr. Bill Casey: Do you have the money to pay them if you could get them?

Mr. Claude Caron: Yes.

Mr. Bill Casey: The Deputy Minister of Foreign Affairs testified he didn't have the money to pay them. Anyway....

One of the committee presenters told us, when we were talking about the proposal on least developed countries' access, that in some cases in particular the Chinese would completely take up 100% of certain markets and wipe out all the other exporters through Canada, and also wipe out Canadian industry in certain areas. Do you agree with that? Are you concerned about it? It's textiles in particular; we were told they would take up 100% of the market share.

Mr. Pierre Pettigrew: I haven't seen that study. I would have to ask for some impact study of it, but I have never seen anything of that nature.

As you know, for the time being, the elimination of quotas by 2005 will be done. We will have tariff elimination down the line that will need to be negotiated. If we do open for Africa--as you know, we're consulting right now for the least developed countries--the Prime Minister's plan for Africa could include elements of that. We're consulting with Canadians right now. I met some industry people in Montreal, in my own riding, last week. So we are looking into it. But we would need to have good routes of origin to make sure China does not use a next-door neighbour or a least developed country in that area, because China is not one of the least developed countries.

Mr. Bill Casey: You've not heard of that before? You've never heard that issue brought up to you? It's not brought to your attention?

Mr. Pierre Pettigrew: You mean that if China had access to our market, they could wipe it out?

Mr. Bill Casey: In certain markets, 100%. That was the presentation to our committee.

Mr. Pierre Pettigrew: No, I've not seen that particular study, nor statistics of that order.

Mr. Bill Casey: I'm surprised at that.

Anyway, moving right along.... At the meeting that British Columbia is holding for the softwood lumber industry, will there be participants from right across the country, or do you know?

º (1650)

Mr. Pierre Pettigrew: Premier Campbell is organizing it, so you'd have to ask him who he's inviting and who he's not inviting. He has invited me, and I was very pleased.

Mr. Bill Casey: What proposals will you bring to that table? Do you have proposals to bring to it?

Mr. Pierre Pettigrew: Listen, we're looking at options at this particular time, and interdepartmentally, because some of the solutions are in other departments. We will get to that summit with an open mind, and we will meet with them.

I'm also going there to listen to them. What have we heard from industry? What have we heard from the individuals and the workers? That's also interesting.

Whatever assistance we do needs to reflect a certain reality, and we need to analyse what that reality is. We don't know the actual impact of that 29% at this moment. We need to know how it will be in the market.

Mr. Bill Casey: But in all fairness, as the international trade minister, I would think you'd come there with some ideas, considering the new developments and the window of opportunity.

Mr. Pierre Pettigrew: I have ideas, don't worry.

Mr. Bill Casey: Do you have any you can share with us, or what your proposals are?

Mr. Pierre Pettigrew: None that I particularly feel like right now.

When I speak, I speak for the government, and I don't have a mandate from cabinet at this moment to go beyond the existing program.

Mr. Bill Casey: If we come to an end on this softwood lumber issue...?

Mr. Pierre Pettigrew: It would be easier sometimes to speak, but I'm one who tries to be disciplined.

Mr. Bill Casey: But if we do come to an end and we get a decision on the WTO, is there any way to prevent the United States from starting all over again?

Mr. Pierre Pettigrew: Well, you know, the Americans will probably use all the tricks in the box. The WTO is a long process. They will appeal, and they will probably reinvent it to another panel.

I believe the NAFTA system is a better one for this particular kind of dispute in the sense that the decision is binding. It's 315 days, and it is binding. That is the reason I went to NAFTA the very day--

Mr. Bill Casey: Binding for how long? How long is that decision good for?

Mr. Pierre Pettigrew: It's binding forever.

Mr. Bill Casey: As long as the circumstances stay the same.

Mr. Pierre Pettigrew: Yes, but of course a few years later it won't stop the American industry from reinventing allegations that we're subsidizing. That is what we're trying to solve on the free trade area of the Americas and the WTO.

When I say there will be a negotiation of the American trade laws, that's precisely the sort of thing that will have a kick at the can.

Mr. Bill Casey: Okay, thank you.

The Chair: Thank you, Mr. Casey.

Five minutes, Mr. Keyes.

Mr. Stan Keyes (Hamilton West, Lib.): Thank you, Madam Chair. I'll keep my questions brief, just two questions for the minister, so that he has plenty of time to give us a thorough answer on both.

On my favorite subject of steel, which is important to my hometown of Hamilton, Ontario, and important to the country, we know about the U.S. exempting Canada from duties and tariffs. But of course our fear is that steel producers around the world are even now eyeballing Canada, to the extent that we've heard that some of that excess steel is on its way as we speak. That being the case, what action is Canada taking to protect our steel producers and our steelworkers, and hopefully taking that method of protection in a very timely manner?

Secondly, given the work being done on the softwood lumber file, I'd like the minister to assure me that we will not compromise on steel to solve the softwood lumber dispute.

Mr. Pierre Pettigrew: I have not been a strong supporter of linking or linkages so far, so I can tell you that, on steel, we were very pleased with the United States exemption and for making sure, of course, that we will not become a dumping ground.

We are before the CITT right now. Should the CITT determine that domestic producers are injured by imports, we'd be ready to take the necessary action to remedy the situation, and whatever is permitted under the WTO, we would certainly be prepared to take such actions.

The increase in imports since--

º (1655)

Mr. Stan Keyes: And how long would that CITT decision take?

Mr. Pierre Pettigrew: Sorry?

Mr. Stan Keyes: How long before we can have that CITT decision?

Mr. Pierre Pettigrew: Five months from the day we requested it, which is three weeks ago now. So it's five months.

But in the monitoring of imports in Canada, we have not witnessed any changes since the American action. We are monitoring exports in steel. For quite a few months now, we have been monitoring very closely every import. And for the time being we haven't seen any changes. But I don't want to pre-empt the CITT's analysis, which could be different from what I'm saying. That's why I should be cautious for the time being when I speak about the control of imports and exports and the sort of monitoring that my department is doing.

What was the second question?

Mr. Stan Keyes: Should the CITT rule in favour...? You were going to finish.

Mr. Pierre Pettigrew: Softwood and the linkage. I've answered the second one first.

Mr. Stan Keyes: So that's an imperative. The softwood issue will not have anything to do for--

Mr. Pierre Pettigrew: No, no. I believe--and that is a deep conviction of mine--every file needs to be treated on its own merit. With a complex trade relationship such as the one we have with the United States, you don't begin to play tit-for-tat and confuse the files. You solve every one of them on its own merit.

Mr. Stan Keyes: Thank you, Madam Chair.

Thank you, Minister.

The Chair: We go back to the official opposition. You now have five minutes, Mr. Day.

Mr. Stockwell Day: Thank you, Madam Chair. I'll take a couple of those, and then my colleague will take the rest.

Except in the softwood file, which the government has handled disastrously, the opposition are supportive of the statements actually on page one in this beautifully coloured book about international trade. Those are the goals of the department and the minister. I believe they are launching new rounds of multilateral trade negotiations, free trade of the Americas, bilateral free trade with Costa Rica, trade negotiations with El Salvador, etc. This is the proper role of government.

I'll come to the minister's defence on a rare occasion here. It should not be the minister and it should not be a government official that we look to for the ideas on how to seek trade advance by Canadian entrepreneurs and business people. If the minister is sincere, and I believe he is, in the stated goals here--which I hope would include making sure that we reduce the punitive effects of our taxation laws and our regulatory regime, continuing to fight for the securing of property rights and intellectual property rights, and establishing all of that clearly--that will be the most we can and should do, as a government, to enhance trade opportunities.

But I get nervous when I hear government.... If we ask government to come up with ideas, be prepared and fear what we might get, because the minister, as intelligent as he is, does not have the intellectual capacity to come up with all the great ideas to enhance trade. His role is to ensure that we have a great environment for trade, and we'll encourage him to do that.

Having said that, I'd like to know, from the minister's perspective, why it is that we have the Prime Minister--and I think quite rightly--talking about trade in Africa and saying that these relationships are incumbent upon the advancement of democratic principles, as we heard in South America and the Americas in general. Why do we not hear that same signal going to the trade that should be happening with Arab nations, although many of those in fact are very strong dictatorships? We don't hear that same compelling message. Why would that be?

Mr. Pierre Pettigrew: First of all, I have to say that I completely disagree with my colleague when he says that the softwood lumber file has been conducted disastrously. There has been unanimous support from all the provincial governments in Canada for the first time ever on this very difficult file. All provincial governments have supported the course of action that we have actually identified with them.

Second, it has been the same with industry. The industry stakeholders have been extremely complimentary about the strategy, the tactics, and the energy we've invested in this file. I have been surprised at how welcome I've been in British Columbia the last few times that I was there, when I met with softwood lumber producers, some of whom were at first doubtful that a Quebec minister could really invest himself so deeply in it. And they've been impressed by that.

Frankly, the stubbornness of the Americans and the strength of the softwood lumber producers here should not be turned into a federal government disaster. It is a rare case of unanimous support across the land in both industry and the provinces. With disasters like that I can, politically speaking, live. I understand that we are very frustrated by the result with the Americans, but I believe that saying that is somehow unfair.

» (1700)

Mr. Stockwell Day: Nothing took place before that agreement came to--

Mr. Pierre Pettigrew: No, no. That's not true. In 1999 I appointed a coordinator for the softwood lumber file. We started consulting with the industry in the provinces. I myself met with the British Columbia provincial government--then the NDP government--and said that I was not in a position to come to the table and propose anything at that time. We saw it coming, we played with the actors who had the responsibilities, and we used every trick we could.

There was, however, a consensus in the land--and I suppose it was shared by the Alliance Party as well--that we should not review the softwood lumber agreement of 1996-2001. That was a consensus across the land, one we reflected in our position, and we identified that very strategy. You may disagree with it, but you will be in very small company if you insist on doing that on that particular file.

I am very frustrated by the results with the Americans, but I am absolutely encouraged to see that this country works. That is one of the reasons I entered politics six years ago, to make sure that as a federation, east and west, Quebec and B.C., we could work together even on difficult files that were of interest to us, where we might diverge. We've demonstrated here that we can do that, and in my view it is very encouraging from a federation point of view. It doesn't solve it with the Americans, and I am extremely frustrated by that, but we will continue to give the best possible effort we can to redress the situation with the Americans.

Now, on the other questions--

The Chair: We've gone past the five minutes.

Mr. Pierre Pettigrew: Well, I just want to thank Mr. Day for this great opportunity to express a point for my colleague, Paul Martin, about the $100 billion tax decrease over the coming years that is going to help the business climate for investment and trade.

The Chair: Thank you, Minister.

Ms. Jennings, you have five minutes.

[Translation]

Ms. Marlene Jennings (Notre-Dame-de-Grâce--Lachine), Lib.): Thank you, Madame Chair.

Thank you very much for your presentation. I am obviously very happy to hear you speak. I have a few points to raise and I want to raise them quickly.

We know that the steel industry is perhaps the most integrated industry in the North American market. What do you think about the possibility of integrating it even more, through joint regulations on competition? Is it that conceivable?

[English]

You mention a company in here that has a plant in my riding.

[Translation]

Mr. Pierre Pettigrew: The question is also relevant from a general perspective.

Ms. Marlene Jennings: Yes.

[English]

My view is that the steel industry is the most integrated industry in North America. When you look at Europe, that was historically the first industry where you had a common market and common competition rules that were established, and that ultimately led up to the EU. I'm saying what about having that here in the short or medium term?

Second, there's the possibility of a Canadian foreign development investment fund.

[Translation]

Thirdly, I would like to go back to a point raised by my colleague Ms. Marleau on the topic of scholarships. Today, I met with heads of Canadian missions in the Americas and the Caribbean. We were told that Canada is an excellent position in the Caribbean countries which are members of the Commonwealth. That is due in part to the fact that many elected officials and senior public officials studied in Canada as part of a university scholarship program. What do you think of that?

» (1705)

Mr. Pierre Pettigrew: Your first question pertained to the steel market. I agree with your assessment. Indeed, the industry in North America, between Canada and the United States, is extremely integrated, and this explains why many representatives from the Canadian industry were hurt by the American measures that were to have included Canada. For a while, we were afraid to be included. But unfortunately, we were exempted in the end.

This also serves to explain why Canada strongly supports the work being done at the OECD. In actual fact, the production over capacity problem is an international problem, and is not limited to North American alone. You're quite right in saying that both the Canadian and America industry must become even more integrated and, in particular, continue to work together at the OECD and elsewhere to find overall solutions instead of working against each other. I think that we were able to avoid having that happen, thanks to some fortunate decisions made by the Bush administration on steel.

Secondly, you talked about an investment fund. Would this be a fund between Canada and the United States?

Ms. Marlene Jennings: No, between Canada and the Americas.

Mr. Pierre Pettigrew: Yes, we were speaking in French.

Ms. Marlene Jennings: Yes.

Mr. Pierre Pettigrew: I had understood Canada and the United States.

Ms. Marlene Jennings: We would set up our own funds or our own investment bank for foreign development, but in the Americas. We would do this ourselves, as a government.

Mr. Pierre Pettigrew: We have already discussed this matter in Parliament with the Bloc members, including Pierre, who had asked some questions on the topic. We assessed the situation of the various institutions we belong to, institutions to which we make a significant financial contribution, particularly the World Bank and the Inter-American Development Bank. These are institutions that play a very significant role.

I can even say that last year's meeting in Buenos Aires was so successful because Enrique Iglesias, who attended the ministerial meeting in Buenos Aires, had agreed to release some very considerable funds to make it possible for the countries in the South to participate in these negotiations. For the time being, I believe that our existing institutions have this responsibility and I would prefer to avoid any duplication.

Your third question was on—

Ms. Marlene Jennings: —the establishment of a program or policy offering university bursaries for the Americas.

Mr. Pierre Pettigrew: You will be meeting the Minister of Foreign Affairs tomorrow. The education component of our department falls under his jurisdiction. I couldn't really comment on this, but I can tell you that if you would like to see increased support for this type of assistance, I would be in full agreement. However, I do not want to increase the pressure that is being put on my colleague, the Minister of Foreign Affairs, who is already dealing with quite difficult budgets. This is clearly a field in which we should be doing more.

[English]

The Chair: Merci. Thank you, Minister.

Madame Lalonde.

[Translation]

Ms. Francine Lalonde (Mercier, BQ): Thank you.

Welcome, Minister. As far as social and cultural issues are concerned, I am happy to tell you that the Sherpa, Marc Lortie, is more open than you are.

» (1710)

I want to focus on the issue of foreign service employees and their spouses, but I would like to go back to a question that was raised earlier, which you did not answer, namely the establishment of bilateral agreements within what will be the Free Trade Area of the Americas.

If such agreements are based on what was done in Costa Rica and include the principles... We thought that you were in agreement with us that the principles of chapter 11 should not be reproduced in an agreement for a Free Trade Area of the Americas, because these principles give investors the right to lodge complaints directly and to obtain rulings from tribunals in Washington that operate in a secretive fashion. If you continue to conclude bilateral agreements in this manner, you will be sending a strange signal as to what you want for the Free Trade Area of the Americas, and as to how you see the partnerships with other countries in the Free Trade Area of the Americas.

I would like you to tell me when we are going to be able to see the proposals on intellectual property and services. We feel that this matter is very important. We recall that certain issues, such as five-dollar daycare and dispute resolution, had been discussed.

Also, when are we going to be able to see the draft negotiation texts for the Free Trade Area of the Americas?

Mr. Pierre Pettigrew: On the issue of bilateral agreements, I have always said that we must take into account our own experiences when we negotiate a trade agreement, whether individually or regionally. I wanted some elements clarified. You say that things are done in secrecy. I feel that we must improve on the transparency of panel discussions and of this legal and court system. In fact, progress has been made. On the first of August last year, we made progress in the trilateral panel and I hope that we will make yet more.

I have given assurances to the committee, but rules are still necessary. I think the opposition will agree that we need some rules on investment. We need a chapter on investment because we must protect the interests of our citizens who invest in South America; otherwise, there will be no more investment. If we don't have minimal rules on investment...

Ms. Francine Lalonde: Yes, but right now, unscrupulous businesses use complaints or threats of complaints to put pressure on governments.

Mr. Pierre Pettigrew: You know very well that as soon as rights are given there are always people... Each time that we improve on rights...

Ms. Francine Lalonde: But we must not facilitate it.

Mr. Pierre Pettigrew: I agree that we must find ways to clarify our real intent as much as possible, that is, to protect investments and not help businesses use those rules in such a manner.

You know that this is the very nature of the law. You give people rights—we are very proud of our Charter of Rights and Freedoms, a charter that is very popular throughout the country—but you know full well that there are people who sometimes will use it...

Mr. Pierre Paquette: We heard such a case before you.

Mr. Pierre Pettigrew: I have always said that the Canadian Charter was inspired by the Quebec Charter. In fact, it is in the great tradition of civil law that charters are born. I would even say that it is a Quebec project that was offered to the rest of the country more than anything else. So, yes, some malicious people will abuse the Charter, but that doesn't mean the Charter is no good. For chapter 11, we could say the same. Some businesses will abuse it, but it still is a good thing; we must protect investments.

We have a responsibility to clarify it and I hope that we will also increase transparency.

You also asked a question about the publication of documents, as Mr. Paquette had done earlier. The last time, we succeeded in getting a commitment for the texts to be made public at each summit. This is what we have already. I do hope—and it does seem possible—that we will get more regular publication of those documents, but I cannot yet tell you that I will get that, since I would be presuming on a ministerial decision. Those texts are not mine, they belong to my colleagues. But I agree with you, we should make them public fairly regularly.

About services, our position is essentially the same as the position we had made public for the WTO. Canada's position on services in the FTAA is essentially the same that on services for the WTO.

Mr. Pierre Paquette: It is not on the Web site.

Mr. Pierre Pettigrew: We could add a line on it to the site.

Mr. Pierre Paquette: To this day, Canada has not submitted any proposal.

[English]

The Chair: Okay, Minister, the five minutes are up. We go now to Mr. O'Brien.

» (1715)

Mr. Pat O'Brien (London--Fanshawe, Lib.): Thank you, Madame Chair.

I should have conferred with my colleagues first, but I guess I can't resist. I know on the softwood lumber agreement we heard Mr. Day's comment, but prior to the running out of the SLA, the trade critic for the Alliance at the time indicated to me and to the minister several times how they were fully supportive of what the government was doing at that time. When he left that party, there were weeks when there was no trade critic at all for the Alliance. I think we need to be a little careful when we're casting aspersions about the performance within various parties. I agree with the minister that the government's handled it quite well and the Americans are the problem.

Minister, I want to go back to something that was raised by the opposition critics. It was on textiles and apparels. I was at that meeting, and I followed it up with the textile and apparel witnesses we had. The point they were making was that our initiative with LDCs will not really, in the long run, help LDCs and that it will threaten our own industry and our own workers. That was their point.

I said that's an opinion, and I'd like to see evidence of that effect. They admitted they didn't have a crystal ball and didn't have evidence, but that had been the pattern of similar initiatives. I'm wondering what your initial thought on that is. I understand you have met with them or will be meeting with them again.

Mr. Pierre Pettigrew: When you meet the people from clothing and textiles, what they express to you is that we've already announced to them intentions of eliminating all quotas before the end of 2005. They say “What you have announced has already required some adjustment or restructuring on our part,” and they've done very well. As a matter of fact, we've been doing very well in the clothing and textile industry of Canada in the last few years. It's progressing substantially. We're increasing exports, and we're increasing sales in the domestic market as well, because they've done a good job and the right job.

So this is what they're telling us. They say “We don't mind continuing to evolve, but make sure we undertake the elimination of tariffs eventually in a way that would be well announced. Make sure we have the right adjustment programs”--Prime Minister Chrétien referred to that when he was in Africa the other Sunday--“and make sure the government can accompany both the industry and the workers, because there are lots of niches and lots of places for our industry to grow.” This is an industry in which I continue to believe; the Canadian industry still has a lot to contribute.

Mr. Pat O'Brien: Minister, on GATS, I think some of us in the House come from a municipal background--I had 13 years there before I came here--so we all well know the concerns of municipalities across the country about GATS. They are concerned that they will somehow be restrained from doing their legislation at the municipal level. Can you speak to that concern? I know you've heard it; we've all heard it, in all parties.

Mr. Pierre Pettigrew: Well, it is very important to realize that the GATS negotiations are fundamentally different from every other GATT negotiation in the sense that you only take up commitments that you want. It's a bottom-up approach, and not a top-down approach, which does mean that a country like Canada will only commit to the international obligations that it wants to. Obviously we will do it in very close consultation with municipalities when it is the case of municipalities. We will do the same thing for the very important sectors of education and health.

We do want to be at the table. I know some members in the opposition have said we should not even be at the table. The reason we want to be at the table is that Canada wants to participate in the establishment of international trade rules in education and health because we have exporters who are interested in making sure those rules favour them and respect their own potential on those markets. This is the reason we will be part of it. We have a lot of education exporters or health exporters around the world.

The Chair: Thank you, Minister.

Mr. Robinson and Mr. Duncan will get the final five minutes.

Mr. Svend Robinson: I just have a couple of brief questions, Madam Chairman.

I'm wondering what restrictions are in place with respect to the export of military goods from Canada to Israel.

» (1720)

Mr. Pierre Pettigrew: There is no total ban, but we'll look at every export on a case-by-case basis.

Mr. Svend Robinson: What criteria are applied in assessing each one?

Mr. Pierre Pettigrew: I'll send you a written answer on this one and on TRIPS as well. I will make sure to send you that on TRIPS and the position we're promoting at the council right now on the HIV/AIDS follow-up to the Doha thing.

Mr. Svend Robinson: Good. Also specifically on the issue of the employment insurance eligibility for....

Mr. Pierre Pettigrew: Yes. We'll have a lot of correspondence.

Mr. Svend Robinson: That's fine.

I wonder if the minister could clarify Canada's position with respect to the recent statement of the European Union's position on the GATS negotiations. The minister will know that the Council of Canadians, I believe, today released a copy of the European Union's request to Canada for negotiations. It's a sweeping document that would touch almost every aspect of our lives. They're basically looking at our water, our culture, attacking our economic sovereignty.

On behalf of their giant water corporations, the European Commission wants us to open up water services. It's a very sweeping and very dangerous position that they're taking, and I want to ask the minister what Canada's position will be. Will Canada vigorously and aggressively reject this attempt to move in on some very important elements of Canadian sovereignty?

Mr. Pierre Pettigrew: It is too early for me to comment. What I think you are referring to, my dear colleague, is a draft, because we have not received any official demands. It's very hard to comment on a draft of which I don't really know the seriousness or whatever because we have not received any official requests from any of our trading partners, including the European Union, at this moment. It is the way it works, though, as we do in Canada. We prepare our list of what we want to achieve. The Europeans might be working on what it is they want to get from Canada, but obviously we have not received anything official.

Mr. Svend Robinson: Could I ask the minister specifically what is our position with respect to any suggestion of opening up Canadian water collection, purification, and distribution to privatization or to foreign competition?

Mr. Pierre Pettigrew: I need to look at the way it is proposed or something like that. I am not even sure I understand what you're referring to.

Mr. Svend Robinson: Does Canada have any position with respect to opening up water collection, purification, or distribution, as the European Union apparently wants us to do?

Mr. Pierre Pettigrew: If they ask us, I'll give you my position then. So far they have not asked that from us.

» (1725)

Mr. Svend Robinson: Just one other area and then--

Mr. Pierre Pettigrew: Don't worry about our sovereignty.

Mr. Svend Robinson: A lot of us are very concerned about that.

Mr. Pierre Pettigrew: You know sovereignty is a complex concept that is evolving a great deal. We are gaining a lot of strength, and as a stronger country we are more sovereign than we were not too long ago when we had a huge debt and not the trade we have now.

Mr. Svend Robinson: I would like to address one other area, and then I know Mr. Duncan has a question, Madam Chair.

My question is with respect to the issue of Canada's relationship with Taiwan. Taiwan is of course one of our leading trading partners in the Asia-Pacific region. I wonder if the minister could talk a bit about what the Canadian government is doing to promote and strengthen the trade relationship between Canada and Taiwan. Specifically, what high-level meetings or bilateral meetings are planned for that relationship between Canada and Taiwan? Is the minister himself prepared to travel to Taiwan, as his predecessors have done in the past, to promote this very important trade relationship?

Mr. Pierre Pettigrew: Just on the water question before we leave it, most water distribution services in Canada are provided publicly. They do fall outside of the GATT then. There is nothing in GATT that forces countries to privatize publicly provided services. Nothing in the GATT can force that.

On Taiwan, I have a great interest in our trade with Taiwan. I have no plans of visiting Taiwan at this moment. I supported, as you know, their membership in the WTO. I was very proud that they joined the WTO as the 144th country. We contributed to that as a country.

I am not aware, personally, of any meeting of senior people right now between us, but we have an active trade office in Taipei.

Mr. Svend Robinson: Is the minister prepared to encourage senior-level meetings between trade officials of his department and Taiwan?

Mr. Pierre Pettigrew: Absolutely, yes.

Mr. Svend Robinson: Would the minister consider a visit, himself, to Taiwan?

Mr. Pierre Pettigrew: Sure I would consider it.

Mr. Svend Robinson: Good. Thank you.

The Chair: Thank you, Mr. Robinson.

Mr. Duncan.

Mr. John Duncan: Thank you very much.

I have two questions. The first one relates to softwood and the second one to your visit to India and Pakistan.

Mr. Pierre Pettigrew: I am not going to Pakistan. It's India.

Mr. John Duncan: It relates to the sanctions we applied to India and Pakistan in 1998.

First of all, on the softwood, I think the minister may underestimate the concern of many in terms of leadership at the federal level in this dispute. Many were very concerned about what happened in Washington and the lead-up to March 20, when it was viewed that you were neutered by the Prime Minister's Office and Eddie Goldenberg. Neutered was the word I used.

The Chair: Is that a polite word to use in committee?

Mr. John Duncan: It's a neutral word.

Mr. Pierre Pettigrew: Does it mean neutralized?

Mr. John Duncan: That's what I meant. I didn't mean anything by it in that regard.

I want to pursue this a little further, because I think we need some leadership on this issue. There has been a lot of talk about a tariff scheme as being a subsidy. The most recent Free Trader says:

“In practice, no action taken by Canada could add to the 29% burden that exporters will have to shoulder once the final order is in place...assuming of course that Canada does not win outright on May 2. Any potentially countervailable benefit could only be added to this burden once the results of the first administrative review are in, sometime in late 2004. Appeals should be well over before that comes to pass, especially the crucial CVD NAFTA panel ruling expected in February of 2003.”

Do you agree or do you disagree with that statement?

Mr. Pierre Pettigrew: Can I read this statement? Find me the statement.

Mr. John Duncan: I thought you would be up to speed on it.

Mr. Pierre Pettigrew: Now let me comment on the lack of leadership.

Eddie Goldenberg, who is a.... When the Prime Minister is in Monterrey and I'm in Washington and when Mr. Goldenberg, who knows B.C. very well, contributes and is there to make sure of the connection with the Prime Minister, who happens to be with George Bush at the time, I think it is an ideal situation that a minister works with his Prime Minister and with the Prime Minister's advisers.

Mr. Goldenberg has a history with this file. I want to comment and use some of the committee's time to say that Mr. Goldenberg's contribution on the softwood lumber file has been very valuable and that I do believe that it's been extremely helpful to have him, demonstrating that the Prime Minister himself is interested in the file. That's not been the case in the past. The previous prime minister would never speak to the President of the United States on this file, whereas Prime Minister Chrétien has done it every time.

Now on this.... I'll look at it to answer it eventually, because there are legal considerations, I suppose, in this thing.

Mr. John Duncan: Thank you, because it's the crux of the issue.

» (1730)

Mr. Pierre Pettigrew: Let me have my legal people look into it and all that. I'll do anything that can be helpful, let me tell you.

Mr. John Duncan: The question I'd like to pose is in relation to India and Pakistan--and I know you're only going to India. Now, we imposed sanctions in 1998 because of nuclear testing. What kinds of sanctions are those when our imports from both countries have since gone up, virtually year by year, and our exports to those countries either remain unchanged or have gone up a bit? Our balance of trade has become worse, and we've imported nuclear reactors, boilers, machinery, and mechanical appliances from both nations.

Mr. Pierre Pettigrew: I'm sorry, but we do not import reactors from those countries. Of course not.

Now, as to sanctions, you can have the opportunity of discussing them with Minister Graham, who is the minister responsible for the sanctions. His predecessor is the one who lifted them, allowing for trips like mine. The reason is that we believe it is needed, and the proof that it is needed is that more than a hundred business people have agreed to join me on that trade mission. What we--

Mr. John Duncan: That's all well and good, but we never agreed with the sanctions.

Mr. Pierre Pettigrew: Ah, okay. Sorry.

Mr. John Duncan: But your government insisted on those sanctions. As a matter of fact, they advised our leader at the time and our foreign affairs critic not to even go to those two countries. They proceeded to do so. All I say is that you as the minister plan to go to India, and I say that it's to cover up a blunder by the previous minister.

Mr. Pierre Pettigrew: No, of course not. The sanctions have now been removed. We have registered our point. You all remember as Canadians how we felt about some use that was done with Canadian technology, and we were not amused about being part of the spread of nuclear capacity in the world. Our government...I of course support what we did.

Now time has passed, times are evolving, and we do believe that it is time to re-engage. On military and nuclear sanctions are still in place, but we decided to re-establish trade and the rest of the relationship. I'm very pleased that I will be contributing to that at the end of the week.

Mr. John Duncan: We're still importing from both countries.

The Chair: I think we've reached a point now where we want to say thank you to the minister for being with us for the last couple of hours. It has been a good and very broad-ranging exchange. I hope that we'll have an opportunity to peruse the documents on the estimates you've provided and to further comment on some of the items that did not come up in the discussion during the questioning with you.

Thank you so much, Minister.

The meeting is adjourned.