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37th PARLIAMENT, 1st SESSION

Standing Committee on Foreign Affairs and International Trade

EVIDENCE

CONTENTS

Thursday, May 9, 2002

0900

Mr. Harvard

0905

Mr. Brian Stevenson (Associate Vice-President (International), University of Alberta)

0910

0915

0920

The Acting Chair (Mr. John Harvard)

Mr. Martin (Esquimalt—Juan de Fuca)

Mr. Brian Stevenson

0925

Mr. Keith Martin

Mr. Brian Stevenson

Mr. Keith Martin

Mr. Brian Stevenson

Mr. Keith Martin

Mr. Brian Stevenson

0930

The Acting Chair (Mr. John Harvard)

Mr. Yves Rocheleau (Trois-Rivières, BQ)

Mr. Brian Stevenson

0935

The Acting Chair (Mr. John Harvard)

Mr. Brian Stevenson

The Acting Chair (Mr. John Harvard)

Mr. Brian Stevenson

0940

The Acting Chair (Mr. John Harvard)

Mr. Brian Stevenson

The Acting Chair (Mr. John Harvard)

Mr. Brian Stevenson

0945

The Acting Chair (Mr. John Harvard)

Mr. Brian Stevenson

The Acting Chair (Mr. John Harvard)

Mr. Brian Stevenson

The Acting Chair (Mr. John Harvard)

Dr. Anna Fanning (Chair, Stop TB Canada)

The Acting Chair (Mr. John Harvard)

Dr. Anna Fanning

0950

0955

Dr. Walter Kipp (Member, Stop TB Canada)

1000

The Acting Chair (Mr. John Harvard)

Dr. Stan Houston (Member, Stop TB Canada)

1005

The Acting Chair (Mr. John Harvard)

Mr. Keith Martin

Dr. Anna Fanning

1010

Dr. Stan Houston

Dr. Walter Kipp

1015

The Acting Chair (Mr. John Harvard)

Mr. Yves Rocheleau

The Acting Chair (Mr. John Harvard)

Dr. Anna Fanning

1020

Dr. Stan Houston

1025

The Acting Chair (Mr. John Harvard)

Dr. Anna Fanning

Dr. Stan Houston

1030

The Acting Chair (Mr. John Harvard)

Mr. Keith Martin

The Acting Chair (Mr. John Harvard)

Dr. Anna Fanning

1035

Dr. Stan Houston

Dr. Walter Kipp

The Acting Chair (Mr. John Harvard)

Professor Yasmeen Abu-Laban (Faculty of Political Science, University of Alberta)

1040

1045

1050

The Acting Chair (Mr. John Harvard)

Mr. Keith Martin

1055

Prof. Yasmeen Abu-Laban

1100

Mr. Keith Martin

Prof. Yasmeen Abu-Laban

The Acting Chair (Mr. John Harvard)

Prof. Yasmeen Abu-Laban

The Acting Chair (Mr. John Harvard)

Mr. Yves Rocheleau

1105

Prof. Yasmeen Abu-Laban

1110

Mr. Yves Rocheleau

1115

Prof. Yasmeen Abu-Laban

The Acting Chair (Mr. John Harvard)

Prof. Yasmeen Abu-Laban

1120

The Acting Chair (Mr. John Harvard)

1130

Ms. Kerry Barrett (Secretary-Treasurer, Alberta Federation of Labour)

1135

The Acting Chair (Mr. John Harvard)

1140

Mr. Jim Selby (Director of Research, Alberta Federation of Labour)

The Acting Chair (Mr. John Harvard)

Mr. Yves Rocheleau

Mr. Jim Selby

Ms. Kerry Barrett

1145

Mr. Yves Rocheleau

Ms. Kerry Barrett

Mr. Yves Rocheleau

Ms. Kerry Barrett

The Acting Chair (Mr. John Harvard)

Mr. Jim Selby

1150

The Acting Chair (Mr. John Harvard)

Mr. Jim Selby

The Acting Chair (Mr. John Harvard)

Mr. Jim Shelby

The Acting Chair (Mr. John Harvard)

1155

Mr. Jim Selby

The Acting Chair (Mr. John Harvard)

Mr. Jim Selby

1200

The Acting Chair (Mr. John Harvard)

Mr. Jim Selby

The Acting Chair (Mr. John Harvard)

Mr. Jim Selby

Ms. Kerry Barrett

Mr. Keith Martin

Mr. Jim Selby

1205

Mr. Keith Martin

Mr. Jim Selby

Ms. Kerry Barrett

1210

The Acting Chair (Mr. John Harvard)

Ms. Kerry Barrett

The Acting Chair (Mr. John Harvard)

Ms. Kerry Barrett

The Acting Chair (Mr. John Harvard)

Mr. Yves Rocheleau

The Acting Chair (Mr. John Harvard)

Mr. Jim Selby

1215

The Acting Chair (Mr. John Harvard)

Mr. Jim Selby

The Acting Chair (Mr. John Harvard)

Ms. Kerry Barrett

The Acting Chair (Mr. John Harvard)

1335

Professor Barry Scholnick (School of Business, University of Alberta)

1340

1345

1350

The Acting Chair (Mr. John Harvard)

Prof. Barry Scholnick

The Acting Chair (Mr. John Harvard)

1355

Prof. Barry Scholnick

The Acting Chair (Mr. John Harvard)

Prof. Barry Scholnick

The Acting Chair (Mr. John Harvard)

Prof. Barry Scholnick

The Acting Chair (Mr. John Harvard)

Mr. Keith Martin

Prof. Barry Scholnick

1400

Mr. Keith Martin

Prof. Barry Scholnick

The Acting Chair (Mr. John Harvard)

Prof. Barry Scholnick

1405

The Acting Chair (Mr. John Harvard)

Mr. Yves Rocheleau

Prof. Barry Scholnick

1410

1415

The Acting Chair (Mr. John Harvard)

Prof. Barry Scholnick

1420

The Acting Chair (Mr. John Harvard)

Mr. Rocheleau

Prof. Barry Scholnick

The Acting Chair (Mr. John Harvard)

Prof. Barry Scholnick

The Acting Chair (Mr. John Harvard)

Prof. Barry Scholnick

1425

The Acting Chair (Mr. John Harvard)

Mr. Keith Martin

Prof. Barry Scholnick

The Acting Chair (Mr. John Harvard)

Mr. Keith Martin

Prof. Barry Scholnick

Mr. Keith Martin

The Acting Chair (Mr. John Harvard)

Mr. Satya Das (Principal, Cambridge Strategies Inc)

1430

1435

The Acting Chair (Mr. John Harvard)

Mr. Keith Martin

Mr. Satya Das

1440

The Acting Chair (Mr. John Harvard)

Mr. Yves Rocheleau

Mr. Satya Das

Mr. Yves Rocheleau

Mr. Satya Das

1445

The Acting Chair (Mr. John Harvard)

Mr. Satya Das

The Acting Chair (Mr. John Harvard)

Mr. Satya Das

1450

The Acting Chair (Mr. John Harvard)

Mr. Satya Das

The Acting Chair (Mr. John Harvard)

Mr. Rod Scarlett (Executive Director, Wild Rose Agricultural Producers)

The Acting Chair (Mr. John Harvard)

Mr. Rod Scarlett

The Acting Chair (Mr. John Harvard)

Mr. Rod Scarlett

The Acting Chair (Mr. John Harvard)

Mr. Rod Scarlett

1455

Mr. Paul Hodgman (Assistant General Manager, Alberta Pork)

1500

Mr. Rod Scarlett

The Acting Chair (Mr. John Harvard)

Mr. Rod Scarlett

The Acting Chair (Mr. John Harvard)

1505

Mr. Rod Scarlett

The Acting Chair (Mr. John Harvard)

Mr. Paul Hodgman

The Acting Chair (Mr. John Harvard)

Mr. Yves Rocheleau

Mr. Rocheleau

1510

Mr. Rod Scarlett

Mr. Yves Rocheleau

1515

Mr. Paul Hodgman

Mr. Rod Scarlett

The Acting Chair (Mr. John Harvard)

Mr. Rod Scarlett

1520

The Acting Chair (Mr. John Harvard)

Mr. Rod Scarlett

The Acting Chair (Mr. John Harvard)

Mr. Rod Scarlett

The Acting Chair (Mr. John Harvard)

Mr. Rod Scarlett

The Acting Chair (Mr. John Harvard)

Mr. Rod Scarlett

The Acting Chair (Mr. John Harvard)

Mr. Paul Hodgman

1525

The Acting Chair (Mr. John Harvard)

Mr. Paul Hodgman

The Acting Chair (Mr. John Harvard)

Mr. Paul Hodgman

The Acting Chair (Mr. John Harvard)

Mr. Rod Scarlett

The Acting Chair (Mr. John Harvard)

Mr. Keith Martin

1530

Mr. Rod Scarlett

Mr. Keith Martin

Mr. Rod Scarlett

The Acting Chair (Mr. John Harvard)

Mr. Rod Scarlett

The Acting Chair (Mr. John Harvard)

Mr. Rod Scarlett

Mr. Paul Hodgman

1535

The Acting Chair (Mr. John Harvard)

The Hon. Roche, O.C.

1540

1545

The Acting Chair (Mr. John Harvard)

Mr. Keith Martin

The Hon. Roche, O.C.

1550

1555

The Acting Chair (Mr. John Harvard)

The Hon. Roche, O.C.

Mr. Yves Rocheleau

1600

Senator Douglas Roche

1605

1610

The Acting Chair (Mr. John Harvard)

The Hon. Roche, O.C.

1615

The Acting Chair (Mr. John Harvard)

CANADA

Standing Committee on Foreign Affairs and International Trade

NUMBER 082

1st SESSION

37th PARLIAMENT

EVIDENCE

Thursday, May 9, 2002

[Recorded by Electronic Apparatus]

¿ (0900)

[English]

The Acting Chair (Mr. John Harvard (Charleswood St. James--Assiniboia, Lib.)): Members, I call this meeting to order as we continue our public hearings on North American integration, Canada's role in the light of new security challenges, and the study of the agenda of the 2002 G-8 summit here in Alberta.

As everyone knows, Canada is president of the G-8 this year. We'll be hosting the summit next month in Kananaskis, Alberta. In addition to addressing the global economic situation and the international fight against terrorism, Canada is putting particular emphasis on advancing an action plan for Africa, based on the African initiative for a new development partnership.

This committee has held hearings already in Atlantic Canada and Quebec. This week, we're working in two teams. One team is in Manitoba and Ontario, and this team is in the western-most provinces of Alberta, B.C., and Saskatchewan. Of course, today we're here in Edmonton.

Witnesses should know that in regard to the G-8 issues, the committee will be tabling its report by the end of this month, in advance of the summit. In the case of the North American study, all aspects of Canada-U.S., Canada-Mexico, and trilateral ties are open for examination. That report is expected some time this fall.

In advance of their appearance, I want to thank all witnesses who will be coming before us today.

It is now my pleasure to introduce our first witness of the day. He is Brian Stevenson, associate vice-president at the University of Alberta. He's no stranger to us. He has worked in Ottawa for a number of years.

It's nice to see you here in Edmonton, Mr. Stevenson. I gather you have a prepared text, and then we'll finish the 45-minute segment with questions.

Welcome, and you may proceed.

¿ (0905)

Mr. Brian Stevenson (Associate Vice-President (International), University of Alberta): Thank you very much, Mr. Chairman.

I want to begin by thanking the committee for inviting me here today to speak about a subject I am very passionate about: the future of the North American community. I also want to make it clear that the views I express here today are solely my own.

First and foremost, I get my passion for the North American community through a deep personal experience. One might say North America is in my blood, literally. My mother was born in Mexico, but her family emigrated from there to California in the 1920s. She grew up in the U.S., but ended up marrying a Canadian and moving to this country, where I was born. In fact, I was born and lived in Mr. Martin's constituency for a good part of my youth. As a result of this, my extended family is scattered throughout Mexico, the U.S., and Canada.

As if following a family tradition, I grew up in Mexico and the U.S., finally returning to Canada in my teens.

My mother tongues are both English and Spanish. In many ways I find myself, culturally speaking, to be a North American, quite comfortable in all three countries.

I also started my academic career in Mexico, and had the pleasure and privilege of explaining Canada to Mexicans at a crucial historical moment during the negotiations of the North American Free Trade Agreement. At the time, I was coordinator of the Canadian studies program at the Instituto Tecnológico Autónomo de México, or ITAM.

While there I travelled the country, giving lectures and offering courses on Canada to audiences who could do little more than conjure up stereotypical images of our country. They were, however, fascinated by the many nuances of our rich and complex society.

I also spent quite a bit of time explaining Mexico to Canadians, and often brought both parties together to realize how much they had in common, or, to be more precise, what countries they had in common. I've always been fascinated by this common experience and the sense of camaraderie that exists when Mexicans and Canadians compare historical notes. You may have had this experience when you were recently in Mexico.

When we discuss North America, our guiding principle has to be one that furthers our national interest. Moreover, it is critical that we conduct our foreign policy in such a fashion that we protect and promote what is best about Canada, and that we preserve our unique identity and core values.

It has been a mainstay of Canadian foreign policy in the post-war era that we should offset our bilateral relationship with the United States through multilateralism. If this is taken to mean only the multilateralism represented by organizations such as the UN and the WTO, then I can accept this, but only to a limited extent. I like to tell my students that the first five foreign policy and trade priorities for Canada are about Canada-U.S. relations, but the sixth is diversification. In the immediate post-war world, when multilateral organizations were relatively small and substantive results were accomplished relatively easily, this made sense.

Today, a universalist conception of multilateralism is much less useful and effective in meeting specific goals. Among other things, it is much more difficult to come to a common understanding of the best outcome in any given situation, simply because of the large membership. In addition, the kind of consensus-building that achieves meaningful results takes more time and greater effort than is normally available.

I still believe that multilateralism of this type helps us balance our relationship with the United States and is valuable in itself for a host of reasons. But we must understand that the world is an increasingly complex place, where we need to think about a whole series of complementary strategies.

In the hemisphere, for example, we could significantly enhance our multilateral needs, not only through trilateral arrangements such as NAFTA but also through regional arrangements, such as the free trade agreements of the Americas, institutions such as the Organization of American States, and other inter-American institutions.

So for me, the two least-desirable arrangements are an asymmetrical bilateral relationship on one end of the spectrum, and a fully universal multilateral relationship on the other. Neither of these two can be rejected, of course, but they must be complemented by a variety of options throughout the middle of the spectrum of multilateralism, and even selected strategic bilateral relationships. Our menu of policy options has to be broad, but it must begin with North America.

North America, as a region, begins with economic and trade relationships, supported by multilateral and bilateral agreements and arrangements. This encompasses what Joseph Nye described to you last week, when he explained the nature of power today as a three-dimensional chessboard, the top being the board of military power, the middle part including economic relations, and the bottom being transnational relations. And what I primarily want to address is the bottom one, in the North American context.

Both my personal experience and my professional interests have led me to attempt to understand the complexity of the United States, and in particular the manner in which it deals with its two North American neighbours.

¿ (0910)

The academic culmination of this is embodied in a forthcoming book I have co-edited with Michael K. Hawes and Rafael Fernández de Castro, entitled Relating to the Powerful One: How Canada and Mexico View the USA. This book explores another dimension of what George Haynal described to you as the three bilateral relationships and one trilateral relationship in North America. Perhaps this one can be called the collateral relationship, the shared bond between Canadians and Mexicans about their relationship to our common neighbour. I will suggest this to George.

Each chapter in the book was co-authored by a Mexican and a Canadian expert on a selected theme of their country's bilateral relationship with the United States. The authors had to compare notes on a familiar topic, but learned how the other country dealt with the theme or sector. At the last of the author workshops, we invited two prominent Americans, each an expert on one of the two bilateral relations, to give us their views on the chapters in the book. One of the conclusions I drew from this exercise is how little we know about each other in North America, and how much we're dominated by the two strong bilateral relationships.

I also learned, although we have spent a lot of time and energy in establishing the rules of the game and the infrastructure for the economic and trade relationships--what Joseph Nye described to you as the second board of the three-dimensional chess game--we have spent precious little time, energy, and resources in understanding or providing a policy framework for the transnational relations, the bottom board of the three-level chess game. It is here the North American community will really begin to take shape.

Public understanding and support of the trade and economic processes are viable in democratic societies. Increased understanding and exposure will lessen the “us and them” syndrome, for, ironically, as we become more economically integrated, we will also find an increase in disputes and disagreements that will fuel tensions and will reflect different values and priorities. Helping the public see, and preferably experience, the other countries can build a transnational consciousness that can assist in the integration process. We need a North American constituency. Increasing awareness of each other, and of the community we're building, is important in and of itself because it broadens our horizons and deepens our understanding of ourselves.

For example, recently we have begun to learn about the importance of understanding the first-level chessboard, the military and security dimension in North America. Without direct exposure to the deep feelings, insecurity, and vulnerability our American cousins feel right now, it is difficult for governments to justify to their citizenry, and to themselves, the security measures that must be taken to address the fears. We have also learned that what we want to do is protect a shared way of life that is being opposed and threatened by extremism. Our friends in the U.S. must also try to understand if we disagree about particular measures, we're no less committed to their security and to our shared community.

In a very real sense, the big question is how much do we invest in our attempt to understand and explain non-trade relations in North America and in forging a sense of community? It would appear we have invested too little. If we truly value the economic relationship we have with the United States, and we most certainly should, or the one we're building with Mexico, then we should nurture the social, political, academic, and cultural dimensions as well. This is about bringing people together. We've done a good job establishing the hardware, but we cannot operate well without good software. We need an operating system for North America. The question is, who will write the program?

A starting point is certainly the work of this committee and your role as parliamentarians. I wonder if you could become not only policy thinkers and analysts, but also protagonists in building a North American community.

For example, I've heard the suggestion that we develop a North American parliamentary association or committee. This could be an important first step. If U.S. legislators cannot be convinced to participate at this time, how about bringing together the two parliamentary bilateral committees to a one-time session to discuss North America? How about inviting the counterparts of this committee to share your conclusions regarding this very study and asking what the next steps might be?

¿ (0915)

Another idea could be to establish a North American congressional and parliamentary internship program. This would certainly help in bringing together future political leaders and encouraging them to understand the very different political systems in North America.

At a broader level, we could develop more programs that foster educational exchanges and we should also consider expanding the existing North American mobility program.

When you heard from Robert Pastor, you were presented with a series of concrete proposals to build North American institutions and the North American community in the fullest sense. I can understand if some of you felt a bit overwhelmed by the breadth and scope of the proposals. He presents us with an architecture for regional integration. His proposals are visionary and bold, and they should not be easily dismissed.

You've also heard that the Mexican government and some Mexican academics have embraced Dr. Pastor's vision and have extended a hand to us to engage in a dialogue about this vision. It is understandable that the U.S. government may be unlikely to engage in a meaningful dialogue on North Americanization in the near future, except, perhaps, to address their security concerns in the fight against terrorism. But I believe we should engage the Mexicans, and more importantly be seen to engage them, and take up the challenge to discuss the process of building a North American community.

Although we benefit tremendously from our good bilateral relationship with the U.S., we are also terribly vulnerable because of it. Our next step should be to transform the three bilateral relationships into a North American community. This is in our national interest.

Thank you.

¿ (0920)

The Acting Chair (Mr. John Harvard): We have about half an hour for questions. We'll start with Dr. Martin.

Mr. Keith Martin (Esquimalt—Juan de Fuca, Canadian Alliance): Thank you, Mr. Harvard.

Thanks, again, Dr. Stevenson, for being here--it's great to see you again--and for all the hard work you did while you were working with then-Minister Axworthy in Foreign Affairs.

In the two examples you gave, Dr. Stevenson, about worst-case scenarios in our relationship, one of those, on one side, was an asymmetric relationship with the United States. I would suggest, as your comments went, that of course that's what we have, unfortunately. Our obstacle or our challenge is how to get around it. How do we deal with a powerful country like the U.S., which is becoming more unilateral and more centrist in its views, willing to go it alone? In terms of the mechanics, the softwares, which is what this committee is actually struggling with, what concrete steps would you also take in terms of being able to engage the Americans? One solution was perhaps a North American commission--and you've proffered many.

The toughest part is trying to engage them. When we were down in Washington, about three Congress people came up--just because we were some curiosity to them, not because they wanted to have any meaningful interaction with us. In your view, how do we manage to engage the Americans in a meaningful way to get to argue through this self-interest? How do we get them to the table so we can actually work with them? I think there's enormous opportunity in terms of learning from them and their learning from us.

Mr. Brian Stevenson: It's a very good question. There are a number of concrete ways in which we do it. I think we have to begin with our partnership with the Mexicans. Together we can bring the Americans in certain sectors and in certain areas to the table to talk about building institutions in North America; about how we develop a relationship with them that's based on rules, that's based on the mechanics of a relationship that is predictable, and that has an institutional framework. I think often we can't go to the U.S. on our own and have anybody pay attention to us, but I do think if we work with the Mexicans strategically, we can get the attention of some U.S. legislators.

The problem of getting the attention of the Americans is something a lot of sectors in Canadian society experience. In the academic world, we have a lot of trouble getting attention from the academics in the States, and there are other sectors that are the same.

But if we find the right people, people who are interested, sensitive, and ready to engage us, I think we have to do it as a team. Working bilaterally, which is a predisposition of some, is not my preferred track. I think we have to work as a team, and we have to have a goal. This is why my suggestion is to work with the Mexicans to build a road map to where we want to go and then to try to engage the Americans.

I participate in an organization called the North American Institute, or NAMI, and that organization has the same problem that all trilateral organizations have--that is, the Mexicans and the Canadians are very active, and it's sometimes difficult to get some of the Americans involved. In the case of NAMI, the American office is the most established and does very well, but we do find that getting the Americans to come to our meetings is a little more difficult.

So my answer is that we have to work together.

¿ (0925)

Mr. Keith Martin: So what you're suggesting is that we sit down with the Mexicans and come up with a common game plan and then together we approach the Americans on what we want.

Mr. Brian Stevenson: Obviously, we can work several tracks at the same time, but I think that's a very good initial approach. We have to find people who have an interest in developing a trilateral relationship. In our case it may very well be legislators in the north, and for the Mexicans it might be legislators in the south. Once you start to bring those partners together and see that there are trilateral relations to further, I think it will be easier to work.

Mr. Keith Martin: Do you think that post-September 11, because of the security in Washington, that can be used as a hook to get the Americans interested in other matters, such as the environment, social issues, and trade issues? Are there levers we can use? Or would you suggest that one of the ways we can deal with this is to fight fire with fire; that is, identify American lobby groups and other Americans who have the same interests as we do and work with them to put pressure on the Congress, the Senate, and the administration to do what we want?

Mr. Brian Stevenson: I think we have to use all the tools available to us. One of them, of course, is to develop coalitions with Americans who have common interests with us, and I think that's a very sensible thing to do. But I think that in the long term--we're not moving anywhere, so we're going to be here in the long term--we have to develop institutions and processes not only for trade but for a number of other issues we want to deal with the Americans on.

My sense is that sooner or later there is going to be leadership in the U.S. administration to develop North American relations. We don't have it now because, of course, the U.S. administration is focused on security issues, and we may have to wait a while before we get that.

Consider how NAFTA was created. We can look at that historical moment in November 1988 where within a month we had three elections in North America whereby George Bush, Sr., Salinas, and Mulroney were elected. They came together soon after to discuss a North American free trade agreement. It's that kind of harmony we will need.

But in the meantime we still have a lot of work to do, and that's why I'm suggesting that the first step is to try to build a common vision together about what we want to do in North America.

Mr. Keith Martin: Dr. Stevenson, one of the big challenges, as you know from your time in Foreign Affairs, is to get a level of meaningful interaction between our Canadian and American legislators. Can you offer us some suggestions on how that could be done? Do you believe in a North America commission?

Lastly, one of the difficulties we have is engaging the Canadian public, and you can see it from this room, which probably has the largest number of people we've had in any of our hearings. How can we do that?

Mr. Brian Stevenson: To begin with your last question, I think you're engaging the Canadian public by coming out here. I want to commend you for doing this tour and taking foreign policy out to the community. I think that's a very important task.

I think we have a whole series of measures at Foreign Affairs, through the legislative process, to let Canadians express their views. They express them in a variety of ways. Having these kinds of meetings is one way of doing it. Another way is the consultative processes of the department. Through the party system, of course, there is a way to channel ideas and concepts.

But I think Canadians will get engaged in these issues when it affects their lives and when they feel concerned about them. I remember, when I worked as an intern in the Department of Foreign Affairs, the single most important issue in the review of foreign policy in the 1980s was Central America. Gerry Schmitz and I worked on that theme. It was amazing to see the number of letters we received that talked about the Central American crisis. It engaged the public, and it affected Canadian foreign policy. In fact, I've written a book about it, and the process that the non-government organizations have had in affecting our policy towards Latin America.

So as far as I can tell, on that side, enough doors are open for people to walk through. I certainly don't have any concrete suggestions for more.

With regard to engaging legislators, again I think part of the answer has to be what is in it for them as legislators to get engaged--besides a nice little show of activity. We have to find reasons that are important for them. Like you, they're concerned about their constituents, about how their country fares in the various themes, and with issues they're dealing with. So you have to find that hook.

I also think, if you build institutions, people will come to them and engage in them. I think we're missing this in North America. Even the NAFTA institutions are still too rudimentary to create a social engagement among citizens and legislators.

¿ (0930)

The Acting Chair (Mr. John Harvard): Thank you.

We'll now turn to Mr. Rocheleau.

[Translation]

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

Mr. Stevenson, thank you for your presentation. With all due respect, I find that you attach considerable importance to Canada's relations with the United States. It seems to me that your view of relations between the two countries is not only positive but also perhaps somewhat idyllic or angelic. As for the relative power of the two countries, both witnesses and the general public often refer to the elephant and the mouse analogy. Your way of looking at these relations seems, on the contrary, to stem from an approach emphasizing equality, despite the fact that a large number of parliamentarians and American congressmen know very little about Canada and would undoubtedly have trouble naming its capital, which says it all.

In this context, I would like to hear your interpretation of what we are currently experiencing, specifically in the area of softwood lumber and agriculture, and I would like to know what we should do to achieve something more positive. How do you see this quasi-aggressive action on the part of our friend, our powerful neighbour? How does that fit in with your view?

I would also like to know what you think about the suggestion made by the leader of the Bloc Québécois, Mr. Duceppe, during his trip to Mexico, where he suggested that the foreign affairs committees of each country should meet regularly to create more solid links. He also suggested that Canada should be present as an observer during negotiations between the U.S. and Mexico, and that Mexico be present during negotiations between the U.S. and Canada. This would enable the parties to better understand each other and, if need be, to defend their interests, which could be in jeopardy without their knowing it, if the parties concerned are not present. I would like to hear your comments on that.

[English]

Mr. Brian Stevenson: I'm sorry if I gave you the impression that I think there is any kind of equal relationship between the two countries, which is certainly not what I believe. I do believe, though--and I agree with the analysis of Joe Nye--that power is more diffused now than it was during the Cold War era, and there are certain areas and sectors in which we have more control and influence. But that doesn't mean the overall power relationship between the most powerful nation--not only on earth, but in history--and ourselves would be anywhere near equal. However, if you look at that three-level chess board, there are definitely areas in all three where we do have influence.

With respect to trade disputes between the United States and us, at this stage I would say to you that if you look at the more than $1 billion U.S. a year that goes back and forth, if you look at the enormity of the trade relationship, and then you measure it against the trade disputes, which are very important to us but really don't represent a huge percentage of the trade we're doing, you may find--and probably nobody could calculate this exactly--99% of the bilateral relationship is working fairly well between the two countries. Unfortunately, sometimes that 1% in the trade conflict between us is found in areas that we're very sensitive about and are very worried about, such as softwood lumber.

The softwood lumber case is a very good example of a trade dispute that is ruled not by unfairness on our behalf, in my view, but by a good trade lobby in the United States. I think we are beginning to see, as I was saying to Mr. Martin, that we have to be able to make coalitions with people in the United States who have influence over their government, who can help us in a common goal. I think that is very important.

With respect to Mr. Duceppe's suggestion, I do believe we have to move more and more toward trilateral discussions, and I would very much support his ideas if they mean we're going to bring together the committees and we're going to discuss trilateral relationships. I think getting to know each other is a very important measure. However, there are still, and there will always be, matters that are strictly bilateral. I guess the best way of putting it is a word that I learned recently and really like very much, which is, with respect to Mexico, that we're in a position of “co-ompetition”--a combination of cooperation and competition.

So I think there are some areas in which we can collaborate, work together, but there are other areas in which we're going to be competitors with the U.S. or trying to deal with the U.S.

¿ (0935)

The Acting Chair (Mr. John Harvard): Thank you.

I have a couple of questions, Mr. Stevenson. Let's have another go at trilateralism.

You may reject the analogy, and if you feel compelled to do so, please do, but you could say there's a North American jungle out there, and at the top of the animal chain are the Americans. We Canadians are somewhat down the chain, and perhaps the Mexicans are down even further.

When we talk about multinational institutions, the American animal at the top of the chain will reply by saying, ah, you're just trying to bring us down to your level, down to your size; and why should we come down to your level when we're already on the top?

Does that analogy make sense to you?

Mr. Brian Stevenson: I would say, perhaps being a good predator isn't always what makes you get ahead. Humans were not the most fearsome predators in the evolutionary scale, but we managed to survive and we managed to thrive because we used our wits.

I think we have to use our wits in our relationship with the United States. We have to be smart, and I think we have been smart over the decades. Generally we've been able to handle our relationship with the United States quite well.

The Acting Chair (Mr. John Harvard): Largely bilaterally, though.

Mr. Brian Stevenson: Yes, largely bilaterally. My concern is that the bilateral relationship is getting deeper and deeper. That brings us a lot of benefits in the short term, but I really worry about the long term of our relationship. I'm suggesting that we have to have a variety of strategies to be able to decrease that dependence in the long term.

In my academic work, I remember finding that when Mr. Trudeau developed the third option in the early 1970s, we had probably somewhere around 60% of our exports going to the U.S. By the time the third option ended--which was implemented with gusto over a 10-year period--we had 75% of our exports going to the U.S.

There are centrifugal forces in the North American continent that we have little power over. We have little power over what those realities are, but we have power over how we deal with them, how we protect ourselves from them, and what we do in the rest of the world. This is why, for me, in the hemisphere, the free trade agreement of the Americas is so important. This is why building relations with the Asia Pacific and rebuilding our relationships with Europe are very important. But it can't just be that the WTO and the UN are going to help us become independent, which was a post-war theory. It's much more than that.

¿ (0940)

The Acting Chair (Mr. John Harvard): Let's talk about negotiating strategies. Which ones might be the most efficacious?

We've heard from Wendy Dobson, with her big idea approach--customs union, common market, common currency. Then the other day in Vancouver we heard from Reg Whitaker, a professor at York University, suggesting something at the other end of the spectrum--go slowly, piecemeal, incrementally.

Where do you come down on this?

Mr. Brian Stevenson: I think what I'm trying to say to you today is, let's talk about the things that don't have to do with trade for the moment, and let's think about how our societies are adapting first. Before we go forward any more--and I think we're going to probably have to, eventually--we have to build a community. We have to build a constituency in North America to help us deal with that integration. Otherwise, there is going to be a point at which we're going to get a greater negative reaction, a broader negative reaction than we have had in the last few years.

We've built this trade relationship, which is, let's face it, largely bilateral, with some trilateral potential in the future. So my sense is that the next step has to be to start building other structures as part of this North American entity, and let's start working on those areas that I think we have largely ignored and underfunded.

The Acting Chair (Mr. John Harvard): Give us a couple of examples beyond what you were suggesting about building up some sort of parliamentary institution of one kind or another among the three countries. What are the possible social structures, or whatever?

Mr. Brian Stevenson: Let me just use one from the research world that I have to deal with in my job. We all know the future of our economies is going to be based on the knowledge-based economy, on high technologies, on research. I think the federal government has to be commended for its strategies over the past few years to increase the amount of research money through the Foundation for Innovation and the granting councils. The U.S. is even envious of some of the things we've done, like the millennium chairs, etc.

We're just beginning to catch up with the Americans in those areas, but the Mexicans are even further behind than we are. There are no trilateral structures to try to bring the three countries together and do common research that will affect our economy in the long term, to find discoveries, to develop technologies. There's no common structure. There's no common funding. There's no way of trying to bring researchers together in North America to try to develop joint projects in a formal way. A lot is done bilaterally; a lot of things are done informally.

There is very little money in Mexico for this kind of research, and I think we do have to find ways of bringing them in, because they have very good researchers and they have potentially very good research institutions that can collaborate and develop good niche research.

But we don't have that kind of vision. We find research is strictly a national enterprise, but the results are international, and certainly could be trilateral.

Another way of bringing together is trying to find ways of addressing the social and political issues--in Mexico, for example. Right now the issue that concerns me the most about Mexico is the high degree of poverty and disparity that exists there. Not only is there a great deal of poverty, there's also a great deal of regional disparity from the north to the south.

Because they're linked to the U.S. economy, the areas in the north seem to be doing better than the ones in the centre and the south. I think we should develop North American strategies to be able to help those regions develop better. Of course, Mexicans have to, themselves, develop strategies and policies to improve the distribution of wealth in their country, and I think maybe something like that could be done with them. But we can't ignore that. If we're part of a community, we can't brush aside the fact that there are these very serious social and economic problems and hope that simply trade is going to resolve them. There are deeper and more important issues that we have to deal with. The European Union has dealt with these issues internally, with mixed results, and I think we have to begin to address those.

¿ (0945)

The Acting Chair (Mr. John Harvard): Just building on that, the Mexicans have made a number of proposals, many of which involve rather substantial funding commitments not dissimilar to Europe's social cohesion. Do you really think that the other two North American partners--Canadians and Americans--could be persuaded to buy into that kind of thing?

Mr. Brian Stevenson: First we have to learn from both the successes and the mistakes of the European model, and in fact we have to learn about the successes and failures of our own internal regional development models.

But I do believe very strongly that, if we're part of an economic community, if we're part of a social, political community in North America, we have to think about these things and we have to address them. Health issues--which you're going to hear about in a few minutes with respect to Africa, but there are serious problems in Mexico as well--poverty issues, issues with indigenous peoples, etc., are very important.

Now, we have our own problems that we have to deal with as well, but I think the Mexicans are suggesting to us that they want to participate with us in developing those policies and strategies. We have to at least sit down and listen to them and not dismiss it offhand. We may or may not be able to come together in this, and it may or may not be palatable politically in Canada and the U.S., but if we're part of a community, it means we take common responsibility. I think this is a very important part of our relationship with Mexico but also in North America.

The Acting Chair (Mr. John Harvard): Dr. Stevenson, this has been very informative. I want to thank you very much for this. The entire committee appreciates your taking the time to share these thoughts with us. Thank you again.

Mr. Brian Stevenson: Thank you, and again I commend you for coming to Edmonton. As you can see, we have better weather than in Calgary and we're very proud of it. I hope you stay here a little longer.

The Acting Chair (Mr. John Harvard): Thank you very much.

We're going to move on to our next set of witnesses. They are from Stop TB. Anne Fanning is the chair and Stan Houston and Walter Kipp are members.

I want say thank you very much for coming today. We have until 10:30 to hear what you have to say.

Are all three of you going to be speaking off the top before we go to questions? What is the intention?

Dr. Anna Fanning (Chair, Stop TB Canada): I'm Anne Fanning, and I will be begin by introducing our overview, talking a bit about tuberculosis, and then Walter Kipp will talk about the HIV issues, which are closely linked, and Stan Houston will summarize with comments about malaria.

The Acting Chair (Mr. John Harvard): That's wonderful, as long as you can leave us at least half the time for questions, something like that. Thank you.

Dr. Anna Fanning: First of all, we are delighted to have the opportunity to address this committee, and I might say that we are talking not just as North American citizens, as Dr. Stevenson was, but as global citizens. Perhaps if you take the honourable member Mr. Harvard's analogy to Mexico at the bottom of the chain, we go even further down, in this discussion.

We are in fact all members of the coalition called Stop TB Canada, but in addition we are academics in the Faculty of Medicine and Dentistry at the University of Alberta. We are part of an initiative for international and intercultural health, and our major focus, our major goal, is to ensure that our graduates, the young doctors of the future, are cognizant of the global health issues--that is, the health of the 3 billion people who live on less than $2 a day and whose health issues are largely due to problems that have a solution. We believe that these graduates, whether they practise in Canada or abroad and teach or do research, will be part of the solution to the disparity and to those unaddressed health problems.

I've given you a bit of a handout that starts with a slide I use to talk about global disparity, and it illustrates what has happened in the past century in terms of the haves and the have-nots.The disparity between the top quintile of the richest to the bottom quintile of the poorest has increased from a ratio of 3:1 to now close to 80:1 at the turn of the last century.

We are really proud of Canada's taking the lead. I would suggest that in spite of the fact that we have this omnipotent partner to the south of us, we have a tremendous role and respect in the global community, and we are exercising our role. We urge that we expand that financial commitment to fund health issues; that we sustain it, because you can't just do it for a year or two and expect it will bear fruit; that it be evidence-based and evaluated; and that it recognize that we will not have economic development without good health. Sick people can't work and poor people tend to get sick. We are really proud that the Prime Minister has acknowledged this and led the Africa focus in the G-8 coming up, and we believe that in addition to sustaining development abroad we have to develop capacity within Canada.

Now I would direct you to my remarks about tuberculosis, because it is one of the diseases, perhaps the best-evidenced disease, that has a cost-effective intervention, an intervention that is neglected. About a third of the 6 billion in the world are infected--2 billion--and every year there are 8 million people with active TB, of whom 2 million die in spite of the fact that we have had a curative strategy since the sixties that now costs about $10 for six months of treatment. It's the best financial bang for the buck. The World Bank says that if you want to invest a dollar in health, this is the place to put it, yet only 25% of those 8 million cases have access to that DOTS strategy to cure TB.

TB has an enormous economic impact. It strikes the young, adults, income earners, caregivers, and mothers, and it's estimated that the cost of their sickness is in the order of $12 billion annually. The cost of addressing that with this DOTS strategy would be something like $2 billion a year.

¿ (0950)

That's an awfully good return on an investment, and it's something that we should be doing. In fact, Canada, through CIDA, contributed the start-up dollars to the global drug fund, with $15 million Canadian, that enabled about 14 countries that were hitherto unable to deliver that treatment to do so.

TB is only one of the issues. My colleagues will address the others. We need to increase the funding directed to these health issues and we must ensure that they are delivered in a sustainable and a valuable mechanism.

I'm going to turn the mike over to Dr. Walter Kipp.

¿ (0955)

Dr. Walter Kipp (Member, Stop TB Canada): I will talk about HIV/AIDS in Africa. Globally, 40 million people are estimated to be HIV-positive, 28 million of whom are living in sub-Saharan Africa. While great progress has been made in the understanding of transmission and the management of the disease, there is still no cure. An efficacious vaccine against HIV/AIDS will likely not be available within the next 10 years for large-scale vaccination campaigns, according to the experts in the field. However, in a few countries prevention efforts have been successful in reducing the spread of HIV. This has been mainly due to outstanding leadership at the highest political level, committed program staff, and the participation of large segments of society.

An example from a middle-income country is Thailand, where through a strong and sustained commitment of the Thai government, condom use was encouraged, targeting mainly towards commercial sex workers. The 100% condom-use policy in Thailand has reduced substantially sexually transmitted diseases, including HIV/AIDS.

Another example of a low-income country is Uganda, where a comprehensive HIV/AIDS control program was launched in 1987 with the help of WHO. Ugandan President Museveni himself became very involved and used every opportunity to talk about HIV/AIDS and how it can be prevented.

At the national level, the number of infections now stands at 800,000, compared with 1.6 million in 1995, which is a reduction of 50%. At the local level in many districts, HIV infection rates in young pregnant women have dropped by 50% as well, within a six- to eight-year time period. In western Uganda, HIV prevalence in young pregnant women dropped from 33% in 1991 to 9% in 1997.

Currently, there is a general feeling of relief in the Ugandan population, because there has been a lowered mortality rate due to AIDS. However, everybody is aware that the struggle against HIV/AIDS is far from over.

In order to achieve results similar to the Ugandan example, a basic package of intervention strategies has to be implemented nationwide, resulting in a comprehensive HIV/AIDS control program.

Even in Uganda this has not been fully achieved yet. Estimates from western Uganda indicate that the costs to prevent one case of HIV infection is less than the treatment costs for one AIDS patient for one year, which is currently $300 U.S. in Uganda. While access to anti-retroviral drugs is essential for AIDS patients, it should also be acknowledged that at the same time preventive programs must be carried on and expanded to areas where they don't exist, which is mainly rural areas.

The cost estimates for the HIV/AIDS prevention program in western Uganda lies between $2 to $4 U.S. per head per year. As Uganda is not able to provide the required resources for disease prevention efforts from its own budget, international assistance is absolutely critical. In order to maintain existing program coverage with preventive programs and to expand it to all areas, including rural and remote districts, increased international funds are crucial.

À (1000)

The Acting Chair (Mr. John Harvard): Welcome, Dr. Houston.

Dr. Stan Houston (Member, Stop TB Canada): The third disease identified by the global health fund is malaria. Malaria accounts for a huge burden of human ill health and disability, with an immense economic impact stemming from it. It's estimated there are about 400 million clinical illnesses due to malaria around the world each year. It's also a substantial contributor to death, with the most conservative estimates being over a million deaths each year, the great majority of these occurring in African children.

There are effective responses and interventions against malaria. There has been excellent documentation of the effectiveness and use of a very simple technology--the bed net--and in fact Canadian development workers and academic researchers have contributed to the knowledge about this topic and the implementation of bed net projects, particularly in Africa.

The infections will never be completely prevented, and it remains essential that there be better access to simple diagnostic and treatment measures, widely accessible to people at the primary health care level. But this requires the existence of a well-developed and functioning basic primary health care system as well as future progress in development of diagnostic technologies and better drugs for treating malaria, because of the increasing resistance to the drugs we presently have.

I'm going to close with a few conclusions and recommendations from our group.

First of all, we strongly advocate that Canada demonstrate and continue to demonstrate leadership in international economic fora, such as the upcoming G-8 meeting, in creating global economic conditions that will allow low-income countries to contribute effectively to their own sustainable development and to improve the health of their people. The areas I'm referring to include fairness in trade rules to low-income, primary-producer countries, and fair access to markets in wealthy countries from poor countries, as well as the elimination of debt burdens that are crippling development in many low-income countries. I'm sure you're aware that a number of African countries spend more servicing their debt than they do on health and education combined.

Second, we advocate that Canada demonstrate global leadership in the provision of development assistance, with a target being our long-ago-set target of 0.7% of GNP, and continue this assistance both through existing important structures and mechanisms that need to be maintained, as well as new mechanisms, such as the global health fund that's received so much attention lately.

Third, we recommend that Canada commit to sustained support for the development of capacity infrastructure and human resources. In the low-income countries themselves, this is critical for successful development to occur and also critical for the effective use of the funds we've been talking about.

At the same time, a limited proportion of Canadian development funding must provide sustained support for the development of Canadian capacity and expertise in universities, in government, and in NGOs, so that Canada can contribute effectively and collaboratively to programs, education, and essential research in low-income countries into the future.

Finally, in pursuit of these objectives, we emphasize two things: the need to recognize the vital and bidirectional interconnection between health and economic development, and the need to ensure that evidence of what really works remains the primary determinant of development policies and spending priorities.

That concludes our presentation.

À (1005)

The Acting Chair (Mr. John Harvard): Thank you very much to all three of you.

We have some time for questions, and we'll start with Dr. Martin.

Mr. Keith Martin: Thank you, Mr. Harvard, and thank you, Drs. Fanning, Houston, and Kipp, for being here today and discussing this issue that is so devastating to the continent that we are dealing with, primarily in the G-8.

It's ironic, isn't it, that the number of people dying every year from malaria, tuberculosis, and AIDS is almost the same as the number of people who died in the Holocaust. It's ironic, putting those figures in there, that number is so large.

Research and development for tropical diseases represents, as you know, less than 2% of all the new medications that are put forth every year, while 98% is spent on diseases affecting the western world. One thing I have proferred--and I wanted to know your reflection on this--is that pharmaceutical companies would not do that because the rate of return is not there for them to do research into tropical diseases.

Given that fact, do you think the Canadian institutes of health research should find partners in other government-funded research groups in the west to form an international partnership to deal with research into tropical diseases so we can develop new therapeutics into these diseases that have such high mortality and morbidity and such an economic burden, as you mentioned, in these developing countries?

My second question is on the burden of tuberculosis. Most of it, or a great deal of it, of course is tied to HIV prevalence rates causing people to be immunocompromised and making them more susceptible to TB. Therefore, would you suggest that we have to work in a multi-factorial approach, not only from a health care perspective but also in terms of economics? By extension, should we focus our investment on those countries where you have a leadership that is prepared to spend the money on health care, acknowledge the problem, and work with the international community fairly, so that your investment is going to get traction in these countries, as opposed to leaders who are not willing to acknowledge the problem, like Mr. Mugabe, and are willing to spend the money on arms rather than on health care?

Finally, with 10 million, going up to 30 million, orphans of HIV, the economic burden on these countries is so massive. HIV is basically ripping the heart out of the economic engine drivers of developing countries. Do you think that, as a country, we should actually call for an increased amount of investment into the fund for TB, malaria, and HIV? That could also be expanded to involve other diseases, like bilharzia and gastro, that have such a huge impact upon developing countries. We can deal with things like clean water and micronutrients and such that can have such a positive effect with such a small input of money into these countries.

Thank you.

Dr. Anna Fanning: I'll start out trying to respond. You ask very good questions.

First of all, in response to your suggestion that the Canadian institutes of health research address this disparity of attention to global health issues, the answer is an emphatic yes. I would hope that within the next year or two there will be an institute addressing global health issues. At the moment, I understand there is a cross-cutting endeavour initiative to turn some of our researchers' attention to these tropical diseases you allude to. We do have to have international partners. I do think we have to link projects, such as those that are developed by CIDA, to the research element.

In addition to the totally new drug and vaccine development, there's a really important piece of research I would refer to as operations research, which is examining strategies that work, and applying those in new and different situations.

I will turn to Dr. Houston to respond to your other two questions.

À (1010)

Dr. Stan Houston: First of all, in regard to the question about where we should invest, it's correct that there are limited resources. They're more limited than they should be. But we'll never have infinite resources, so we have to be wise in selecting where we put them. Delivering them to situations where there are effective programs and good leadership is obviously much more sensible than to such settings as Zimbabwe at the moment. It hits particularly close to home for me, because I've just returned from spending a year in Zimbabwe.

On the other hand, I can tell you it's unfair for the people of Zimbabwe to suffer a second and third time, because they are already experiencing a great deal of suffering due to their poor leadership. For us to complicate this by withholding support is also a concern in terms of fairness and equity. Perhaps it re-emphasizes how consistently politics and health are inextricably intertwined. In order for us to be able to support health intervention in Zimbabwe, we have to support political change in Zimbabwe.

Dr. Walter Kipp: Your question relating to the 40 million orphans and the social impact of HIV/AIDS in Africa is just enormous. I lived for six years in Uganda at the time when HIV prevalence was rising continuously. The death of parents--leaving children alone--has tremendous implications.

Just considering one aspect, if you look at education, we know it is an important, and almost a universal, indicator for health. Health education of the women in a household is directly related to health outcomes of the children.

In most of those situations in a house, where the husband usually comes down with AIDS and dies, the children will not be able to continue to go to school, even in the situation where school fees are not charged. For example, in Uganda primary education is free, but there are, of course, other costs involved in terms of books, uniforms, and other items. So these children simply drop out of school and don't get an education. We talk about all levels of schooling, from primary one to secondary six. I feel this is a time bomb, because these children will be adults in 20 or 30 years. We will really see the full impact of this in the next decades.

There are possibilities to counteract this kind of situation. Funds could be made available, so families who are really affected and economically stressed by HIV/AIDS could be supported, not only in a financial way but also in a counselling or outreach way. In many districts in many areas in Uganda, there was simply not the money for this. For a combined approach, looking at social and economic impacts in the household, we need more research because very little is known. I think we could really make an impact now, which would really benefit us in the next 20 or 30 years.

À (1015)

The Acting Chair (Mr. John Harvard): Thank you.

Mr. Rocheleau.

[Translation]

Mr. Yves Rocheleau: Thank you, Mr. Chairman.

Thank you for your presentation. I would like to raise four points. First of all, it seems to me that in the chapter dealing with international wealth and health, you paint an accurate picture, which appears to reflect what we are hearing and, generally speaking, what we are reading on the situation in most places on the planet, especially Africa. I would like to know what you think about the people whose opinions are fundamentally different. I won't try to hide from you that I am thinking about people, namely the Fraser Institute, who are spreading an entirely different story, and who, when questioned like you in Vancouver, say that the situation is improving and that the gap between the rich and the poor is decreasing, whereas all of the other data, unless we are all biased or ill-informed, show that the gap is getting bigger and has been since the start of the neo-liberal period that we are currently experiencing, in other words, since the Reagan-Thatcher era. Should we not have this debate? These people have considerable influence over some university colleagues who prefer to think this way rather than another way, over a certain political class, over business people—to give you an easy example, just think about the chambers of commerce—as well as over all the citizens who are fed up with paying taxes, who are supported in their criticisms and who dream of the day when the government will play less and less of a role in our society, on both the local and international scenes. This is the first time that I have tried to elicit a different point of view, without stifling freedom of expression. But disinformation also exists. So I would like to hear your opinion and see if there is anything there that stimulates your interest.

Secondly, we are aware that the UN recommends that developed countries earmark 0.7% of their GDP to development or fighting underdevelopment. Although we are far from that objective, especially Canada, which has even decreased its contribution over the years, do you think that if developed countries met this UN objective it would be enough to meet the needs that you identified?

You also raised the issue of debt among African countries. I am more and more inclined to question the validity and very existence of this debt, since Africa has been systematically exploited over decades, even centuries, by countries that are now developed countries and which developed at Africa's expense. Ironically, Africa is being saddled with even more debt. Therefore, should we not adopt a common front and denounce the very existence of this debt? If there is debt, it is the debt of the west vis-à-vis Africa, and not the opposite.

Finally, if I am not mistaken, there is a specific problem with respect to AIDS in South Africa. I would like you to address that, as well as the cooperation or lack of cooperation with pharmaceutical companies in terms of health in Africa. Are the companies simply witnesses, are they contributing to the problem or are they ignoring it? Where are they with respect to these issues relating to health and disease in Africa?

[English]

The Acting Chair (Mr. John Harvard): Who wants to go first?

Dr. Anna Fanning: You do offer four major challenges. I'll begin, but I know that my colleagues will want to jump in.

My first response is, yes, we do need a dialogue about these pieces of information because we are global citizens and we have to get the facts clear and understand them. They are either valid or not valid.

I'm not an economist, and personally, I wouldn't begin to debate with the Fraser Institute, but I think there is indisputable evidence of suffering and disparity. The average life expectancy in southern Africa in the past decade has dropped from about 60 years to about 38 years. This is clear evidence of a deteriorating situation.

As to how one would exercise that debate, discussion, or dialogue, we address it in the North American discussion. How does one engage the community? I think it's essential, and yes, we do have to ratchet up our percent of GDP, because the disparity exists.

We're here, I think, as an accident of birth. We just happened to be fortunate enough to have landed on this side of the Atlantic. So, yes, I think we have to address it.

As far as AIDS and the role of the pharmaceuticals in South Africa is concerned, Stan will address that. But before we start talking about the pharmaceutical issue--and I agree that it's an issue and that we can't depend upon the benevolence of these big companies--I think we have to ensure that there is in place the infrastructure to manage all these aspects of health and social development. If we simply pour in drugs without control and an infrastructure, there will truly be a disaster.

Stan.

À (1020)

Dr. Stan Houston: Okay, I'll start from the top.

First of all, with regard to the debate about disparity, for example, I guess my main point would be to echo Anne in saying the debate needs to be about facts and evidence, not about ideology.

I must say, I think the facts are pretty clear. The figures that Dr. Fanning mentioned with regard to increasing disparity come from such sources as the World Bank, which provides pretty reliable, objective information.

In fact, if you look around the low-income countries of the world, it's increasingly difficult to find examples where you would really feel that these are economic successes, that these countries have promising economic futures in the current global economic situation. Argentina is a striking example of a country that we would have considered a developed country, that is now heading in the other direction.

With regard to the issue of Canada's contribution as a proportion of GDP to international assistance, obviously we would strongly advocate for striving to reach that goal of 0.7%. Will this solve all the problems? I think an aid-based solution that will solve Africa's problems or the world's health problem with more aid or better aid as a long-term solution doesn't make sense. That is something we must do, but at the same time, we must be working to create conditions so that these countries can have effective economic development and participate in their own development and improve the health of their own people.

On the debt issue, I think the figures speak for themselves. In many of the years, in the last 20 years, there has been a net flow of money from these extraordinarily poor countries in Africa to western countries and western banks. That just doesn't make sense to me logically or ethically and seems like a problem we should solve.

The exact mechanism of debt elimination and terms will have to be sorted out, but clearly, debt provides an obstacle to development for many African countries that's just insurmountable at the present time.

The issue of HIV in southern Africa, as Dr. Fanning has alluded to, is much more complicated than just drugs. It can't be seen out of context of all the other lacks that are experienced by people in southern Africa. They not only don't have access to costly anti-retroviral drugs; they don't have access to clean water and to penicillin for simple infections. So while we should encourage pharmaceutical companies to behave as ethical and responsible global citizens, we know they're not philanthropic organizations. It is unrealistic to think they should or will solve the problem for us.

À (1025)

The Acting Chair (Mr. John Harvard): Thank you.

I have a couple of questions. To begin with, it goes without saying that the countries ravaged by these diseases are under a terrible burden. They need, among other things, infrastructure and human resources, as you pointed out, Dr. Houston, and they certainly need our help as much as possible.

But I'm wondering whether some of the things we do in the developed countries--and not only in Canada--actually exacerbate the situations in those countries. Take, for example, immigration policy. It's been pointed out that here in Canada, by 2010, our labour growth will be exclusively reliant on immigration. What does that mean? That means we have been robbing, and will continue to rob, some of these countries of their best brains and talent. Some of them will even be doctors. It has troubled me for a long time that we, one of the richest countries in the world, are taking talent away from these countries.

We've heard for a number of years about the ongoing debate in Canada regarding the shortage of doctors, especially in rural areas. If we face that kind of problem in this developed country, what must it be like in some of those countries you're concerned about that are ravaged by these diseases?

Are we doing what is right in that regard, Anne Fanning?

Dr. Anna Fanning: No. I think global citizens have a responsibility to recognize the needs and rights of all. If we are going to reap the benefits of immigration, as we do--undoubtedly they support our economy, and we are all first- or second-generation immigrants--then we have an obligation, in some way, shape, or form, to repay that debt.

And we have many debts. We have a pollution debt and an economic debt. Your colleague referred to the fact that this huge African debt is probably something we owe. How can we solve this problem? I don't have a simple solution. I think awareness, recognition, acceptance of our global role, and movement in the direction Canada is going, in recommitting and expanding that global role, are crucial.

Dr. Stan Houston: One of the most wonderful things about Canada is that we are a country of immigrants, and I think we all feel it's a vital element of our national character that we continue to be able to offer opportunities to people from other countries to be Canadian. On the other hand, as you've alluded, the effects can be very destructive if you put yourself in the place of an African health minister who's really struggling to try to be self-sufficient and provide for his people.

Doctors are the most expensive element of their health care system, so to struggle with very limited resources to produce these doctors and then see them vanish to countries that really ought to be able to produce their own must be profoundly discouraging. It would certainly have a negative impact on health. The number of doctors in many of these countries is a fraction of the population ratio that exists in Canada.

Obviously, there is not one simple solution to this. But I think you would have to say that, first, one thing it comes back to is the huge disparity between the life of a doctor in those countries and the life of a doctor in Canada. That is part of the gradient that drives this, and therefore it gets back to doing something about that international disparity.

Secondly, there have been some shorter-term solutions proposed--for example, that wealthy countries subscribe to some agreed-upon system for compensation. If a doctor comes from South Africa to Canada, maybe Alberta should pay the Government of South Africa, or the University of Witwatersrand, some figure--which I'm sure we'd have great of difficulty arriving at--as compensation for the cost of that training.

À (1030)

The Acting Chair (Mr. John Harvard): All right. We have only about three minutes. I know Dr. Martin wants to ask a short question and I want to ask one. Let's call these short snappers.

One, should we build into our programs of assistance a bar of conditionality? We know in some of these countries they're not governed that well, there is corruption and so on. Should we put in a base of conditionality?

As well, when we were in Vancouver, it was pointed out by a lady by the name of Catherine Little, of Results Canada, that the G-8 countries had made certain commitments regarding the very issues you've raised this morning. This was at the Okinawa summit. They've not fulfilled those promises, they're lagging. Should there be some better accountability so that the G-8 countries are held to their promises?

Dr. Martin, you had a short question.

Mr. Keith Martin: I need your help to encourage our colleagues to develop physician exchange programs with developing countries. I tried it in the eighties; I failed. I'm trying to do it now with orthopedics, actually with Dr. Penny in Uganda, and I would like to put that to you. Please help us to develop physician exchange programs, maybe along the lines of what Mr. Harvard mentioned, so that if a selected physician comes to Canada, maybe we can send some physicians over there to teach them to learn basic health care issues and train even non-medical people to do some primary health care interventions that could have massive effects on people.

So, please; no comment required.

The Acting Chair (Mr. John Harvard): Perhaps you could answer those two short questions, conditionality and accountability. In other words, do what you say.

Dr. Anna Fanning: Yes, we absolutely have to make the programs of aid conditional upon appropriate utilization and evidence-based impact. They have to be measurable.

We also have to build into those structures the capacity to do the measuring. Of that global fund's 300 applications, only 150 were decent applications. These are countries suddenly with huge opportunities and no capacity to address them; nor do we as Canadians have the capacity to help them. We've let our capacity to do this international development assistance lag. We need to reinvest. For physician or human resource development, we need to raise our own awareness and increase the chance for that exchange to happen--exactly how, I'm not sure.

À (1035)

Dr. Stan Houston: Conditionality is essential, yes, but at the same time, to take the example of Zimbabwe, we have to work to deal with the problem of corruption that the Zimbabwean people particularly suffer from. Accountability? Of course: the whole recent history of international development is a history of failed promises, from “health for all” for the year 2000 to....

It's harder to keep promises than to make them. Let's try to build that in to commitments we make.

Dr. Walter Kipp: Some accountability, of course, yes. One thing with the G-8 indicators from Okinawa was there was little information. I learned about how the indicators were developed and what sort of basis there was for them, because they seemed to me to be overly optimistic. I think a process should be instituted where these indicators, maybe even other indicators, could be chosen or developed on a rational basis, which can be made available to better assess whether the indicators can be achieved or not.

The Acting Chair (Mr. John Harvard): On behalf of the committee, thank you to all three. We appreciated your appearance here today. It was very helpful. Thank you.

Dr. Anna Fanning: Thanks to you. There were great questions.

The Acting Chair (Mr. John Harvard): Thank you.

We are now going to move to our next witness, members, again from the University of Alberta: Yasmeen Abu-Laban, a professor of political science.

Thank you for coming.

Professor Yasmeen Abu-Laban (Faculty of Political Science, University of Alberta): Thank you very much for the invitation to present to this committee on the question of Canada's relations with the United States and with Mexico.

I noted in the outline of key issues and questions for public discussion--in your document entitled Canada and the Future of the North American Relationship--that the point is made up front that Canadian policy-makers face constraints but also have opportunities to shape the future of the North American partnership, so I hope my comments for you today will be helpful in terms of highlighting some possible options and their implications, since I concur that Canadians and Canadian policy-makers do have choices.

In terms of my own background, I would indicate that my geographic areas of specialization relate to Canada, to the United States, and to the European Union, and I have a specific research focus on areas of immigration, ethnocultural diversity, gender, and citizenship theory.

So I'm going to focus on three key questions that are raised in the public discussion document.

The first question relates to how the Government of Canada can cooperate with the U.S. on border security issues and retain distinctive policies that correspond to Canadian needs, values, and interests. And my response here would be that the Canadian government cannot maintain distinct policies that correspond to Canadian values and interests if it does not also defend its past policy choices and Canadian citizens, of whom 20% are immigrants.

Clearly the tragic events of September 11 have served to refocus attention on the border and on immigration. Prior to September 11, business groups have been calling for a so-called security perimeter as a way to better harmonize policies to deal with traffic congestion and bureaucratic delays at the border.

As a consequence of the FTA and NAFTA, now some 85% of Canada's trade is with the U.S., and as we saw, any closures or increased delays at the border clearly have economic consequences for Canada. They also have economic consequences for the United States, because Canada is its largest trading partner.

After September 11 there were renewed calls for a so-called security perimeter, but what's distinct now is the more explicit emphasis on security concerns. So in December 2001, when Canada and the U.S. began negotiations towards a smart border accord, areas for discussion included things like joint scrutiny of refugee applications, coordination of visa policies, and the like.

Harmonization of refugee and immigration policies has taken place in the European Union since the 1990s. This has led some analysts to talk about “fortress Europe” when it comes to immigration and refugee movements from the developing world. But the notable thing about Europe is that harmonization of refugee and immigration policies came about as a consequence of really pushing forward policies enabling the free movement of people within Europe. That is, for European citizens, borders between member states of the EU have been made less significant.

In the case of North America, we're now having discussions around harmonizing policies relating to immigration and refugees with no existing policy goal for labour mobility.

I would also say that when it comes to the border and immigration on the Canadian side, there is probably more of a public relations and image problem than an immigration or security problem, per se. A documentary on the American show 60 Minutes, aired a little over a week ago, took the view that Canada was a “launching pad for terrorists”. And why was this? According to the documentary, even though all of the September 11 hijackers went through the American immigration system and were based in the U.S., supposedly Canada is too liberal with refugees. As well, there's an overall flaw in the Canadian immigration system, because in letting in some 250,000 immigrants per year, Canada is letting in twice as many immigrants proportionately as in the United States.

I think this is an extreme portrayal, and the logical policy conclusion of such an extreme portrayal would suggest that Canada will only cease to be a threat to America if Washington determines all aspects of Canada's immigration. This is why there needs to be a vigorous defence of our immigration system from policy-makers; it relates to Canadian needs and values and interests, and we have a public relations problem.

Canada needs immigration. All serious studies show there is an economic benefit from immigration, and also a demographic benefit in light of an aging population. Immigration is in our collective interests as Canadians.

À (1040)

One of the values Canadians strongly support is multiculturalism. It's notable that a poll commissioned by the Association for Canadian Studies, done after September 11, showed that Canadians still strongly support multiculturalism. Multiculturalism is also enshrined in our charter.

When a show like 60 Minutes pans Canadian residents and citizens who are visible minorities simply walking in the streets or operating small stores to portray the lurking threat of terrorism contained in immigration, it is offensive on a number of levels. It's offensive to the value Canadians place on diversity and multiculturalism. It's an offensive portrayal of Canadian citizens who are immigrants, the vast majority of whom are law-abiding citizens and contributing to Canada. So the successes of Canada's immigration policy need to be conveyed to Canadians, and especially to our North American partners.

A second question relates to the issue of whether the European Union, EU, is or is not a relevant model for the North American experience. Political scientists have traditionally examined countries. Looking at continental regions and comparing across continental regions is new to political scientists. An absolute answer on this question requires more systematic scholarship than we've had.

My general response would be this. The entire European experience cannot be directly replicated in North America, but we should also be careful to not treat Europe as static. The EU is an ongoing and evolving political project. This is also the case with North America.

Why can't the entire experience of the EU be replicated? Because it emerges from a distinct history and it has evolved over many decades. In the case of North America, the economic and military dominance of a single country, the United States, is unique.

The origins of the EU can be traced back to 1951, when the six founding member countries, France, Germany, Italy, and the Benelux countries, signed the Treaty of Paris to found the European Coal and Steel Community. From the beginning, there was a focus on creating political institutions that would be sensitive to differing national interests and also serve to define broader, larger European interests. In more recent years, this has grown into an ongoing concern with discussion around the democratic deficit and how to best close the gap between EU institutions and Europeans.

Labour mobility was considered from the beginning. By the 1980s and 1990s, this had evolved into an emphasis on the free movement of people more generally. It means such groups as students and pensioners now also have the right to move and reside freely in any member country in the European Union.

From the beginning in Europe, there was a sensitivity to differing regions, to areas that were not central or core as a result of economic or geographic facts. Assistance was also contributed to less developed regions. In short, from the beginning there really was a sense that European cooperation was going to lead to a regional political community of some sort.

North American integration we normally associate with the signing of the Canada-U.S. Free Trade Agreement in the 1980s and NAFTA in the 1990s. These agreements emphasize liberalizing trade. If you look at the FTA and NAFTA, the agreements were primarily about removing barriers to the flow of capital, goods, and services across borders, but not people.

It is true there are temporary entry provisions for business people and professionals, but labour's mobility was left unchanged. Despite the fact that if you look, for example, at the U.S. and Mexico, the nature of immigration flows would strongly suggest this is a key element of their economic relationship.

All this does not mean there are not lessons to be learned, or the nature of economic integration between Canada, the U.S., and Mexico might not shift. Probably the most noteworthy thing about the EU is that it has not developed in a linear way.

In the 1950s and 1960s, many scholars and European politicians thought ongoing success and deepening ties in Europe were inevitable. By the late 1960s, up until the mid-1980s actually, this was not so clear, and many began to talk about “Euro-pessimism” and “Euro-sclerosis”. A new momentum was reached in the late 1980s and through the 1990s. Now there is a European citizenship, and the common market has been largely achieved. There is now a common currency in the form of the euro.

À (1045)

Not only have developments occurred in a non-linear way, but the EU, which currently consists of 15 countries, is going through a new phase of enlargement to include less-developed countries from central and eastern Europe, some perhaps as early as 2004. Now, enlargement means power liaisons are going to shift, and Germany has really emerged as a big player in the new Europe. Enlargement also necessitates a major rethinking of institutions and social and regional policies, amongst other things, and even new definitions of what bonds Europeans together now that the Cold War is over.

Since European integration has not been static, this suggests that we might also expect flux and change in the North American experience of integration. In these moments of possible change that we might expect, I think we have an opportunity to consider whether and how some aspects of the European experience might relate to North America, because the EU really represents the most comprehensive example in the world of continental integration.

The third and final question I'll address relates to what Canada's position should be on the idea of moving toward a North American community. My response here would be that this might be beneficial if there is care taken in using the term “community”. Community can mean many different things. For political philosophers, this term has been one of the most invoked ever. Community has also been debated in part because it's sometimes used to justify things that serve the interests of some on the grounds that it's for the many.

So in thinking about political community, European policy-makers have gone beyond simply thinking in national or even regional terms to consider specific groups of Europeans who might face distinct issues. For example, over the last decade the EU has adopted an approach of gender mainstreaming. So consideration of gender has been introduced across a wide range of policy areas, including structural funds, research, and employment. In this way, discussions, procedures, and the actual participants in policy-making have been transforming.

If we take the North American community to mean political elites wholly representing business interests in Canada, the United States, and Mexico by further enhancing trade policies premised on neo-liberalism, this will serve the interests of some more than others. If the forging of a North American community focuses only on institutional intergovernmental mechanisms--however much these may be needed--without considering also popular groups, it could create its own problems.

One aspect of the contemporary discussion amongst EU policy-makers and citizens that I think would be very helpful to keep in mind relates to the whole question of what Europeans call the “democratic deficit”. Basically, this refers to the ongoing concern over the distance between people and European decision-making processes, and also the often secretive nature of deliberations.

We know from the history of the Canada-U.S. Free Trade Agreement and the 1988 election that a lot of groups--labour groups, women's groups, anti-poverty groups, and so on--had concerns about free trade. In many ways these types of concerns were echoed in the streets last year, during the FTAA discussions in Quebec City, by transnational popular groups.

To conclude, mechanisms to take these concerns and groups into account might ensure a richer, broader, and even more representative development of community in North America.

Thank you.

À (1050)

The Acting Chair (Mr. John Harvard): Thank you very much.

We have about 20 to 25 minutes for questions.

We'll start with Dr. Martin.

Mr. Keith Martin: Thank you, Mr. Harvard, and thank you, Professor Abu-Laban, for being here today.

You mentioned the democratic deficit. I would ask you, do you not think we have a massive democratic deficit here in Canada that far exceeds the democratic deficit in Europe? The democratic deficit here in Canada is not only between elected individuals and the public; it's also within our political structure. That democratic deficit is massive because the elected officials are really quite powerless to effect change.

My second question deals with the political community you mentioned. In order to have that, you have to have somebody to dance with. The American political elite have shown that they're really prepared to act quite unilaterally now, more so since September 11. Do you suggest that we go towards bypassing the political elite and trying to encourage greater integration between non-governmental organizations and civil society in order to effect that virtual community?

Lastly, on the issue of immigration I would suggest that perhaps the European Union is really not an example for us. You don't have one single power that's really dominant within the EU, as opposed to our situation, where we do have a huge asymmetry in power. I don't know what the model ought to be, but with respect to our immigration, harmonization of immigration is a non-starter because American interests wouldn't adhere to that.

Don't we have a much larger challenge in the fact that we have a much larger problem in mobility of individuals east-west than north-south? In other words, we have to overcome our lack of mobility of labour east-west before we ever consider dealing with issues of north-south labour mobility.

Thank you.

À (1055)

Prof. Yasmeen Abu-Laban: Thanks for the questions. They are good, interesting questions. I think I'll start with the second one, which will come back to the first part around elected officials being powerless.

When we're thinking about political community--I think this also picks up on some of the points Brian Stevenson was making--that even if it's a non-starter with the U.S., there is an opportunity for Canada to engage in dialogue and have more discussions with Mexico. That's one point to be made there. It would involve a move away from thinking about NAFTA as simply being two bilateral relationships with the United States towards further developing the ties between Canada and Mexico.

Yes, I also think that political community in any meaningful sense cannot be established without engagement with civil society and civil society groups. Thinking about the broad range of groups that are out there is critical to the outcome of this kind of exercise, so I do think this is really important.

Again, this is picking up on something Brian Stevenson said, and I'll echo. If you just look at the whole area of education--he was talking more about researchers, but I'll mention something about students--we could have more exchanges in Canada with Mexican and American students. We do need more understanding of each other. There was a poll that was reported just yesterday in the National Post, and it showed that very few Americans, only 14%, knew that Canada was its largest trading partner; 27% thought it was Japan; and something in the area of 25% thought it was China. I would love to have Americans come to Canada and study here.

Mr. Keith Martin: We could take some from the American administration, too.

Prof. Yasmeen Abu-Laban: Yes, and the American administration. There are real issues there about understanding.

I'd also say that it's not just on the American side. We Canadians sometimes feel as if we know everything about the United States, but we don't necessarily. Again, educational opportunities would be really important.

In our department we have a North American mobility program that has just been developed, and we're encouraging exchanges between Canada, the U.S., and Mexico. So far what's been happening is that Canadian students and American students want to go to Mexico, but there hasn't been a lot of exchange between Canada and the U.S., so I think we have some work to do there.

Certainly, civil society groups fostering the opportunities for those groups to have a say are really important. In a sense, this comes back to your first question around elected officials. It is particularly true that the free trade agreement and the NAFTA agreement ceded a lot of areas of power essentially to the market, but I do think that people are never powerless. It's not like things can't change.

I remember when I was an undergraduate student I was taught that the Berlin Wall was never going to come down. But the Berlin Wall did come down. So I think there are spaces and avenues to try to foster changes; now especially is the time to be thinking in creative ways about that.

Again, looking through your discussion document, it is quite clear that Canada has historically, until now, attempted bilateral relations with the United States with mixed results. What hasn't been thought about as much is the relationship with Mexico, and this may be an opportunity for some more creative thinking about the direction we can go in.

Finally, on your question on immigration, when you said east-west, did you mean within Canada?

Á (1100)

Mr. Keith Martin: Not east as in eastern Europe, but east-west within Canada. We have far greater labour mobility problems east-west within our own country than north-south, and perhaps our first task would be to resolve those issues.

Prof. Yasmeen Abu-Laban: That echoes one of the arguments made around the free trade agreement debates, where people were noticing that barriers between provinces were often as great or greater than among countries. I think both can happen. I don't think it has to be that one comes at the expense of the other.

A point that also should be made is that people don't always move, even if they have the opportunity or the right to do it. One of the interesting things about the European Union is that even though everybody who is a European citizen has this formal right to move, in fact it's only a really small fraction of the population that takes up that right to move. Less than 5% of the European population goes from their own member state to another member state.

Then if you look at it in terms of the labour market, in terms of those who are going for employment purposes, not for retirement purposes--lots of people go from England to Spain or Greece to retire because it's warmer there--in the order of 2% move south. Thinking about that as a right or an opportunity that people might have and offering that right would be a first step.

The Acting Chair (Mr. John Harvard): You mentioned the Berlin Wall and how some people thought it would never come down. Well, it did, but after it came down a lot of people talked about the so-called peace dividend. I'm still waiting.

Prof. Yasmeen Abu-Laban: Yes, me too.

The Acting Chair (Mr. John Harvard): Mr. Rocheleau.

[Translation]

Mr. Yves Rocheleau: Thank you, Mr. Chairman. I have a few questions. Congratulations on your presentation.

Á (1105)

You mentioned on page 2 of your document that the Americans feel Canada is too liberal with respect to the refugees it takes in, as Canada accepts twice as many as the U.S.: 250,000 in comparison with 125,000. Is that somewhat immature on their part, to use a harsh term? The Americans are not accustomed to this type of violence. They are very much accustomed to another type of violence: violence on a daily basis resulting from drugs and poverty in their own country. But the U.S. is not accustomed to political violence, unlike European countries such as Ireland, Spain and France, which faced a wave of terrorism a few years ago.

I am not talking about the kind of extreme violence they were subjected to during the attack on September 11. Is the U.S. not being somewhat immature in its attempt to stir up the entire planet starting with Canada, and in trying to identify the culprits because their national pride has been dealt quite a blow, and since they are somewhat ashamed of having been defeated in their own backyard? We know that all of the terrorists left from the United States, that they lived in the United States and they used an American airline. Was this not an attack on their pride, which would explain why they are trying to find culprits? That is my first question.

Secondly, when we talk about Canada-U.S. relations, does Canadian sovereignty really exist? Given the power of the United States and their ability to take retaliatory measures, namely economic ones—as we have seen in the softwood lumber dispute—and given the fact that when the U.S. puts forth a military project, Canada has virtually no other choice but to follow suit, and in light of their projects regarding the security perimeter and immigration control at the borders, does Canada really have the choice not to agree? How much sovereignty does Canada really have?

The third point deals with the democratic deficit. You addressed it from one angle, and I would like to talk about it from a different angle and ask you for your comments. I am thinking about the deficit of our so-called democratic societies in light of the creation of what we call supernational organizations like NAFTA, the WTO, the FTAA, the Free Trade Area of the Americas, and also a bit like the UN where concessions are nevertheless made or sovereignty is shared every time.

Isn't that a democratic deficit for citizens? The more the situation progresses, the more citizens lose control over decisions and the less of a say they have. National parliaments become insignificant and their power decreases, and the general public feels increasingly under-represented.

Fourth, when we talk about North American integration, how do private and public interests compare? What is behind all of these negotiations? Aren't private interests coordinating and inspiring it all? Where does that leave the interest of the public?

[English]

Prof. Yasmeen Abu-Laban: On the first question, regarding the response of the Americans, I was talking about the show 60 Minutes, but there's obviously also a policy dimension around the kinds of concerns being raised about the Canadian border.

If Canadians wanted to, I suppose they could point out the fact that all 19 of the hijackers came in through the American immigration system, and were based in the United States. Not only that, but after September 11, sometime in late February, the INS issued visa extensions to two of those suicide bombers.

So there are problems in the American immigration system. Maybe it's partly the hugeness of what happened on that day. Coming to grips with it might help account for some of the discussions you are referring to, and a feeling of being wounded, and that kind of thing. But I don't think we really have to go in the direction of analysing it, or even necessarily pointing out these things.

As Canadians and Canadian policy-makers, it can simply be pointed out that our immigration system has been pretty good. If you look at Canada over the last 10 years, probably something in the order of two million people have entered this country as immigrants. That's a huge number. It's only a handful of cases you can point to--Ahmed Ressam, etc.--where we've had problems. In a lot of ways, we have a lot of evidence to say our immigration system is good. More than that, when you get these kind of portrayals, such as on 60 Minutes, it's an attack on Canadian citizens. I think it should be viewed that way. It should be criticized strongly.

Your second question dealt with the whole question of sovereignty. Do we have sovereignty in Canada, particularly around border and immigration issues? One area where states really exercise a lot of sovereignty is precisely over border and immigration issues. Not everyone has the right of entry into any given state. Whether in terms of visas or immigration and citizenship procedures, states determine, and have policies around, who gets in and who doesn't get in. Canada still has that power. Canada still has the power over who it extends its Canadian citizenship to. Even if we move in the direction of harmonizing policies, I think Canada can exercise its sovereignty by doing it, and insisting on doing it, as an equal partner. Canada can insist that the kinds of values we have around immigration, human rights, and the agreements we've signed internationally--like the United Nations Convention on Refugees--are respected.

But, no, I don't think Canada has suddenly lost its sovereignty over immigration. If any moves are made that are shifts in policies, it's Canadian policy-makers who are making these moves.

Your third question is similar, dealing with the democratic deficit, evidenced in things like the NAFTA or WTO. It's again a question around sovereignty, and whether there's much scope for the state in these things. Again, the NAFTA agreement was signed by states. It was governments who got together. It was leaders of governments who forged all these agreements. So, yes, it's true states and leaders may face restrictions by international organizations, but I think there's still scope for the exercise of power. Within a range of choices, there's scope for the exercise of sovereignty.

Probably the place where people see the--

Á (1110)

[Translation]

Mr. Yves Rocheleau: You gave a good example when you said that the governments are the ones who forged all these agreements. However, in that example, the Liberals led by Mr. Chrétien denounced NAFTA. However, when they took power, they continued along the same lines as the government they had defeated. So where is the real democracy there?

Á (1115)

[English]

Prof. Yasmeen Abu-Laban: The same thing happened with the GST, actually.

I just think there's scope for states to try to exercise power. Canada is in a unique situation in the North American continent. There's no question that the United States is powerful. Not only is it powerful in this region, it's a superpower. The United States is bigger in terms of population. It's stronger militarily. It's a huge economic power. That said, something in the order of 22% or 23% of American trade is with Canada. Canada has some leverage there. Canada is an important trading partner of the United States. It's not just a one-way street.

As well, the relations with Mexico are hugely important to the American economy. So there are ways--again, thinking creatively and thinking in terms of not only bilateralism but also trilateralism--where new approaches may be tried to exercise some influence. But I think it does mean taking up more seriously the kinds of concerns that Mexico has registered over the years around American relations and issues of labour mobility.

On the question of private interests versus public interests being dominant, yes, we're in an era of globalization. Over the last decade or more the direction has been one in which states have moved out of certain areas, including social policy areas. But once again, even here I'd say that of all the people in the country, the last place I want people to think they don't have an opportunity to change things is in Parliament. I think there are choices even in an era of globalization. If we are in a period of post-deficit budgets, there are ways of thinking creatively about where moneys are allocated.

The Acting Chair (Mr. John Harvard): Is that it?

Prof. Yasmeen Abu-Laban: Yes.

The Acting Chair (Mr. John Harvard): Thank you.

I have just one observation and perhaps one question. I think we do have a right to be both disappointed and perhaps even angry when programs like 60 Minutes fail to meet certain professional standards. But I really wonder how much we should read into surveys, polls, that reflect ignorance on the part of the Americans, that is, ignorance of Canada and Canadians. We have our own ignorance inside of Canada.

I wonder how many Torontonians could name the premier of Saskatchewan, or how many Albertans could perhaps name the premiers of Prince Edward Island or Nova Scotia. There is this phenomenon that the little guy tends to know a bit more about the big guy than he knows about the little one. But in my home province of Manitoba, I suspect that Winnipeggers don't know a hell of a lot about what's going on in Le Pas or Flint Flon or Thompson or Churchill. And I suspect those people up in the north know a bit more about Winnipeg, although they would be victims of their own kind of stereotyping, as well.

You make reference to labour mobility, the European Union. The Europeans have their own brand of labour mobility. They have had in place for some years now the Scheme agreement, the removal of border controls. Do you see anything like that befitting North America?

Prof. Yasmeen Abu-Laban: I do want to comment on the first point, just to reiterate that if we're thinking about the North American community, or even the global community, there's a really important role for education. I don't think Canadians necessarily know everything about the United States just because we get a lot of American television or American magazines. So that's just a point to be made there.

On labour mobility, I don't know if that's a possibility. Prior to September 11, President Fox of Mexico was talking with President Bush about having some kind of arrangement to recognize illegal Mexican migrants that were already in the United States, and foster some kind of arrangement whereby there would be easier border crossings.

If you've ever gone to any of the border towns in the U.S., some of the stuff that occurs at the border is really incredible. Just a few years ago I was in San Diego and went over to Tijuana. On the highways in San Diego they have people-crossing signs, because migrants are coming over and they can get hit. But that's not the only space where there are dangers. Borders are also very dangerous spaces.

So people are risking their lives to get into the United States to work. On ethical and humanitarian grounds, something should be done there, clearly.

In terms of the history of NAFTA, American officials kind of saw NAFTA as a way of preventing Mexican migration. Labour mobility was explicitly kept off the NAFTA agenda, even though Mexican officials wanted it on there.

In the current climate, in the immediate post-September 11 period, these kinds of discussions have become more difficult. But a real North American community probably can't be established without giving serious consideration to labour mobility issues.

Á (1120)

The Acting Chair (Mr. John Harvard): Thank you.

I think we can enjoy some of the differences, even though some of them might be a bit irritating.

I grew up in an area where there was a lot of pipeline construction--half a century ago--and it drew a lot of workers from the southern states of Texas, Oklahoma, and Louisiana. They were always puzzled by the absence of Mounties and Mounties riding horses, because that's what they fully expected. They were going to be in Canada, and they'd see Mounties riding around on horseback. But it just wasn't the case.

At any rate, thank you very much. It was very good of you to come. We enjoyed every minute of it.

Members, before we move to the Alberta Federation of Labour, we'll take a short break.

Á (1120)

Á (1126)

The Acting Chair (Mr. John Harvard): We can begin. Thank you for waiting.

I gather you'll be going through your text and then we'll have time for questions. Who's going to start?

All right, Kerry, go ahead.

Á (1130)

Ms. Kerry Barrett (Secretary-Treasurer, Alberta Federation of Labour): We're pleased to have the opportunity to present our views on the G-8. We will be making a separate submission on the future of the North American relationship in the near future, but due to time constraints, we'll only be focusing on the G-8 today.

The AFL represents about 112,000 unionized workers in the province of Alberta, and those workers represent workers from every sector of the economy. The AFL's mandate is to represent the interests of unionized workers and their families, but we have always spoken out on behalf of unorganized workers on issues that affect them, as well.

We have to deal first with the issue of the legitimacy of protest before addressing strengthening global economic growth, building a new partnership for Africa's development, and dealing with terrorism.

Increasingly there have been protests around the G-7 and G-8 meetings. We question why citizens are protesting around these events. Why do protestors become violent? What is the appropriate response to the protests? Globalization focuses on the rights and economic success of the multinational corporations. We believe living standards, environmental standards, safeguards, public programs, social programs, workers' rights, and human rights have been eroded.

Inequality is a huge problem and has been increasing, unfortunately. The IMF and the World Bank have policies of liberalization, privatization, and deregulation that have contributed to increasing the inequalities around the world.

Globalization is not being controlled by people and governments. People's concerns are not being addressed. Dissent is a result of the declining economic and social conditions. Protests turn violent when excess force is used to confront protesters. The right to dissent is a cornerstone of democracy. It hinges upon the freedom of association, speech, and thought. Citizens will protest if agendas they oppose are pursued by their governments. People are concerned with escalating military response by the state.

For example, the Calgary police are preparing for the G-8 and have purchased armoured vehicles. They've also emptied a prison in anticipation of some of the protesters being taken there. As well, the federal government convinced a native band to renege on a land agreement. The Calgary police were also quoted in the Globe and Mail as saying that someone was probably going to be killed around the G-8.

Such action should not be taken. Stifling dissent is not good government. Protesters are not terrorists or criminals. Government should not only protect but also nurture citizens' rights to demonstrate opposition or support of public policy, and advance notions in fragile and very moderate economic recovery. For example, Argentina's unemployment level is 20%, and interest on its foreign debt accounts for about 30% of its gross national product.

Such countries require cancellation of their debt and increased aid to deal with the poverty they face. Poverty around the world is increasing, even though developed nations have committed to dealing with this problem. It still continues to increase.

The medicine that has been prescribed by such organizations as the International Monetary Fund and the World Bank may actually be making things worse. They impose structural adjustment programs upon these countries that require cuts to spending on health care and education and the privatization of public assets and programs. This has a negative effect socially and economically for these countries. Countries that have chosen not to become involved in these programs have been the most successful, while countries that have followed these programs have not done very well.

These programs also include recommendations to reduce wages, protections of workers, and collective bargaining rights. The focus has been on liberalizing trade, and on investment and exports, rather than on developing food security and rebuilding these economies.

The WTO has been criticized for ignoring the negative effects these strategies have had on developing countries. Public services and the socially beneficial service-sector activities must be exempt from the General Agreement on Trade in Services.

The question must be asked, what can G-7 and G-8 countries do? We have three suggestions.

The first is to cancel the debt of these developing countries and reform the International Monetary Fund, the WTO, and the World Bank, and insist that corporations act responsibly and be held accountable for their actions. The debt of developing countries is unmanageable. The interest payments alone prevent economic progress. We all know those debts will probably never be able to be repaid.

We feel that priorities of the World Bank, the International Monetary Fund, and the WTO must be to reduce poverty; relieve the debt; and promote social protection, international financial regulation, and respect for labour standards. These institutions must be democratic and transparent, and be held accountable. Their objectives must be to improve working and living conditions around the world. Corporations must not be allowed to exploit labour--child labour, slave labour--and the environment.

Inequality and poverty exist around the world, but immediate and effective action must be taken in Africa; 32 of the 42 poor countries with the highest debt are in Africa. These debts must be cancelled and aid must be increased.

We support the CLC's position that African society needs to be involved in the new economic partnership for Africa's development, and it should focus on building social and physical infrastructure. Education and health care also need to be a priority. And domestic food production for domestic markets is crucial for a sound economy.

We support the CLC's conditions that fundamental and core labour rights must be respected before access to these markets is granted. If Canadian workers are displaced as a result, compensation and retraining must also be provided. This aid to Africa must not be contingent upon the current policies of the IMF and World Bank.

The ongoing debate over terrorism is complicated and can't be simply defined. Hunting down and prosecuting the guilty is an understandable reaction, but it is not a sustainable solution to that problem.

High-tech safeguards and systems are unlikely to address such acts, and increased vigilance or security and reduced civil liberties or freedoms are unlikely to effectively prevent such acts in the future. Such measures can have severe and unwarranted effects upon our individual rights and freedoms.

Rather, I think we need to focus on the root causes of terrorism that need to be addressed. Some of those causes are poverty and injustice around the world, and the lack of access to education, which leaves millions of poor, desperate, uneducated people as potential recruits for terrorists. Armed resistance to undemocratic states must not be defined as terrorism. People struggling for democracy and human, social, and economic justice are not terrorists.

Developed nations appear to be willing to address poverty and inequality around the world, and Canada must insist that immediate and effective action be taken at the G-7 and G-8 meetings that are to take place here in Kananaskis.

Á (1135)

The Acting Chair (Mr. John Harvard): Thank you.

Jim, are you going to comment?

Á (1140)

Mr. Jim Selby (Director of Research, Alberta Federation of Labour): No.

The Acting Chair (Mr. John Harvard): Mr. Rocheleau.

[Translation]

Mr. Yves Rocheleau: Thank you, Mr. Chairman.

The idea of establishing a Tobin tax is more and more widespread. What do you think of setting up such a tax, which would ensure that there be an international fund to make the rich pay, as we say in Quebec, particularly according to the CSN? With such an international tax, there would be a fund to help improve developing countries' situations.

Secondly, in your brief you state that the International Monetary Fund and the World Bank should be reformed. I would like to hear some clarifications on the subject.

Thirdly, given the fact that the Americans are obsessed with security and terrorism issues, do you think that there is a risk that this subject will take over the agenda and that poverty and development or underdevelopment in Africa will be put on the back burner or waved off at the Kananaskis Summit?

Fourthly, you were talking about the protests in Seattle, in Quebec City and in Genoa. We have passed anti-terrorist legislation here, bill C-36. Personally, I spoke out to say that the right to dissent had to be ensured, because it was made clear that if this legislation had existed at the time, the people who protested in Quebec City could have been considered terrorists. Therefore, I would like to know what you think of the enforcement of the law with regard to the Kananaskis Summit. I'd also like to know what you think of the existence of a right to dissent as defined by our society.

[English]

Mr. Jim Selby: I'll see if I can address some of the questions.

On the establishment of a Tobin tax, yes, the Alberta Federation of Labour is on record as supporting a Tobin tax for several reasons--first, as an attempt to discourage profiteering in currency speculation. Again, as you said, the assumption of a Tobin tax where you could take those funds and put them to socially useful Third World projects would be an exceptionally good idea.

On the topic of the danger of the Kananaskis summit having its agenda basically focus solely on terrorism and on security, I think the whole focus on inequality and poverty is in its own way a focus on security and terrorism. If you examine the root causes of political instability, especially in the poorest regions of the world, you see that simply dealing with security as a border issue or a banking issue, whiIe I don't think anyone disagrees with those efforts, is not enough. Unless you address the core, root issues of terrorism, which are already on the agenda for this summit--that is, global poverty, inequality--then we're not going to solve anything.

Ms. Kerry Barrett: In regard to the demonstrations that have taken place in the past, and Bill C-36, we do have lots of concerns around that. I know there were even submissions from various lawyers in regard to their concerns around that as well, because people were concerned that if we are out peacefully protesting we will be seen as terrorists simply because we are out protesting.

We believe everyone should have that democratic right to voice their concerns and to protest. Everyone should have the right to dissidence. I realize the wording was changed from the original proposal, but we still do have a number of concerns around Bill C-36.

When you look at the demonstrations that do take place, most of them are very peaceful. Where we get into problems is when there is heavy-handedness on behalf of the state or the police, and that escalates things. But so long as they're willing to sit back and let people peacefully protest, it usually isn't a problem or a huge concern.

Á (1145)

[Translation]

Mr. Yves Rocheleau: I think the problem with that is the following: people can protest peacefully or violently. When people protest violently, they can protest illegally, perhaps even criminally. All of this is expected, according to some. This human behaviour, whether it is right or not, is anticipated in our legislation, but to make the leap and call this terrorism means that the following question must be asked: are we not being simplistic, or falling into an abuse of power?

[English]

Ms. Kerry Barrett: It has actually been our experience that in the past, when people are allowed to protest peacefully, there haven't been issues around violence. When we have seen violence is when you see things like people arriving for a peaceful protest and being met by police in riot gear or on horseback, or there's a real heavy-handedness. For example, even in Quebec, there was one fellow who picked up a tear gas canister and lobbed it back, and the response to that action was shooting a rubber bullet to his throat. Since then he has not been able to speak, and he probably never will for the rest of his life. We consider that to be excessive force.

Those are some of the concerns we have in regard to what may be considered violent or illegal actions. Quite often there is something that has provoked those actions previously. Unfortunately, in a lot of cases, the peaceful protest is not what the media or the police or the state choose to focus on, but rather the violence that follows.

[Translation]

Mr. Yves Rocheleau: I asked a question regarding the International Monetary Fund and the World Bank, which you wish to see reformed.

[English]

Ms. Kerry Barrett: Right now they require countries to become involved in structural adjustment programs. Countries have to look at lowering their minimum wages, privatizing some of their public sector. Education and health are not considered to be a priority. We believe these are things that should be a priority. It has been proven that countries that have been involved in these kinds of programs have not fared well, compared to those countries that have not chosen that route to deal with economic growth in those countries.

The Acting Chair (Mr. John Harvard): Did you want to say something, Jim?

Mr. Jim Selby: I was going to say that probably the most serious criticisms of the policies of the World Bank have come from their ex-chief economist, Joseph Stiglitz, a Nobel prize-winning economist who basically said the World Bank policies have in fact accomplished the opposite ends from what they were designed to do. In other words, poverty levels increase and the infrastructure in the country supposedly being helped actually deteriorates.

Throughout the labour movement in Europe and in North America, there's a growing suspicion that neither the IMF nor the World Bank are fulfilling the mandate they are supposed to. Under their auspices, under their governance, poverty and inequality are increasing, not decreasing. Countries that ignore the dictates of those programs actually do better. A good example of that would be probably India and China, which run independent domestic procurement in opposition to the recommendations of the World Bank. I'm not saying any of those economies are doing extremely well, but these policies and programs have failed repeatedly to do what they were supposed to do, and yet they still haven't been abandoned.

The suspicion amongst the labour movement is that these institutions answer to no one. It looks as if the governance of institutions has basically divorced itself from the governments that support it.

Á (1150)

The Acting Chair (Mr. John Harvard): Thank you, Mr. Rocheleau.

I have a couple of questions for either Kerry or Jim, whoever wants to take them. You point out in your text that the trade union movement in Alberta is experienced in protest. I suspect that applies to all the trade union movements in all the provinces.

You also say that the right to dissent is a cornerstone of Canadian democracy. That includes the freedom of association and of course the freedom of speech and the freedom of thought. Is it your opinion that we do have that? Do we have that?

Mr. Jim Selby: Yes, it is my opinion that we do have that. In fact, one of the things that has bothered a lot of Canadians in the last little while is in fact a kind of overreaction by government when people have exercised those rights. I'd say we have them because we've exercised them. A right that isn't exercised is not a right.

In the case of the Vancouver protest or Quebec City, Canadians exercised their rights of freedom of association and freedom of speech, but the response of the state to the exercise of those rights was not good.

The Acting Chair (Mr. John Harvard): Is that entirely true, though, Jim? I think most Canadians do accept protest--loud protest, abrasive protest, perhaps even protest including all kinds of abusive language--but I think most Canadians don't accept vandalism, pure and simple vandalism.

I was at Seattle for the WTO meeting. Now, that's down in America, but I saw huge vandalism--huge vandalism. I think most Americans and most Canadians would say, yes, being out on the street, fine, being in the faces of leaders, fine, but, no, you don't smash windows and destroy buildings.

I hear from protesters over and over again about not being able to get their message out. Well, take Quebec City, for example. They put up a huge fence. The fence really drew a line between the politicians and the protesters within 50 feet of the building where the meeting was taking place. There were television cameras all about, and yet the protesters were not happy. Here they are near the building; all that is separating them from the politicians and the meeting place is a fence. There are televisions cameras, radio microphones all around, and yet they're complaining.

What are they complaining about? I assume that they can't actually stand right at the doorway--right at the doorway--and prevent the leaders from having their meeting. I would assume that most of these leaders, certainly ours, were elected. Do they not have a right to meet? Do they not have a democratic right to meet and to talk, as much as the protesters have a right to stand nearby, yell and shout, and make all kinds of statements to the press, and the more provocative, fine?

What's wrong with this picture, if anything?

Mr. Jim Shelby: There are several different points you've raised here. First off, in terms of Quebec, I think a large degree of the problem with the fence might have been a symbolic problem. I will say there was a very large trade union march in Quebec City. There were thousands and thousands of people protesting who had no intention of committing--and in fact did not commit--any acts of vandalism, yet these people also suffered from the hundreds and hundreds of tear gas cannisters dropped in the midst of crowds.

I think we have to get back to this; if there are people guilty of vandalism or those kinds of acts, yes, that calls for a response by police.

The Acting Chair (Mr. John Harvard): Now, your labour leaders, be they in Alberta or elsewhere in the country, are very responsible labour leaders. Yet is it not also true, Jim, that when you conduct these protests, these large ones for example, you are infiltrated by anarchists, people who don't give a damn about your good name or the good name of anyone? They just want to make a shambles of these meetings.

Perhaps you should take some responsibility in conducting your protests in such a way as to prevent these people from infiltrating.

Á (1155)

Mr. Jim Selby: That would be extremely problematic if you were gathering in a public place, and that's the nature of protest.

The Acting Chair (Mr. John Harvard): Oh, I agree.

Mr. Jim Selby: If we were to say, you, you, and you move out of this public space, then they would quite legitimately say to us that we have no business telling them where they can or can't stand.

But I see what you're driving at. What I'm saying is that there has to be a better response, a better way to deal with the isolated acts of vandalism than this blanket approach taken toward all 10,000 people gathered in an area. It just isn't right for the state to be using that kind of force against a protest, 99% of whose participants are in fact peaceful.

That business in Quebec angered people in the labour movement to an incredible extent. They said, here we are, marching down the street, and the next thing you know it's a war zone.

The Acting Chair (Mr. John Harvard): Let me just bring up one other area, and it's really a two-part issue.

Your organization and others, of course, are strongly in support of debt relief, and it's not only debt relief, it's really debt abolition in some or all of these third world countries. As I understand it, you're really taking the view that this debt relief or abolition should be unconditional, with no strings attached. At the same time, when it comes to, say, trade relief and market access to Canada, you sing a slightly different tune.

Now, you talk about respecting labour rights. Fine, but that spells to me “condition”. On one side, when we the country are supposed to be helping poor countries, it's unconditional, yet when we're told that we should be opening up our borders, opening access to our markets to third world countries so they can sell some of their goods, then you raise the flag of conditionality. It seems to me you can't have it both ways; you're just being inconsistent.

Mr. Jim Selby: I guess that's a legitimate point, and I won't dispute it.

If you consider the whole thing about unconditional debt relief, what we're looking at is, on what terms and under what conditions did the debt arise in the first place? We cited in our paper the notion of “odious debt”, which was first raised by the United States to argue that Cuba shouldn't have to repay Spain any of the debt that had been accumulated because the Cuban people had not been party to that debt. There's a very similar argument to be made in terms of many third world countries' debt load, that the debt was taken on without consultation with the people, without democratic governance. There's an argument to be made that this debt exists as something that ought not to have been there to begin with.

We're saying that aid to countries should include core labour standards, and we have been trying to pursue those core labour standards and instill respect for them around the globe through the ILO and all other international labour organizations for 50 years now.

It seems to me that if you provide aid without stipulating that there's a protection of core labour rights, you're simply allowing countries to perpetrate systems of social injustice. And in that case we'd have to ask, who are we helping here? If the aid isn't getting down to working men and women and their families, if their lives don't get better because of it, then who is benefiting?

Â (1200)

The Acting Chair (Mr. John Harvard): An aside to that, at least insofar as debt relief is concerned, is that in some of those countries where there is massive debt and where relief would be most welcome, some of those countries are run by not very nice people. And if we do extend debt relief, especially through their hands, the very people whom we want to help, the poorest of the poor, may never see a nickel of that relief. Would you agree?

Mr. Jim Selby: That is entirely possible.

The Acting Chair (Mr. John Harvard): So what do we do about that? Perhaps that calls for conditionality. Although nobody wants to hurt the little guy, the ordinary citizen perhaps would welcome and needs this support, but if it's not going to get there in the first place, why fill the bowl of the big shot who's going to run away with it?

Mr. Jim Selby: That's a legitimate point, specifically because some of the loans and some of the accumulation of this debt have in fact benefited very small groups of people inside those countries and it has never benefited the vast majority who are now being asked to be responsible for it.

The Acting Chair (Mr. John Harvard): Kerry, you were going to say something?

Ms. Kerry Barrett: I was going to say that once a debt is cancelled and aid is given to those countries, it also needs to focus on building the social and physical infrastructure and on making education and health care a priority. It also needs to focus on domestic food production for the domestic markets so that this economy does become sound.

The Acting Chair (Mr. John Harvard): We'll finish up with Dr. Martin.

Mr. Keith Martin: Thank you both for being here today. On your comments about the World Bank and the IMF, I would agree with you that massive reforms are required. They've been trying to do this for a long time and nothing's happened. What key specific reforms, not just accountability, the catchword of reform, would you recommend that we can offer as a committee to reforming the World Bank and the IMF? At the end of the day, both those institutions are, as is the UN, us. It's only as good as the member states, and they are us.

On the issue of globalization, surely you must also recognize that countries like China and India have largely benefited through globalization, through the removal of barriers to trade, through large companies being able to set up shop and work and employ people and pay taxes. That's been probably the greatest driving force in the alleviation of poverty in those countries, when you compare that to countries that have set up borders and set up blockages to globalization such as Albania and North Korea. The comparisons are quite stark. We should really be comparing people in the lower socio-economic groups, comparing them at time zero, to what we are today. While there may be a greater discrepancy between the lower socio-economic groups and the upper socio-economic groups, I would argue that the lower socio-economic groups have improved dramatically compared to where they were as a result of globalization.

Lastly, I have a comment on dissent. In your comments you make a statement that they will have to put up with angry placards and name-calling, and if they're embarrassed in front of other world leaders because of their citizens' dissent, well, that's the price they pay for being an elected leader instead of a military dictator.

Along the lines of what Mr. Harvard mentioned, people have a right to dissent; they don't have a right to prevent other people from meeting and also proffering their views. Perhaps that's something the Labour Congress should look at, having sensible dissent, having respectful dissent, but not preventing other people from actually voicing their views, which is the reverse of what you actually want. You're actually being quite totalitarian in preventing other individuals from speaking their views and from meeting when you engage in violent dissent.

Thank you.

Mr. Jim Selby: There's quite a broad range of questions there.

First, let's start at ground zero and look at the lowest socio-economic element, and see if they have been raised or not. I think if you look specifically at the figures from Africa, you'll find that's not true. In terms of nutrition, income, and housing, millions and millions of the poorest people on that continent are not better off.

Â (1205)

Mr. Keith Martin: Their economy has actually not participated in globalization for many reasons, in part because of what Mr. Harvard said. You have dictators and brutal kleptocrats who are actually draining the public coffers and resources of the country, for the benefit of them and their lackeys.

Mr. Jim Selby: Nonetheless, many of these African countries have also done and run through the structural adjustment programs recommended by the IMF and the World Bank. They've liberalized their trade. They've followed the formula.

As you said, probably in these cases, the whole situation has been exacerbated by bad governance. There's no question about that. But one of the other things about economic destitution at a national level is, it's very hard to maintain good or stable governance when your population is suffering. Argentina comes to mind. When you have unemployment levels reach above 20%, it's very, very hard to keep a stable government. If the government can't solve the problem very quickly, then they're gone, right? So bad governance can make the problem worse. But I think, as well, the economic insecurity and disparity makes it very hard to have good governance.

Very quickly, you talked about China, as opposed to North Korea, for instance. China has accepted trade, and trade's been good for China. But China also pursues very strong protections of its domestic market. They do not follow....Their trade is always on managed terms. There's no such thing as an open border there. Everything is very structured and controlled. And it's actually benefited them, there's no question about that, but it hasn't been the sort of blanket trade liberalization you find elsewhere in the world.

Ms. Kerry Barrett: With regard to reforming the IMF and the World Bank, there would be a big difference in the programs forced on countries if the former were to become more democratic and transparent, and if they took into consideration--and were held accountable for--the effects their policies are actually having on the people, and adjust their programs accordingly. We have seen what has happened in some of these countries, when they have followed these programs. In most cases the programs have not improved things within these countries.

We are not opposed to globalization. But right now, we are opposed to what has been happening with globalization. Unfortunately, it has been mostly to the benefit of the multinational corporations. They're going around the world trying to set up free-trade zones. They're basically trying to get products manufactured as cheaply as they possibly can. So they go into a country and set up a free-trade zone. Rather than improving environmental standards and labour laws, and the right to free collective bargaining and these things, they're sometimes lowering those standards. Because they're within a free-trade zone, they're beyond the control of the governments in these countries.

So if globalization is to improve the lives of working people and to raise the standard around the world, we do not see it as a problem. But if it's just for the benefit of the multinational corporations, it is a problem.

In regard to your comment about letting others express their opposing views, we're not against that at all. We believe in respecting people's opposing views. I think we need to have that discussion amongst people with opposing views, and hopefully there can be some kind of agreement or education reached by both sides. It is important that we respect those different viewpoints, but we have to keep in mind, too, what effect they may have as well.

Going back to John Harvard's comments around what took place in Quebec, I think one of the biggest problems there was the erection of the fence, and people felt that they were basically being stopped from protesting before it even got started. And looking at the different groups that were targeted there, some of the first aid workers were targeted, and just because there were some anarchists there who did become violent, everyone was treated the same. Yet the majority of the people who were there were there to protest peacefully.

Then you see somebody like Jaggi Singh lobbing teddy bears over the fence, which is not a violent thing, nobody got hurt, and yet he was held in prison for days. So it was a real show of excessive force.

Â (1210)

The Acting Chair (Mr. John Harvard): Do you really, truly believe, Kerry, that if there hadn't been a fence and perhaps not even security people, the meeting would have happened? My guess is that there were people who were intent upon--and this is anti-democratic--shutting that meeting down. That was their intent. That's why the fence was there.

Ms. Kerry Barrett: But I think we have to go a little bit further and look at the reason why they'd want to shut those meetings down. People are concerned that there isn't--

The Acting Chair (Mr. John Harvard): That's where the freedom of speech comes in, Kerry. They can talk until the cows come home and tell the world why perhaps the meeting is taking place or shouldn't take place. But my guess is that the security people and the leaders were concerned that, if they didn't have a fence, there would probably be tragedy and the meeting would not take place.

Ms. Kerry Barrett: I think we need to look at a number of different issues concerning that. Yes, the meeting may not have taken place; on the other hand, it may have. And we still feel that it was excessive force the way they went about dealing with it. You look at all the dollars that were spent there in regard to that protest, and maybe those dollars could have been put to use in actually doing some of the work that we've talked about in alleviating some of the poverty and inequality that people face around the world.

The Acting Chair (Mr. John Harvard): We've gone over our time, but Mr. Rocheleau wants to squeeze in one question before we wrap up.

[Translation]

Mr. Yves Rocheleau: I would like to make two comments, Mr. Chairman. The first concerns the Quebec Summit and the second, the right of dissent.

At the Quebec Summit, I was one of the 40,000 or 50,000 peaceful civil society protesters, representing unions in particular. Peaceful protesters such as myself denounced the secret nature of the meeting, the fact that texts were not available and the fact that everything was being done secretly. That was the real meaning of the protest. There were violent protests at the same time, and the difference between the two is what I want to point out.

Our laws provide for the phenomenon of violent protests. We call it vandalism or mischief, and anyone who commits such an offence can be incarcerated and judged using the mechanisms provided for by our so-called democratic and civilized societies. But when a vandal is mistaken for a terrorist, in my opinion, this constitutes an abuse of power on the part of the state, and we sense that people are worried about this kind of abuse. When Warren Allmand, whom you know better than I, Mr. Chairman, testified before the Justice Committee, he said that as president of Rights and Democracy, he could be considered a terrorist because he was using his right of dissent in our so-called democratic society, under Bill C-36 as drafted.

This is the kind of thing that must not be done, in my opinion. The right of dissent exists. A terrorist is a terrorist and a dissident is a dissident. What do we do about struggles for national liberation in particular? On this earth, there are peoples who want to free themselves from the tutelage or hellish system under which they live. If wanting to challenge the established order in this or that country automatically makes someone a terrorist, then where are we headed? The rules of the game must be followed. I think there is a risk of excess if we let ourselves go. Perhaps that is the difference between the great democracies and those that are buffeted along by events, as painful as those events may be.

[English]

The Acting Chair (Mr. John Harvard): I'll give you the last word and that's it, Jim or Kerry.

Mr. Jim Selby: I agree completely. There's a vast difference between a young person spraying graffiti on a building and an act of terrorism. The two are completely dissimilar. You're also right that simply police presence, where the police do their policing work under the Criminal Code that exists in this country, would have done the job.

You were at Quebec City. How many violent anarchists would have invaded a meeting room? Out of all those 50,000 people, only a small handful were prepared to do violent acts. Surely a competent security force could take care of that on an individual basis.

Â (1215)

The Acting Chair (Mr. John Harvard): It's true that things have really gone off the rails, when they talk about spending as much as $300 million for Kananaskis, and a large part of that is for security. Somehow we collectively--governments, labour leaders, everybody involved--will have to get our heads around this. Even if it were just half that amount, for a few people to gather together for a handful of days and spend even $100 million is just beyond my imagination.

Mr. Jim Selby: I think total Canadian assistance for the AIDS program in Africa doesn't reach that amount.

The Acting Chair (Mr. John Harvard): Thank you very much. This was very interesting and informative. Thanks to both of you.

Ms. Kerry Barrett: I have another comment. It would be interesting to see if a different structure could be set up around those meetings. Instead of having all the cameras and everything set up on the protesters, some of the proceedings from those meetings could be broadcasted, and people could actually have the opportunity to contribute and make comments on the discussion. Or you could maybe have representatives from some of those groups involved in some of those meetings. That might alleviate some of that.

The Acting Chair (Mr. John Harvard): “Counterspin at the Summit”: that's what we'll call it.

Thank you.

This meeting is suspended until 1:30 p.m.

Â (1215)

· (1330)

The Acting Chair (Mr. John Harvard): Members, we're going to resume our hearings.

To begin with this afternoon, we have the pleasure of welcoming Dr. Barry Scholnick, an associate professor at the School of Business, University of Alberta, here, of course, in the city of Edmonton.

Dr. Scholnick, as usual we have plenty of time. I'm sure you'll be sharing some of your thoughts with us off the top; then we'll have time for questions. You may begin.

· (1335)

Professor Barry Scholnick (School of Business, University of Alberta): Thank you very much for inviting me.

Just for a bit of background, I'm an economist. I teach international business at the University of Alberta school of business. My interests are in international trade and exchange rates.

What I plan to do today is comment quite specifically on some of the questions this committee has proposed in your research documents, which I should compliment you on. The research documents were very thorough and very well written. They have a whole bunch of questions I would like to address.

In particular, my area being international trade and exchange rates, I'd like to comment upon parts VII and VIII of the research documents of this committee, part VII being entitled “NAFTA and Beyond: Next Steps?”, and part VIII, “The Dollarization Debate and North American Integration”. That's my agenda for this afternoon.

Briefly, in summary what I will be proposing before this committee is a very specific, somewhat technical, but in my argument very politically achievable increase in economic integration between the United States and Canada. I will be proposing that Canada consider moving from a free trade area--which it currently has with the NAFTA--with the United States, to a slightly increased degree of integration, which I call a customs union. I'll describe in detail why I'm proposing this and why I believe it will be economically as well as politically feasible.

That's my agenda for this afternoon. If I have time, I also propose to address the other set of questions proposed by this committee, which covers the dollarization debate.

But first let me talk about customs unions and free trade agreements. I have circulated a document that hopefully the committee has. Towards the bottom of the first page of my document, I list five levels of increasing economic integration. This is standard material that you'll find in many textbooks. It more or less lists how countries can integrate with each other. This list is in the documents your committee has produced, and you'll find it in many other places. There is nothing original about it.

The list briefly, through stages one, two, three, four, and five, shows countries getting more and more integrated. Under one--what I've called the free trade area or NAFTA--is the least amount of integration. Then you move through to a customs union, a common market, economic union, political union, and you're getting more and more integrated. I've given some examples. The common market is what the Europeans used to be; the economic union is more or less what the Europeans are today; and number five, a political union, is more or less what the Canadian provinces have at the moment.

What I'm going to be arguing to this committee this afternoon is that Canadian policy-makers and United States policy-makers seriously consider moving from number one, where they are today, which is a free trade area, towards number two, a customs union. I would argue it's a small step, an incremental step, a technical step, but it will have significant benefits. That's the main thrust of my remarks this afternoon.

Let me define what these terms are. These are all economic jargon terms. Essentially the idea of a free trade area, which is where the Canadians and the Americans are at the moment, is simply that we've reduced tariffs and quotas between our two countries, and we have that to some extent. As the committee is well aware, we have many other areas where tariffs are not reduced. But the free trade area--NAFTA--has focused on relationships between Canada and the United States. That's the main thrust.

What I'm proposing is that when you move to a customs union, you're asked the question, how do Canada and the United States respond to everybody else in the world--to the Japanese, for example; to the British; to the Europeans?

What the customs union essentially does is to create a situation where Canada and the United States have the same level of tariffs relative to everybody else in the world. In other words, the Japanese, the British, and the Europeans pay the same tariff whether their goods are coming into Canada or the United States. The key thrust of a customs union is this notion of a common external tariff. We wouldn't be integrating under this customs union to any greater or lesser extent in relation to each other--Canada and the United States--we'd be integrating to a greater extent in relation to everybody else in the rest of the world.

The situation as it stands now is that you can have very different tariffs. For example, the Japanese or the British pay when they want to bring their goods into either the United States or Canada. Canada could have 10% tariffs and the Americans could have 50% or vice versa, depending on the goods, the products. My proposal to move to a customs union is so that Canada and the United States will have the same tariffs as Japan or Britain or other foreigners when they want to bring their goods into North America.

Now, the question you're asking is, why? What's the benefit of this? My argument is that currently, because we don't have common external tariffs and because we have a situation where the Americans and the Canadians have different tariffs, this leads to significant bureaucratic and legal complications when foreigners want to bring their goods into North America. The complications arise from the following problem. Suppose a Japanese firm wants to bring its goods into North America, and the product has a higher tariff in Canada than in the United States. Let's say you have to pay 30% to bring the stuff into Canada and 10% into the United States. The producer in Japan has an incentive to bring the goods into the United States first, where the product has a cheaper tariff, and then cross the border into Canada because the tariff in the United States is lower.

In order to stop this happening, when the NAFTA was first introduced, the drafters of the NAFTA, as with every other free trade agreement, introduced something called “rules of origin”, which are very complex, very legalistic rules. They basically say that only goods that are essentially Canadian goods or are essentially American goods are under the free trade agreement, under NAFTA, and that they can cross the Canadian-U.S. border relatively quickly, freely, and cheaply under lower tariffs. For any good that is defined as British or Japanese or as some other foreign good, they have to pay higher tariffs and cannot cross the Canadian-US border very quickly.

To stop the problem of a Japanese, British, or some other foreign company undercutting the tariffs by getting into the cheaper one, whichever is the cheaper, the United States or Canada.... My argument to you is that the whole bureaucratic structure and legal structure of enforcing these rules of origin is very, very costly. It's costly for the firms, and it's costly for the Canadian and American governments to enforce, to make sure that the goods that are crossing the border are in fact, strictly by definition, Canadian goods and/or American goods and are not these British goods. When you think of some products that are complicated, such as cars, it's a very complex process to work out whether the car is in fact American or Canadian rather than Japanese.

I'm proposing that if we move to a customs union, which basically says that the tariffs the Japanese have to pay are essentially the same whether the goods come into the United States or Canada, we will no longer need this very laborious, rigorous structure of rules of origin. We can move to a situation where trade really is free across the border. If both Canada and the United States have the same tariffs with respect to the Japanese or the British, it doesn't matter which country the goods come into. Once they're into the common union, they can cross the border freely. That's my main proposal for this afternoon.

What I've done on the second page of my discussion paper is list a few political as well as economic arguments as to why I believe moving from a free trade agreement to a customs union is in fact a good policy proposal for the Canadian authorities to consider.

First, the political arguments, and I'll give you my comments within the perspective of September of 11. What happened on September 11 gave many if not most people in Canada a significant shock when they suddenly realized that on that day, September 11, the Americans closed the border. They closed the border for one day, and all of a sudden Canadians woke up and realized how important that border was, how important it was that it function freely, and how important it was that goods and services get across the border quickly for the success of our economy.

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What you saw after September 11 is the concern about the functioning of the border increasing rapidly in political circles as well as, I would argue, in the views of many Canadians. My proposal to move from the current free trade agreement to a deeper economic integration and customs union I would argue has significant political benefits in light of September 11.

Number one, I would argue that it acts in terms of Canadians' fears of the importance of this border. Secondly, the argument could be made that by focusing less on products, on goods, whether it's cars or manufactured goods coming from the United States or Canada, and focusing less on whether these goods are made in Canada, made in the U.S., made in Britain, made in Japan, by moving to a customs union we have much more resources to put toward focusing on what I would argue are bigger issues, which are the politically very sensitive issues of security, immigration, etc. So my argument is to reduce the resources put into worrying about goods crossing the border, by having a customs union, and increase the resources to the more politically sensitive areas of security, immigration, etc.

Thirdly, I would suggest that, politically, the time right now is appropriate to introduce the idea of a customs union in both Canada and the United States. My reading of the American political scene at the moment, in these last couple of months, is that there has been a succession of victories in the United States Congress in particular for what I would argue are protectionist forces within the United States. You've seen examples that this committee is very well aware of; you've seen softwood lumber, you've seen steel, which affected the Europeans. This morning the American Senate passed the U.S. Farm Bill, which is highly protectionist. So you've seen the succession of protectionist victories in the United States Congress.

In my view, there is a natural coalition within the United States political system that I would call the free trade coalition. This coalition is made up of centrist Democrats and centrist Republicans, and this is the coalition that essentially voted for NAFTA when NAFTA was first introduced in the early 1990s. It was also the coalition that voted for, last year, China entering the WTO. There is a natural free trade coalition in the United States, which has suffered significant defeats in the last couple of months.

I would argue that Canada proposing, and thinking about, and introducing a customs union creating integration with the United States, an incremental degree of integration, will be an issue that what I call the “free trade coalition” in the United States, the centrist Americans and centrist Republicans, can put their weight behind and push through the political agenda in the United States. The time, I think, is good for a free trade initiative coming from Canada with respect to the United States. I suspect there's a potential movement in the United States political system in support of this agenda.

In my view, that is the political benefit, or the political possibility, of introducing a small, incremental, and somewhat technical change that will nevertheless be a deepening of the level of integration between Canada and the United States. And what I tried to do is answer specifically in this regard the questions that your committee has asked on your website and in your research document.

My background is as an economist, so let me very briefly touch on some of the economic benefits of moving from a free trade agreement, which is what we have right now, to a customs union where we have a common external tariff related to foreign countries.

In terms of economic benefits, first, you have the reduction of these bureaucratic rules of origin determining what a product is, whether it's German or French or Japanese or Canadian or American. There are various estimates, but in Europe the estimates of not having to go through these long bureaucratic processes, not having to fill in these forms and do the bureaucracy, results in something between a 3% and 5% savings in trade.

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Secondly, as an economist I would argue that by moving to a customs union, if we can have a situation of having reduced tariffs between Canada and the United States...and that's not clear now. The common tariffs are up for negotiation between the Americans and the Canadians. But if we have a situation of reduced tariffs, we can then have a situation, I would argue, where the lower your international tariffs are, the more trade there is.

We can encourage it by reducing tariffs on the Japanese or the Europeans, for example. By having a common Canadian-U.S. tariff, we could encourage greater trade between North America, as a customs union, and other parts of the world. It is unclear because of a lack of negotiations between the Canadian and the United States negotiators.

The final economic point I want to mention is that this committee has to recall that what I'm talking about today is trade with respect to the rest of the world. I'm not referring, in any sense, to trade between Canada and the United States. All I'm proposing is that trade with the rest of world.... Canada and the United States together as two countries, or perhaps with Mexico as three countries, could come together and have a common tariff, the same tariff--everyone has 5% towards Japanese motorbikes, or whatever the example is.

The committee should remember that the amount of non-United States trade that Canada has is relatively small. The numbers vary, but approximately 80% of our exports are to the United States. About 60% of our imports are from the United States. I'm referring my remarks today to the non-United States trade. These are relatively small numbers.

Once again, I emphasize that my remarks are about an incremental, relatively small increase in integration between the United States, for which there would be, obviously, a reduction in Canadian sovereignty, because what we have now is a situation where Canada and the United States have to agree on whatever the tariff should be between Canada and the United States with respect to Japanese goods, British goods, or whatever the case might be.

So there is some reduction in sovereignty. However, the benefits, I would argue, far outweigh the costs. The benefits are closer integration. The benefits are increased trade across the Canada-United States border. We don't have to worry about rules of origin. We don't have to worry about bureaucracy. I would argue that there is almost a potential political benefit to following such closer integration at this time, following September 11.

Those are my remarks about integration. It answers the questions this committee posed in section VII.

Mr. Chair, I have more comments on your section VIII with regard to the Canadian dollar and dollarization. If you would like me to carry on, I can address the comments or you can ask questions.

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The Acting Chair (Mr. John Harvard): Sure. Are there any questions?

We have 25 minutes. Can you confine your dollarization comments to no more than five minutes?

Prof. Barry Scholnick: Thank you.

Briefly, the committee has asked a question about dollarization in its documents. This is a very old question about which economists have been worrying for many years. What currency regime should we have in our country? What is the best for our country?

There is a continuum. There's a range of choices, ranging from the current situation now of a Canadian dollar that is a flexible dollar, to a fixed Canadian dollar pegged to the United States dollar, to a common currency along the lines of the euro, to dollarization, which is basically the idea of us, the Canadians, using the U.S. dollar. There's a wide variety of choices.

To summarize my thoughts on this issue, I'm of the opinion that is, I think, the opinion of most, but certainly not all, professional economists in Canada--namely, that the current floating exchange rate system is preferable to any fixed exchange rate system, to either a peg of the U.S. dollar to the Canadian dollar, or a common currency, call it the “amero”, aligned with the European version of the euro, or the extreme case, which is Canadians using the United States dollar as a currency.

My views on this are not in any sense original. The arguments are very well known. Your committee has access to them in its report. I'll stop there. If you want to question me about it, I can give you the reasoning for my views in more detail.

The Acting Chair (Mr. John Harvard): Perhaps I can ask one question, just for information, before I go to Dr. Martin. I'm not an economist, so I ask you to excuse my ignorance. When you talk about a customs union, is the definition you put forward what you might call the traditional definition, that means only a common set of external tariffs and nothing more?

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Prof. Barry Scholnick: That's a very, very good question. The answer is, it depends on what the negotiators want to negotiate. I would argue that this is a minimum level, the set of common tariffs.

The Acting Chair (Mr. John Harvard): So you can have other kinds of customs unions.

Prof. Barry Scholnick: Correct. Often you have a situation where at the same time as a common external tariff, you do indeed have deeper integration between the two countries.

Now, I would say if Canada and the United States wished to pursue that, it would be wonderful. I would be all in favour of that. But my main thrust of the argument this afternoon is to propose we start small. Let's have an incremental deepening of integration right now. Let's focus on the one thing that I believe is doable, achievable, politically possible, and economically possible, and that will have significant benefits, which is simply moving toward a common external tariff.

The Acting Chair (Mr. John Harvard): I ask that because I'm sure that the two words “customs union” would conjure up all kinds of images in the minds of people who may--if it's perhaps possible--know less about economics than I do.

Prof. Barry Scholnick: That's very possible. You often would have a situation of a customs union including much deeper integration. Your committee's documents talk about deeper levels of integration, including things such as competition policy, anti-dumping, and countervailing duties, etc. One can hook up a whole variety of different issues to put into your customs union. My proposal this afternoon is simply the minimum.

The Acting Chair (Mr. John Harvard): Thank you for your patience, Dr. Martin.

Mr. Keith Martin: Thank you, Mr. Chairman.

Professor Scholnick, thank you very much for your well-organized presentation here today.

I have three questions. First, how do we negotiate a customs union with the United States when, as you quite appropriately mentioned, it is becoming more protectionist in its view? Protectionism is the dominant view certainly of this administration. What's the hook to get the Americans interested and involved in negotiating? What is in their interest to actually work with us to accomplish that objective?

My second question concerns page 3 of your wonderful, short dissertation. You mention the fact that dollarization is not going to cure our woes with our lack of productivity and that the declining dollar's a symptom of a bigger problem. What in your view do we need to do to become more productive and more competitive as an economy?

Lastly, this is not relating to your.... Are you South African, may I ask?

Prof. Barry Scholnick: Yes, sir.

Mr. Keith Martin: I was going to ask you at length about the South African economy, but we don't have time, I'm sure.

Short-term capital flows and how we actually address the destabilizing effect of short-term capital flows in our current international markets.... As an economist--I'm picking your brains--do you have any views on what ought to be done to try to ameliorate those devastating impacts of large movements of short-term capital flows across international markets?

Prof. Barry Scholnick: Okay. There were three questions, and I'll do them one at a time.

The first question from Dr. Martin was, what is the U.S. hook? Why is the U.S. interested? Answer: more free trade. Answer: better access to the Canadian market. The American policy-makers understand that Canada is its best customer, its biggest customer, even though recent evidence shows that the Canadian public doesn't believe that. But I think policy-makers do understand that. More integration between Canada and the United States will lead to better trade, easier trade. Anything that reduces the problems of getting a product from one side of the Canadian border to the other side will I think be.... The argument can be made to the Americans that this will be beneficial to their trade.

Secondly, I would argue that politically the balance between the protectionists and the free traders in the United States is, in my view, a very fine balance. We've seen some protectionist views right now from this administration. I'm not sure whether this will change or whether this will stay the same. The argument I made is that there is a free trade lobby in the United States, certainly within the Congress--and I suspect within the administration--that has been very quiet and has suffered defeats over the last while. This lobby, I think, can be used to push a free trade agenda with Canada.

Fundamentally, what is the hook? The answer is the same hook the Canadians sold to the Americans more than 10 years ago to negotiate the free trade agreement. Free trade leads to more economic growth, which leads to more wealth. I think the Americans will buy the argument that by reducing the borders we will have more trade, more growth. This issue, I would argue, will streamline significantly what happens at the Canadian border. Coupled with it, my other argument is that the Canadian government can then take those resources it saves in worrying about rules of origin and worrying about where the car came from, and focus on other issues the Americans find very important, which are the issues of security and immigration.

This is an argument I would put to the Americans. Let's worry less about stuff. Let's worry less about making it as easy as possible for goods to cross the border, and worry about some of the bigger issues post-September 11, which are security and immigration, etc. For all those reasons--economic, political, and security--I would say there's enough of a hook for the Americans.

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Mr. Keith Martin: Do we have to resolve our current trade differences with the U.S. before we actually get into a customs union?

Prof. Barry Scholnick: No. That's a really important question. I haven't talked in any sense about what's happening currently under NAFTA, and there are significant problems under NAFTA, as this committee is very well aware.

My proposal today simply says let's do something different. Let's worry about the tariff that Japan or Britain or other countries have to pay when they're coming into North America. That's a very tightly defined, single proposal to integrate further the Canadian and American economies, and solve some of the problems at the border.

I suspect what would happen if there were negotiations is that you would find these other issues would be opened up, but they don't necessarily have to be opened up. You could define the negotiations simply to be a customs union.

The Acting Chair (Mr. John Harvard): Thank you.

Prof. Barry Scholnick: There were two more questions Dr. Martin asked me about.

The Acting Chair (Mr. John Harvard): I'm sorry, go ahead.

Prof. Barry Scholnick: One was productivity. The argument I make on page 3 about dollarization--which I didn't discuss, but I'll talk about briefly--is that in my view, the reason the Canadian dollar is declining and has been declining for 25-some years is.... It's a long-term issue. It's not something that happens over one month or one week. We've seen the Canadian dollar decline year after year. On average, the trend is downhill for 25-some years, which tells me there's a long-run cause for this issue, not some short-term fluctuation. I would argue that the long-run problem is, fundamentally, productivity. This is not an original argument. Many economists have made this argument.

What do we need to increase productivity? This is another long answer, which I'll give you a short version of. We have to increase our competitiveness. We have to be able to compete. In some areas, Canada is very highly productive. In some areas, Canada is very highly competitive. We have to make sure Canada is as productive and as competitive relative to the United States in all areas. We have to make sure Canada is as productive and as competitive all the time, in all years.

What we see, in my view of the Canadian dollar, is that it's a slow, incremental process. Every single year, Canada falls. Well, not every year, but in many years. Canada is just a small amount less productive or less competitive than the United States, and this compounds itself year after year after year, which contributes to the Canadian dollar falling slowly and gently. It's not a major thing every year, but there's a significant long-run trend in the dollar going down.

How we increase productivity and how we increase competitiveness is something I'm not sure I can discuss in the short time available, but there are many things that I would argue the current administration is doing really well, including reducing taxes, which we've seen in the last federal budget, and including research and development expenditure. But there are many more things.

I think there should be a focus of the Canadian administration, of the government, on a productivity and competitiveness agenda. So that's a short answer to a very long and complex question.

The final question Dr. Martin asked me, which is something I have some opinions about, is short-term capital flows and how you stop the destabilization of these flows.

The answer is, you can't. You can do very little as a country to stop money flowing into and out of your country. Countries have tried to stop currency coming in and out--or capital, or financial instruments, or whatever their financial assets are.

People have talked about introducing something called the Tobin tax. A Nobel prize-winning economist had the idea to tax people every time they took money from one country and gave it to another country. But I would argue that any attempts to control hot money, which is the term given by many economists for money that flows backwards and forwards across borders very quickly, are self-defeating.

Once you impose such controls, the capital markets, the financial markets, are even less interested in bringing money into your country. That impacts things like your Canadian dollar, foreign direct investment, and foreign debt. All of those things become more expensive.

So my argument is to not impose some sort of controls to stop the flows of hot money. I don't believe it's possible to do that, in the global world in which we're living.

The answer, as always, is to create an environment in Canada where foreign investors do not have an incentive to withdraw their money very rapidly, so they do not behave as if Canada were like Mexico--the same as the Wall Street Journal argument that described Canada in the mid-1990s as “Mexico north”.

If the world thinks of us as Mexico north, then we're in trouble. The argument to the Canadian authorities should be to create a political and financial environment within Canada that is as stable and friendly toward foreign investors as possible, to make sure foreign investors do not withdraw their money very quickly.

Quite frankly, in the last few months we've seen a rise in the Canadian dollar. A couple of days ago, Moody's announced that Canadian credit rating had risen. I applaud all of these things because they show that the foreign investment community has had significant trust in the Canadian economy, and we're not seeing the significant flows we used to see perhaps 10 or 15 years ago.

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The Acting Chair (Mr. John Harvard): Mr. Rocheleau.

[Translation]

Mr. Yves Rocheleau: Thank you, Mr. Chairman.

Thank you for your presentation, Mr. Scholnick. Here are a few questions.

When you talked about a customs union, you spoke about Mexico only incidentally. Would it not be in Canada's interest that Mexico be involved in building and participating in a potential customs union, if only to offset American interests? We might at least be two against one. The United States might be in the minority and have some food for thought. David would no longer be facing Goliath alone.

My second question concerns the weakness of the Canadian dollar which, if I've correctly understood your comments, is the result of the weakness of the Canadian economy and Canadian competitiveness. Does our weak dollar not in fact protect us from this great weakness in our economy? What would happen were the dollar to rise, as some say it might, to 72¢ or perhaps even 75¢? Does our dollar not protect us from the current weakness in the Canadian economy?

You say that dollarization would come with disadvantages for Canada. Would you go so far as to say that if we were to adopt the American dollar, we risk experiencing what Argentina is presently going through, as it seems they pegged their dollar too closely to the American dollar?

Finally, regarding the Tobin tax, it is all well and good to talk about common markets, economic union and free trade, which are all mechanisms, but one mustn't forget that the economy exists because of people. Money is a development tool for people. If we don't advocate the Tobin tax and we admit, furthermore, that there is something like an unacceptable fiasco happening in terms of global economic development, what can we try and do to improve the situation of people in general, and not just the 2 or 3% who are part of the international jet set and are living better and better? When I was young, it was said that two out of three people were starving to death; I think that today it's more like three out of four.

[English]

Prof. Barry Scholnick: Thank you very much. Let me respond to your four questions, all of which are very good.

Your first question was on Mexico. You were quite correct that I did not focus a great deal of my comments on the Mexican situation. I would argue that if Mexico was involved in our proposal for a customs union, that would be wonderful. I have no objection to Mexico being involved, and it's very probable that Mexico would be involved, because I think the American government is trying very hard to integrate Mexico to a greater extent into the North American economy. So my comments, by excluding Mexico, didn't imply that I was in any way against Mexico, but just that I think the main focus for the Canadian situation is the United States.

I agree with you that having two smaller economies, Mexico and Canada, around the table, relative to the United States, could be beneficial to Canada. So my first answer is, yes, Mexico could and, in my view, should be involved.

On your second question, which was about the low Canadian dollar protecting certain industrial and manufacturing producers and that if we move to a 72¢ dollar, which we may or may not see, these producers will find it more difficult, yes, I agree with you entirely. I think that's a very valid comment. You have seen very low levels of productivity in Canada protected by the low Canadian dollar. Once the Canadian dollar begins to rise, some producers will face difficulties; some exporters will face difficulties. On the other hand, some importers will find life a lot easier. We have more or less the same amount, give or take, or the same level of imports as exports in our country, so we will have some winners and some losers when the dollar rises to 72¢--if it rises to 72¢, and I hope it does.

In my mind, the significant issue is, how do we increase productivity given the value of the Canadian dollar? One of the things I would argue about is, in order to raise productivity, we have to ensure that those firms that are now being protected by the low dollar, those exporters, are in fact able to compete internationally even with a higher dollar.

Clearly, some of them will go out of business, but many of them will not. If they are more productive, if they become more competitive, it's my argument that this government, the Canadian government, should ensure that those firms have the ability to be more competitive internationally--and there are many ways of doing that, which I don't have time to go into now. But that's my emphasis, on a productivity agenda.

Your third question to me was about dollarization. Let me clarify. In my comments, I am opposed to dollarization. I believe dollarization is not a good proposal for the Canadian government, for the federal bank, the Bank of Canada. I'm arguing in favour of the current system of a floating exchange rate, where the dollar goes up and down every day.

Dollarization is, as you pointed out, the Argentinian case, where they pegged their currency one to one to the U.S. dollar. As you saw, there was a significant crisis, with significant problems.

So my argument to you and the proposal I'm making today is for the Canadian government not to have dollarization, but to stick to its current regime of a floating exchange rate. But in order to ensure that the Canadian dollar doesn't continue to fall....

We're now at 63¢ or 64¢. Some people are predicting 74¢; we could also go to 50¢. In order to ensure that does not happen, the Canadian government needs to focus on issues such as productivity and competitiveness. I hope it does go to 72¢, but I'm not sure. That's my answer to your third question.

On your fourth question, on the Tobin tax and human development and the idea that two-thirds of people are living in poverty, my response is a philosophical one. It seems to me that globalization, the idea of globalization, international capital markets, money and goods flowing across the borders, cannot be stopped. Globalization is here. It has happened. I don't believe you can go backwards. You will see more and more globalization. We will see more and more money, goods, and people crossing borders.

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The question I believe the Canadian government has to focus on is, how do we best fit in? How do we best compete in this increasingly globalized world? I'm aware that in a system of globalization there are winners and losers. Some people do very well--we call them the jet-set community--and some people do poorly. The question the Canadian government has to ask is, how do we ensure that the Canadian population--and, for that matter, many populations throughout the rest of the world--wins through globalization? We cannot turn back globalization. We cannot stop goods, money, and people flowing across borders, which is my definition of globalization. The world is getting smaller and smaller and more and more integrated. So we have to think about how we're going to survive within this new world order.

My response is the same one I've been giving all afternoon, that in order to ensure that we do well in the globalization context, we have to be able to compete and to be productive. People have to be able to buy our goods and want to buy our dollar.

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The Acting Chair (Mr. John Harvard): I have a couple of questions before we have to wind this up, Professor Scholnick.

Number one, you attribute the slide in the value of the Canadian dollar to our competitiveness and productivity. You certainly know more about these things than I do, but let me try something on you. The United States' economy is humongous. The world has never seen anything like it. At the same time, international investors, if not all investors, are a conservative crowd. They want to put their money in what they would consider safe havens. Is it not the case that these conservative investors are more apt to invest their money in huge economies, which are better equipped to withstand the buffeting of economic storms? If that is true, would that not to some extent contribute to the disparity in the value of the two dollars? That's my first question.

The second question has to do with your suggestion of a customs union. It appears that it would be a rather modest proposal. What implications might that have for Canada with regard to any international trade negotiations, such as the WTO and the free trade area of the Americas? As part of a customs union, would we still negotiate as one country, or would we then be negotiating as a NAFTA block?

Those are my two questions.

Prof. Barry Scholnick: I think both of those are very important questions. I'll be very brief.

Your first question was about safe havens. You're absolutely correct; the international investment community views the U. S. as a safe haven. There is what I would call a safe haven premium on the United States dollar. There is some money that will always go to the United States dollar relative to the Canadian dollar because the U.S. is a safe haven. My response is that there's very little we can do about that. That's life. The United States is big and powerful. There's very little Canada can do to change the view that the United States is a safe haven.

Given this problem that is acting against us, the view of the safe haven, we have to ensure that Canada remains as competitive as possible in order to ensure that foreigners buy the Canadian dollar and Canadian goods. That makes it more difficult, but, I would argue, much more important for the Canadian government to ensure that the fundamentals are right, which they have become. I would congratulate this current government on moving in that direction, as we've seen Moody's arguing in the last couple of days. The fundamentals are getting better and better, and more foreigners are buying the Canadian dollar and investing in Canada.

The Acting Chair (Mr. John Harvard): Where is it now?

Prof. Barry Scholnick: It has gone from 62¢ to 63¢ and a bit, so we have seen some progress. Some commentators are saying it's going to go to 72¢. Whether that's right or wrong, I'm not sure. The point is, we have no alternative but to keep moving in that direction. There's nothing we can do about the fact that the United States is big.

With regard to your second question, on the customs union and how it affects our relationship to other agreements, WTO etc., the answer is that it depends on what the negotiators come up with. You could have a situation where Canada and the United States agree they will form a North American bloc. For example, Europeans have a single seat on the WTO representing the whole of Europe. We could move in that direction, have a single seat in the WTO representing Canada, the United States, and possibly Mexico, but not necessarily. It depends on what the negotiators agree to.

My argument is that this is not the main issue. The thrust of my argument is that we need to make sure things work better at the border, that goods get across the border easily, as easily as possible after September 11. That's what I would see as the main agenda.

To conclude, I'm arguing that it's doable, it's achievable, it can be done.

¸ (1420)

The Acting Chair (Mr. John Harvard): Mr. Rocheleau wants to squeeze in a very tight question or observation.

[Translation]

Mr. Yves Rocheleau: Mr. Scholnick, if you feel that a Tobin tax or its equivalent would not be appropriate, does that mean that you find it appropriate, acceptable and ethically correct that the jet set take billions and billions of dollars from the economies of developed and underdeveloped countries and send that money to tax havens to be sheltered from taxes? You know as well as I do that it is money being used to make money, that it is pure speculation. Do you consider that to be acceptable?

[English]

Prof. Barry Scholnick: That's a very good question, and a very complex and tricky one.

My response to your question about tax havens and tax shelters is similar to my response to the chairman of this committee a few minutes ago--that is to say, there's very little we can do about it. These things are there. Tax shelters are there. They'll continue to be there. And I would argue that they will increase. We're going to see more and more governments and countries and small islands, for example, competing based on low taxes. We're sitting in Alberta right now, and this province competes based on low taxes. You have the notion of tax competition between jurisdictions. A tax haven is the extreme case; no taxes.

I would argue to this committee that this is only the beginning. We're living in a world where governments, jurisdictions, will compete for money, will compete for investment, and they will compete on the basis of all kinds of things, including lower taxes.

Do I think it's morally or ethically acceptable? I have no opinion on the morality or the ethics of a tax haven. My suggestion to the committee is that this is just the beginning. There are going to be more and more tax havens. My view to the committee is that Canadian authorities need to be thinking about how to deal with these tax havens in this kind of environment, because they're not going away.

The Acting Chair (Mr. John Harvard): Mr. Scholnick, is that not just another form of a race to the bottom? If countries, small islands, whatever, get into that kind of competition, how is that different from workers undercutting each other--i.e., I'll work for $8 an hour, I'll work for $7, no, I'll work for $6? What is the difference?

Prof. Barry Scholnick: There is no difference.

The Acting Chair (Mr. John Harvard): Well, I'll tell you, something happened when undercutting did happen. I come from Winnipeg. We had a 1919 general strike.

Prof. Barry Scholnick: Let me respond. What happens is that authorities do need tax revenue, and they do need money from taxes. So you have a situation where jurisdictions compete on taxes. I don't believe you'll see many jurisdictions offering zero taxes. Some islands will do it. But I do see a situation where there's a notion of tax competition.

Authorities, including yourselves, have to make the decision as to what level of tax is appropriate for us: as low as possible in order to attract foreign investment, in order to keep brains and highly skilled people in your authority, in your jurisdiction, but as high as possible in order to get revenues so you can do good things such as building schools and building hospitals. This is the nature of government. This is what you have to decide.

My point to this committee is that tax competition, as labour competition, is not going away. It's here to stay. You'll see more of it. You already see it in this province. In provincial tax competition, Saskatchewan is very unhappy at what the Alberta government is doing in lowering taxes, because people are moving from Saskatchewan and British Columbia, I suspect, to Alberta.

It's the same thing: tax competition is here, whether it's between cities, between provinces, or between countries. This is the whole manifestation of globalization. This government and this jurisdiction has to make sure it can compete and win in this environment; otherwise, it's going to lose.

¸ (1425)

The Acting Chair (Mr. John Harvard): I think Darwin had it right.

Mr. Keith Martin: I have just one comment, Professor Scholnick. There's a curve...and you'll know it as an economist. As I'm not one, I have forgotten the name of it. It begins with an L. What is it called?

Prof. Barry Scholnick: The Laffer curve.

Mr. Keith Martin: That's it.

The Acting Chair (Mr. John Harvard): It's anything but laughter.

Mr. Keith Martin: Isn't it the Laffer curve that demonstrates where the optimal tax benefit is?

Prof. Barry Scholnick: Yes.

Mr. Keith Martin: Shouldn't we be looking at the Laffer curve in our country to know where that tax...?

Prof. Barry Scholnick: Mr. Chairman, I'm not sure how much time I have to go into the Laffer curve.

The Acting Chair (Mr. John Harvard): You're so damn fascinating, we've actually gone over five minutes. But we'll let you finish this time.

Prof. Barry Scholnick: Okay: here's the Laffer curve in one minute.

The Acting Chair (Mr. John Harvard): And supply-side economics.

Prof. Barry Scholnick: The Laffer curve was the idea of Ronald Reagan--well, not his idea, but Ronald Reagan came in and introduced the notion of the Laffer curve. The Laffer curve basically says if you lower taxes you can increase government revenue. By lowering taxes you create more incentives for wealth creation; you have more people come into the economy; and therefore, people pay a lower rate of tax. But more people are paying, and they're paying with more income, so government actually gets more money.

That was the idea of the Laffer curve. It's still around, although Mr. Reagan did not succeed with the Laffer curve, because he ran huge deficits--because he had things like Star Wars, etc. But that's history. The idea of the Laffer curve is still out there. It simply says if you lower taxes you can create more revenue. That is an issue I think this government has to deal with.

But there are problems with the Laffer curve. It's not clear that it always works--and you're correct, there is an optimal level, beyond which, if you go too low, you get less money. Yes, that is an issue.

Mr. Keith Martin: Thank you very much.

The Acting Chair (Mr. John Harvard): There will always be some of us who will want to have our cake and eat it too.

Dr. Scholnick, this has been absolutely fascinating. Thank you very much.

Prof. Barry Scholnick: You're very welcome.

The Acting Chair (Mr. John Harvard): We appreciate everything you have done for us today.

Members, we're going to move now to Satya Das, who is a principal of Cambridge Strategies Inc.

Thank you for coming, sir. I don't know whether you're going to be working from a prepared text, but I'm sure we'll have time after your opening remarks for some questions.

Mr. Satya Das (Principal, Cambridge Strategies Inc): Thank you, Mr. Harvard. Actually, since time is a bit short, I will just make a few short points and then move directly to questions.

The presentation today touches on Canada's security needs in the post-September 11 climate and the ambitious agenda for African engagement envisioned in the Kananaskis G-8 meeting. These are, I believe, related issues. While Canada ought to continue with a cooperative and coordinated approach with the United States concerning North American security, it would be quite wrong to integrate Canadian and American military capability.

Our model of cooperation has served us well. There is no compelling reason why our sovereignty needs to be compromised by submitting our military capability to American command. We have shown in a number of multilateral missions and endeavours, whether under NATO or UN command, that Canadian troops can indeed serve well in integrated military structures. There is nonetheless a signal difference between joining a multilateral mission and placing our troops under the dictate of a neighbouring power, no matter how benevolent.

One need look no further than the Brock monument on Queenston Heights to understand the meanders of history and to remind us that it is always wise to maintain a sovereign Canadian military capability.

That's a brief take on some of the proposals for North American integration. I'd like to move now to the African agenda and how it plays in with a differing view of security than the one held by the United States.

[Translation]

This distinction between multilateral cooperation and total submission to American control is also at the heart of the way in which we are approaching the G-8 agenda and the possibilities for African renewal.

Even though there may be moments when Canada and the United States share security needs, it is critical to recognize that Canadian and American definitions of world security and their respective approaches are often very different.

I believe it would be useful to broach these issues within the context of Canada's high ranking in the United Nations Human Development Index. In their report in 2000, the United Nations explicitly connected their ranking to progress in the areas of human rights, human development and national security. These three interconnected and overlapping concepts are at the heart of a vision of a different world.

Overall, these phenomena represent a new way of seeing the world, particularly as regards the development of civil society and ideas of global governance. Unlike the established international order having its roots in relations between countries, this model goes beyond political frontiers to defend the well-being of individual citizens, regardless of where they live.

[English]

That is the basic distinction where I believe the issues raised by the G-8 agenda and by North American integration intersect. The American view of global security, as we've seen quite clearly, is linked to a projection of American military power, to the pursuit of American interest, and, dare I say, to a sense of American exceptionalism in which its status as the global superpower encourages Americans to define their self-interest outside the ambit of the United Nations when it is not seen as conducive to their particular definition.

The Canadian tradition, on the other hand, especially as evolved in the human security agenda that was advocated so vigorously by former Minister Axworthy, has always been a multilateral vision. It has been a global vision. It has been one of inclusion, and above all, it has been based on the Universal Declaration of Human Rights and the values that sprang from it.

In the context of African engagement, we have for the first time, in the new Africa partnership initiative, an explicit engagement--and Dr. Martin has much more direct experience of this than I do--and an undertaking by the leaders of Africa, by their own free will, not with coercion or external forces, that they will in fact try to adhere to what we would consider to be the principles of the human security agenda. These would be transparency, accountability, democratic governance, the construction of civil society, peace maintenance and enforcement, and essentially the creation of a world in which economic development, human rights, and social development are seen as simultaneous endeavours rather than successive ones.

In that climate, the opportunity to engage with Africa must be done in a multilateral way. It must be done in such a way that aberrations like the Mugabe period in Zimbabwe are not permitted to become the excuse upon which a whole broad agenda of engagement flounders. It must be done with the recognition that there are multilateral forces here, that there are levels of integration between concepts of security, whether military or human, and that all of this needs to be engaged with the overarching ambition of helping African nations to become truly independent in fundamental ways.

It includes giving African nations and other developing countries free access to markets, as opposed to simply preaching the rhetoric of free trade. It means enhancing civilian and economic capability within African nations. I believe all of this engagement can best flow from a definition of security that leans much more closely toward former Minister Axworthy's human security model than a purely defensive mindset in which building Star Wars or other technological systems of protection and saving one's military might for national defence is the prime driver of human security.

¸ (1430)

I would make those points briefly. They are elaborated on in some length in the paper, which I hope you would read at your leisure at some point, and I will open the floor for questions.

¸ (1435)

The Acting Chair (Mr. John Harvard): Thank you very much. We appreciate that.

We'll start with Dr. Martin.

Mr. Keith Martin: Thank you, Mr. Harvard, and thank you very much, Mr. Das, for being here today and taking time out of your busy schedule.

I couldn't agree with you more on the notion that if we're going to deal with terrorism, a multilateral approach dealing with political, economic, and social changes is absolutely essential and that the military component is a short-term endeavour.

How do we engage the Americans in trying to take that multilateral approach to deal with, as you mention, the economic and social and political changes required? And secondly, while Zimbabwe, I agree with you, must not be a reason to disengage from the process, in your view, should it though be used as a bar of conditionality? In other words, should it be a challenge to African nations to say you must speak out against this terrible situation being meted out against the black population in Zimbabwe? If you do that, and if you speak out on both types of issues, then we will engage you.

And lastly, should the G-8, in your view, be making a global investment in dealing with and helping on issues of governance--anti-corruption, protection for domestic foreign investment and foreign investors, good monitoring, fiscal policy, and encouraging countries to invest in primary health and education? As you have said in your paper, that package is absolutely essential if countries are going to be independent players internationally.

Mr. Satya Das: Okay, let me take those three big questions one by one.

First of all, on engagement with the United States, I don't think any direct or short-term approach is going to work. I think you need an evolution of American consciousness. I think that can happen with efforts like the Middle Powers Initiative, which my friend Senator Roche has, and especially if we can work with our partners in the European Union, and certainly as we have done to some extent within NATO already and the approach to Kosovo and post-conflict reconstruction. There, for instance, it showed that this blend of hard power and soft power, this blend of sustaining peace, peace maintenance, and building civil society can really be made to work. You take a small poster boy like East Timor, you take a semi-success like Kosovo, and you show that here are places in which a mixed or multiple definition of security has enabled a return to normalcy of some sort. It may be a possibility to engage the U.S. Also perhaps just wait until the Afghanistan campaign is over and the worst sort of effects of September 11 have diminished.

As to the question of Zimbabwe and the bar, I think the people we should really be talking to in Zimbabwe are the party that actually would have won the election, and talk to them about their governance plans. I would heartily encourage the committee to consider inviting Morgan Tsvangirai to come and testify as to what his plan for Zimbabwe would be, because it is quite clear that Mr. Mugabe has succumbed to some sort of folie de grandeur, which seems to bar him from rationality of action, and an entire population should not be held hostage by that. But by the same token, if we are not prepared to alleviate suffering in Iraq because of the depredations of Saddam Hussein, should we necessarily come massively and quickly to the aid of the Zimbabwe population because of Mr. Mugabe's particular insistence on using foreign aid and using foreign capital and resources to his advantage and to the detriment of his people?

The Zimbabwe engagement is a tough question. As to other African nations, one doesn't want to preach the conditionality of rhetoric, because there's nothing simpler than parroting a certain line if it's going to get them cooperation and resources. The key question is, can we help to transform African consciousness to denounce this without being prodded? I believe that too will take time.

As to investment in capacities for governance, transparency, and accountability, I believe, again, that these are processes we can start by capacity-building measures. You cannot expect a largely dictatorial society to make a transition to democracy and plurality in any short or rational order.

In the capacity building, I think Canada does have a role in global leadership because we don't come with imperialist ambitions and imperialist baggage. We can indeed bring a best-practices basket of goods and services for our African partners to pick and choose from. We can offer examples and instances that have worked for us rather than impose them, and we can point to instances where we can say, if you build these sorts of capacity, within a generation, or over an even shorter period of time, you will in fact be able to chart these measurable outcomes. Again, I'd use the human development index as the most suitable outcome for progress in, say, three-, five- and seven-year time spans.

Thank you.

¸ (1440)

The Acting Chair (Mr. John Harvard): Now we will hear from Mr. Rocheleau.

[Translation]

Mr. Yves Rocheleau: Good afternoon, Mr. Das. Congratulations and thank you for having spoken French. That is very kind. Do you understand French?

Mr. Satya Das: Yes, obviously.

Mr. Yves Rocheleau: I would like to ask you a few questions.

How do you interpret the fact that the United States of America, an otherwise highly developed country which is supposed to be respectful of human rights, refuses to sign the treaty on human rights, the anti-personnel mines treaty and the Kyoto treaty? Where do you think that attitude fits in in the history of American development? That's my first question.

Secondly, do you think there are lobby groups or groups of dissidents in the United States today who are in a position to make their point of view known and who would potentially be able to influence and change the trends that we are seeing now, or do you think there is still a kind of omerta because the wounds of September 11 have not yet healed?

Thirdly, have you ever heard of the concept called manifest destiny? If you have, I would like you to tell us how that fits in.

Finally, do you not think that the attitude the Americans have always had, but that has got much worse since September 11, is an argument in favour of the rapid establishment of a world government to manage the planet in place of the Americans? If they want to run everything in this world, perhaps we should all have the right to vote in American elections and have our own senators and representatives in Congress. Nowadays, the Americans decide in any case on behalf of many countries. Perhaps we should all demand the right to have a say in the matter because they are inextricably bound up in our daily lives.

Mr. Satya Das: Thank you, Mr. Rocheleau. I will start by answering your fourth question.

It is a little difficult to imagine the concept of a world government, but we should not forget that the UN represents the world parliament. World governance is something that will be shared by countries that have certain values in common. The only values that could reign in this world will be those set out in the Universal Declaration of Human Rights. I am talking about the human security agenda, because it is shared by most countries that have signed this declaration and accepted it as part of their laws. We agreed to try to live within these guidelines, with their... [Editor's Note: Inaudible] ...and their restrictions on power.

I will turn now to your third question. You spoke about the manifest destiny of the United States. This is a concept that has been around since James Madison's time. You said that the Americans had not signed such a treaty or protocol. According to this theory, the United States are exceptional and destined, to some extent, to lead the world because they are a society of immigrants that has brought together people from around the world. From this melting pot emerged a very powerful nation with unprecedented military strength, which could be the standard-bearer for a new world in which democracy would triumph.

For our country, which is also a nation of immigrants, I would suggest something different—namely a multilateral, cooperative model. Our country must work with other nations and other people to meet our shared objectives.

In your second question, you spoke about the domestic influence within the United States. Many groups cannot or dare not make themselves heard in the post-September 11 context. However, you will remember in particular that Ms. Judy Williams won the Nobel Prize for her work on land mines. That was a Canadian initiative. Of course, it was possible because the United States is also the depository of everything that goes on in the world. Despite the fact that the military aspect and other somewhat dictatorial aspects are visible at the moment, there are many positive influences domestically.

¸ (1445)

[English]

The Acting Chair (Mr. John Harvard): Thank you.

I have one or two questions, sir, to do with Mr. Axworthy's soft power, something that I subscribe to. It seems to me it makes sense that moral leadership is perhaps better than military or economic leadership to achieve certain goals. I have the sense that we have to be more concerned about our backs than about what's in front of us when pursuing goals in that manner.

There seem to be a number of the elite in this country who will attack the soft-power approach. Anything divergent from that of the United States' policy is seen as anti-American, soft, indifferent, whatever.

What's your take on it?

Mr. Satya Das: Soft power has its limits, just as hard power has its limits. It's why the Canadian way has to be to blend both. You can't operate in a world or in a vacuum where you think military power and the capacity of building, maintaining, and enforcing peace is unnecessary.

The question soft power asks is what do you do after the conflict has stopped? What do you do once the peacekeepers are there? What do you do once you've stopped the combatants from fighting and you've taken care for your own security? How do you then start addressing the underlying causes of the conflict? How do you start making sure it doesn't happen again? How do you build confidence and the capability for cooperation and co-existence?

It's where soft power comes in with the Canadian experience in the field. I think we heard in the very moving eulogy to Sergeant Léger, who died in Afghanistan, about his Bosnian experience. As a Canadian peacekeeper, he helped rebuild civil authority, civil society, and civilian life to the point where residents of the valley wanted to elect him as the mayor.

It is a very practical example of how you can arrive with a hard-power mandate to create a peace, but then you need soft power to create it. By soft power, we're not talking about a woolly concept. We're talking about teachers, nurses, road builders, hospital workers, administrators, judges, plumbers, pipefitters, technicians, and police forces. We need to rebuild all the capacities. People with guns aren't going to provide all the services, are they?

Instead of talking at cross-purposes, it's finding the most felicitous combination of the two forces, I believe, that will be a Canadian way forward.

The Acting Chair (Mr. John Harvard): I have a final question. Chances are, at the G-8 summit meeting at Kananaskis there will be some kind of action plan to fight terrorism. It will be an anti-terrorism action plan, I guess.

Given your views on multilateral security approaches, what do you think, from a Canadian perspective, should be the major elements in any kind of action plan of that kind?

Mr. Satya Das: I think the hard military early response has been set out.

I was talking to Ambassador Fowler a couple of months ago. He said the Africa plan will not be derailed and terrorism will be seen in that context. If it is, it means it will be seen more in the context of root causes of inequities, with the necessity of bridging the gap between rich and poor and giving some measure of the lifestyle we enjoy to the most wretched people, to essentially diminish the conditions under which terrorism is bred. Both economic development and democratic development are essential.

Terrorism works in a vacuum. It works in a vacuum of knowledge. It works in a vacuum of responsibility. It works in a vacuum of personal power for the ability to change things, and of course from an absolute lack of economic power.

If we can start restoring these things in a broad, multilateral, complex way, we will go much further toward answering a terrorist threat than any temptation to put up space satellites in a world where people destroy buildings by flying planes into them.

¸ (1450)

The Acting Chair (Mr. John Harvard): So what you're saying is a well-thought-out Africa plan is part and parcel of an anti-terrorism plan?

Mr. Satya Das: Yes, it is, sir. It's the core of a comprehensive answer to terrorism.

The Acting Chair (Mr. John Harvard): I want to thank you very much for your comments.

Mr. Satya Das: Thank you, sir.

The Acting Chair (Mr. John Harvard): Okay, members, we're going to move on to our next witness.

We're going to hear now from Rod Scarlett and Paul Hodgman, from Wild Rose Agricultural Producers, one of the best-known agricultural organizations here in Alberta.

Thank you for coming. We have 45 minutes, so please proceed.

Mr. Rod Scarlett (Executive Director, Wild Rose Agricultural Producers): Thank you very much.

First off, I would like to introduce Paul. I asked Paul a couple of days ago if he would appear with me. He is assistant general manager with Alberta Pork, in Edmonton.

The Acting Chair (Mr. John Harvard): Is Alberta Pork just one component part of Wild Rose?

Mr. Rod Scarlett: No, it is a commodity organization in and of itself. But we try to work together.

The Acting Chair (Mr. John Harvard): Is Wild Rose an umbrella organization?

Mr. Rod Scarlett: Yes, we are an umbrella or general farm organization for the province.

The Acting Chair (Mr. John Harvard): Okay. Go ahead.

Mr. Rod Scarlett: I appreciate the opportunity to appear before you today to discuss recent events with international trade affecting our agricultural economy. As the regional marketplace diminishes as the sole target of our agricultural production, international trade becomes extremely important. Because our economy is so intertwined with other economies, particularly of the United States, the recent U.S. Farm Bill has created a great deal of interest and debate.

The United States is Alberta's largest export market. We exported $2.6 billion worth of agrifood products in 1999. That rose 7.7% in 2000, to $2.8 billion. That's a pretty large percentage of our total exports. I think our total exports are about $7.3 billion. This means 35% or 36% of our exports go to the United States.

The farm bill is going to have a pretty big impact. Exports to the U.S. in Alberta have increased from 69% of our total exports to 84% in the last two years. As you can see, it's a pretty big component. The farm bill is going to have a dramatic impact on the agricultural sector in Alberta, perhaps more than on any other economy.

One of the many goals of the World Trade Organization included the elimination of subsidies. This was to create a level playing field for trade agreements globally. We all agree, in the agricultural sector, that subsidies destroy and debilitate the balance of supply and demand that drives our economy.

President Bush said he was committed to free trade and overseas markets in free trade for U.S. farm products by limiting agriculture export subsidies. He was also quoted as saying he was committed to the long-standing relationship between the United States and Canada. Somewhere along the way his commitments have been overlooked. Apparently, when he signs the farm bill, which I believe will take place next week, it will provide a 70% increase in subsidies, basically, to American farmers.

One point I would like to raise with regard to that is that since 1996, when the right to farm legislation was passed in the U.S., they've had some tremendous ad hoc payments in addition to their farm bill, ranging anywhere from $5 billion to $7 billion a year. The farm bill, in effect, legitimizes these ad hoc payments that have been made in the past.

I think the real fear, or an additional fear, that agricultural producers throughout Canada and here in Alberta are scared of is that there will be additional ad hoc payments onto to that farm bill. In that event, the gap will be even greater than the farm bill is expected to create now. It will expand even further, and that's a very big concern.

Certainly, the farm bill, as it relates to pulses, is a very disconcerting thought. The pulse crops in Saskatchewan, Manitoba, and Alberta have grown dramatically and have been very successful, basically on a non-subsidized basis; we've been able to compete. Now, with the farm bill including pulses, we may not feel the effect this year--although I do understand they already have a shortage of seed peas down in the States from farmers wanting to plant pulses because it's one of the best subsidized crops under this new legislation--but we're looking in a year or two from now for our pulse industry to be severely affected.

Of course, the other one is the meat industries, cattle and hogs, and the country-of-origin labeling. I'd like Paul to address some of that.

¸ (1455)

Mr. Paul Hodgman (Assistant General Manager, Alberta Pork): Thank you for allowing me to join you with little or no notice. Rod was kind enough to ask me to come along. I don't pretend to know all the ins and outs of the farm bill, but I do know some of the highlights. To put it into perspective, and Rod talked about the value of our primary agriculture and our processed agriculture for Canada and Alberta, this has some huge implications if the U.S. proceeds with it, and it has some big spin-backs against us here in Canada.

Speaking about pork, which is my area of interest and expertise, Canada is now the number one exporter of pork in the world. We have passed the Danes. We have actually out-tonned the beef industry in Canada. That's not to say that the beef industry is not huge in terms of exports, but they also import. Pork is a product in the world that will continue to be in demand. It is the number one source of protein in the world and will continue to grow.

Here in Alberta we export about $92 million worth of live hogs every year. From Alberta, most of them go to northern California and are processed there. We have pork and pork products of about $177 million exported. In fact, out of our production here, close to 60% of the pigs that are produced here in Alberta, the pork products, are exported, and about half of that goes to the United States. So roughly you're talking about 25% of the production here in Alberta.

Obviously export is important not only for producers but for our economy in terms of jobs and all the rest of it, with processing, etc. I think you gentlemen understand that whole situation well enough.

This country-of-origin labelling is going to have huge implications, because what it really says in a nutshell is.... If you ship a product to the United States now, whether it's live or whatever, and it goes down there and it's had any processing done to it, where you take a live animal and you process it, then you don't have to mandatory label what country it comes from. Our fear is that what will happen is that the U.S. people, who are tremendously patriotic.... For one thing, in the midwest they're not going to welcome and support Canadian products. The other area is that it's going to require retailers to start double labelling, extra labelling, extra shelf space, and all those things, which will have some adverse effects on our market.

The problem can come very quickly, even into September of this year, as Agriculture Secretary Veneman is going to announce the voluntary country-of-origin labelling and make it mandatory in two years, as I understand it. So I think there's some chance to have some pretty immediate fallback.

Just speaking for our industry--I don't pretend to talk for anybody else, but I can mention a bit about cattle right now--both red meats, cattle and pork, are in a down part of their cycle and prices are somewhat depressed, although we're not screaming and yelling too badly. It has some potential there, if this is added to it, particularly for Canadians.

What we would like to see the Government of Canada do.... I don't think stopping the U.S. Farm Bill is probably in the cards, but there are avenues through NAFTA and the World Trade Organization. We think this is quite punitive and falls against the intent of those agreements, and we think Canada needs to follow that up through those avenues.

With that, I think I'll turn it back to you, Rod.

¹ (1500)

Mr. Rod Scarlett: Just to finalize things a little bit, Paul had mentioned taking legal action. Of course, I think there is also the need to look at some emergency bridge funding, trade compensation funding. I know you members are aware of the trade compensation package that has been put forward. We certainly support that. That might be the one area that most farm organizations have agreed upon in the last five years. This is the one issue where we seem to have the most consensus.

There are some other issues regarding U.S.-Canadian relations that I would like to touch on some time, maybe during discussions. Those would be things like the harmonization of trucking regulations, the harmonization of pesticides, possibly some discussion on green box programs and definitions, and something with regard to state-trading agencies.

The Acting Chair (Mr. John Harvard): Thank you.

Just before I turn it over to Mr. Rocheleau, I have a couple of questions. Do either of you gentlemen feel there are elements of the farm bill that are illegal, at least illegal against any international trade obligations taken on by the United States? Do they violate any of their international commitments?

Mr. Rod Scarlett: Not that I can see offhand, but I am not a trade lawyer either. Nothing has been brought to my attention.

The Acting Chair (Mr. John Harvard): In other words, if you are right, the Americans can increase their farm support programs by 70%, and these were already in some cases eight or nine times greater than those existing in Canada. So they can increase their subsidies to that level and not violate, say, any of their WTO commitments?

¹ (1505)

Mr. Rod Scarlett: Again, without pretending to be a trade lawyer, I believe that's correct.

The Acting Chair (Mr. John Harvard): That's a hell of a sad commentary on what we negotiated or were a party to in the Uruguay Round.

Mr. Rod Scarlett: It's a very sad commentary.

The Acting Chair (Mr. John Harvard): Number two, just before we go--and maybe you can answer this, Mr. Hodgman--relates to this mandatory labelling, voluntary first of all and then mandatory a couple of years down the road. Do you feel that from an American perspective this is strictly political? In other words, is it the intention to have these products identified as foreign products, if I can use that expression, so as to cause the patriotic Americans--or at least many of them--to turn their backs on these products that otherwise they would eat with great relish if they just didn't know where the products came from?

Mr. Paul Hodgman: I believe that's the case. Look at the U.S. midwest, which is where a lot of this stems from. In particular, you've seen it in the past with Canadian cattle trucks going down there and what have you, and the Americans get right bent out of shape when they see the trucks and their own prices dropping and so on. In the midwest, where they produce a lot of cattle and hogs, when the prices start to fall, there's an easy culprit.

A lot of Canadians, people from Quebec and Ontario, have developed long-term markets in the eastern U.S. Out of southern Alberta we have some live hog markets in California, and we have a bunch of our processed product that goes there. These markets have been developed, and in many cases our product is seen as preferred over the American product because we have different feeding regimes--we use barley instead of corn, and things like that.

This to me is very political, which is exactly what you said, Mr. Chairman. The big concern for us is, if we go to retaliate with a program of some sort, then we'll end up in the situation in the hog business we had a number of years ago, where this will all of a sudden become a countervailable type of action. It took us 10 or 12 years to get out of the last countervail, and we just nicely got out of it about a year ago.

The Acting Chair (Mr. John Harvard): Mr. Rocheleau will now ask some questions.

[Translation]

Mr. Yves Rocheleau: Thank you, Mr. Chairman.

I am not sure whether I understood you correctly, but in your preamble, you said that the objective of globalization and free trade agreements was to eliminate subsidies in order to place more emphasis on supply and demand. Moreover, you say that there are agricultural subsidies in the United States, and that there will be more and more of them. You gave the example of pulse crops in Alberta, which are not subsidized. The United States, on the other hand, subsidizes their pulse crops. That means that those who preach supply and demand in this world are systematically subsidizing their economy while at the same time urging other countries not to do so.

You also spoke about product labelling, particularly pork. In the past, we have seen buy-at-home campaigns carried out for all sorts of reasons, particularly because we are a different people, one who speaks French, but we have been told and we have told each other that this was out of date, that globalization was in vogue and that the old approach was protectionist and amounted to navel-gazing. Are we to understand that the Americans, for their part, buy at home, even if this runs counter to the spirit and the letter of the free trade agreement they have signed with Canada?

I would like to know whether you have any dealings with the Union des producteurs agricoles in Quebec and whether this organization is aware of this bill which, I think, could have terrible consequences. I would also like to know whether you are facing the same problem as we are as regards supply management, which may be called into question as well. For Quebeckers, the problem lies with the dairy industry. In addition, could you tell us more about the truckers you mentioned earlier. I would also like to hear your views on pesticides.

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[English]

Mr. Rod Scarlett: There are a number of issues there.

I'll start with the WTO. It's a perception. I believe the WTO has been negotiating--or at least Canadian negotiators have been trying to do away with--farm subsidies as best they could, with the objective of creating that level playing field. And that's a good thing: if every producer had no subsidies, we would be very competitive on international markets. We are as efficient and effective farmers as there are in the world.

The problem is--in our mind, a little bit--we have now taken away many of the subsidies for Canadian producers, with the expectation that others would fall in line right behind. It's like going out onto the football field: we were leading the charge and waiting for the players to follow us, but they turned around and went back to the dressing room.

We've eliminated a lot of our farm support and a lot of our farm subsidies, with the expectation in mind that everybody else would be honourable and do the same thing. Unfortunately, it hasn't worked out that way. That's what I meant with WTO and the objective to do away with subsidies. I think it's an honourable objective. I believe it would have been the way to go. Unfortunately, with the passage of the farm bill, we're looking at least ten years down the way before something will be done.

With regard to pulses, the farm bill has mentioned that it will include subsidizing pulse crops--peas, lentils, chickpeas, that type of thing. They were not covered before, under the previous farm bill. Now we have created another subsidy, for a crop that was not included under the farm bill previously.

That no doubt will skew the market, creating overproduction down in the States and reducing the price of the commodity up here. That's the fear, at least.

Concerning pesticides, Bill C-53 is before the House right now, having to do with pesticide legislation. There are a number of areas there that I know CFA has been working with the departmental officials on. One area on the international side that is important, I believe, is that Canadian producers have access to the same types of pesticides or other things American producers have. It may be a case of perhaps somewhat quicker notification and regulation in the pesticide agency to approve those products, or looking at more closely aligning the registration of those chemicals with the United States in some way. I'm certainly not saying to make it easy, and that if the United States approves it we should approve it, but to try to work together for some common approval process that meets the needs of both Canadian producers and American producers.

[Translation]

Mr. Yves Rocheleau: I'm very surprised to hear about subsidies being provided by the American government, when the popular line is that the government should get out of the economy and let the free market take over. In Quebec, for example, this led to a policy of preferential tariffs or purchases by Hydro-Québec for all their suppliers.

Hydro-Québec paid Quebec suppliers 10% more. This measure was abolished because of the popular view, and because we were adapting to the North American context. Now you are saying that the Americans provide subsidies to this industry when it suits them to do so. I have heard it said, particularly by Mr. Duceppe, the leader of the Bloc Québécois, that because of its activities along the Mississippi River, the American army was doing a great deal to help American agriculture, if I am not mistaken.

Thus, while it may not be direct, the Americans are providing support that the Canadian economy does not allow itself to offer Canadian farmers. Is that what we should be talking about? How can we explain or accept the fact that the Americans are behaving in this way, whether we are talking from the point of view of a moral issue or merely being good neighbours?

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[English]

Mr. Paul Hodgman: I'll start, and I'll let Rod make some comments.

Historically--and I say this with a little trepidation--Americans tend to be free traders when it suits them. I've been kicking around in agriculture for 30 years in a number of areas, and when things get tough at home because of market prices or political pressure, there always seems to be something brought to bear on the trade front that affects us here in Canada, because it has traditionally been a huge market.

For example, we're becoming less and less dependent on them. Whereas about 10 years ago, 80% of pork was exported to the U.S., now we're down to about 50%. So we've made great strides on the world market as well. But one of the real concerns, as I've mentioned before, is if we have a whole bunch of new programs here, they will very quickly become major trade issues for the United States. That's the real fear, that it then will just escalate it up one.

Rod, do you see it that way?

Mr. Rod Scarlett: I think that's exactly correct. What they can say publicly and what they do domestically seem to be two different things. Certainly the farm bill being introduced in an election year has something to do with it, but I don't think that's necessarily the driving force.

The Acting Chair (Mr. John Harvard): I have a couple of questions around the subsidy issue.

In my low moments or pessimistic moments, I tend to believe hell will freeze over before we see the end of subsidies, be they American or European. I hope I'm wrong, but that's how I feel in my low moments.

If I'm right, that we're not going to see the end of subsidies, to me that leaves us two choices. The first choice is that you meet the subsidies head on with your own subsidies. I guess that's what you call compensation.

For my part, I just can't see us doing that. We're a small country, a relatively small economy. To me, it would be like playing the role of the Russians in the Cold War. Sooner or later the Americans outspent the Russians, and finally the Russians had to cry uncle. My guess is that if we went into that kind of a subsidy war with the Americans, sooner or later, maybe two years, seven years, or twelve years down the road, we would have to scream uncle as well.

So if I'm right with respect to the first choice and that we should avoid that option, that would leave us a second choice; that is, to do something else.

That's where I really run dry, because I don't know what the “something else” is, unless it's some kind of approach, a new kind of agricultural system, I guess, that would be less reliant on exports. I know how reliant our agricultural industry is on exports, especially things like your business, Mr. Hodgman, pork, all red meats, and certainly grains--grains even more so. We're in a pickle. What do you say to that?

Mr. Rod Scarlett: There are two things. The first thing I'd say is, can we afford not to? If we do not support our agricultural producers, if we don't support our farmers with finances, we'll lose them. There are no margins in farming any more, or very small margins, and by creating even greater trade disparity with the States, the gap goes farther and farther behind.

If we decided we wanted to perhaps increase our safety net programs instead, well, safety nets are only good for when you get that 70% drop in income.

Try to picture this now. We're down 25% already because of subsidies in the United States and Europe. We don't even get to count that in our total. So now we're going to do our safety net programs, our NISAs, our AIDAs, our crop insurance, but we've forgotten about the 20%; we've forgone that income already. And now we're dropping even farther behind. I don't know if we can afford to do that.

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The Acting Chair (Mr. John Harvard): On the other hand, and perhaps this is just philosophy, but we Canadians, and especially here in Alberta, are supposed to be free traders. We're supposed to be free enterprisers; we're supposed to be believers in the market economy. And yet we say perhaps we should have subsidies and we'll farm the programs as opposed to farming the land. Something is wrong with that picture.

The other thing is that you may be able to do that kind of thing for a while, but all you're doing is delaying the inevitable. I don't want to lose the farm industry; I don't want to lose one farm, one farmer. I grew up on a farm and I don't want to lose any. If we're only talking about the difference between losing them now as opposed to five years down the road, in the end we've lost them.

Mr. Rod Scarlett: That may sound extreme, but what we would see in five years is certainly a change in the agricultural environment. I think what we would see is--

The Acting Chair (Mr. John Harvard): How would we see a change in the environment if we are masking the problem with subsidies?

Mr. Rod Scarlett: Well, if we don't address it, we'll certainly see a change. We will see some very small niche market farm operations and some very large to-scale operations that might be able to compete. That whole layer of middle-managed farms will be gone.

The Acting Chair (Mr. John Harvard): Mr. Scarlett, we've had this U.S. Farm Bill around for a number of years now; now it's going to get even worse. Can you walk us through how the farm bill, with its subsidies, has impacted, say, Alberta farmers so far and how would you see that magnified as a result of a 70% increase in the American subsidies?

Mr. Rod Scarlett: I want to be quite clear here now. The 70% increase really legitimizes or legalizes what the United States has done in the past two or three years through ad hoc payments. It has legitimized those ad hoc payments as a part of the farm bill now. So, in essence, it is a stabilization of what they've done in the past.

The Acting Chair (Mr. John Harvard): Put all payments under one roof.

Mr. Rod Scarlett: Exactly. How has it affected Alberta producers? Certainly the price of wheat and barley has been the primary trade injury that has occurred as a result of the U.S. Farm Bill because it was directed towards wheat and barley. It was directed to the grain and oilseeds industry down there. That's where we've lost the value of crops in Alberta. With the new bill, it's opened up a whole myriad of other problems beyond grains.

The Acting Chair (Mr. John Harvard): Such as?

Mr. Rod Scarlett: We had mentioned country-of-origin labelling. That would affect meats.

The Acting Chair (Mr. John Harvard): And you mentioned pulses.

Mr. Rod Scarlett: Pulses come under there now.

The Acting Chair (Mr. John Harvard): You know what happened to the alfalfa dehydrators. You know how they were ravaged by, in this case, European subsidies. Are the pulse people facing the same fate?

Mr. Rod Scarlett: I can assure you that the Alberta Pulse Growers Commission is extremely worried that this is now an attack on the pulse industry, an industry that really has grown as a result of nobody subsidizing that portion of the industry. Competitive natures have gone through and followed through in the pulse industry; now they're facing the same thing that the grains and oilseeds are.

The Acting Chair (Mr. John Harvard): It certainly gives a new definition to taking one's pulse.

Mr. Hodgman, did you have something to add?

Mr. Paul Hodgman: I wanted to follow up on your comment about the two alternatives. I think your analogy is quite correct. The other thing I would like to say is I would think that not all the farmers in this country and not all the farm organizations are on the same page with regard to whether you should have subsidies, or support, or what kind.

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The Acting Chair (Mr. John Harvard): But you must admit pork producers are doing not too badly right now.

Mr. Paul Hodgman: Well, we're still not...but we have had a couple of very good years, no doubt about that.

The Acting Chair (Mr. John Harvard): Good. I'd like to see it become a couple of thousand.

Mr. Paul Hodgman: So would we.

You posed the question “Then what?” This is not an extensive list, but I think there are some things that certainly have helped us in the past and things that can certainly help us in the future. Being in the pork business and being in Alberta, we believe we'd like to have market access and move that way as opposed to pulling back to a structure where you have to just look after your own domestic needs, because that comes with all kinds of problems for the country if you really delve into it.

But I think there are many of the so-called GATT-green things that government and industry can work together on and some funds can be put into. I'm not going to get into all issues in detail, because I'm not an expert on them, but I know there are some things with regard to taxing of agriculture operations that need some looking at. We have to make sure we have access to investment, and that's not a problem at all times; sometimes it is and sometimes it isn't.

We need a proper set of safety net programs, and that's different from having a bailout--some things that are functional and work and address things. There are a number of things in infrastructure that can be helped in terms of export at ports, and inspection, and all of these kinds of things. We have in our own business the meat inspection, and a number of those services have been downloaded to the industry in the past. These are areas that are GATT-green and could be picked back up by governments.

As Rod mentioned earlier, we don't want a carte blanche to put the safety of Canadians at risk, but there are some good technologies available from our competitors in the U.S. and other places, and we've had trouble getting them adopted through Canada because a lot of it is at the bureaucratic level. One I can mention is the problem with getting new drugs and antibiotics, and things like that, through what was formerly the Bureau of Veterinary Drugs. I believe they've changed their name in the last little while.

There are some issues around genetic engineering technology, and I know there's a big debate going on around that. I know there are some ethical issues and these sorts of things.

The Acting Chair (Mr. John Harvard): Are those suggestions that you were making more than just nibbling at the edges?

Mr. Paul Hodgman: I think some of them are quite germane and deep and some are on the edges. There are other things like research, helping us with market access, which you've been doing. I'm not suggesting this hasn't been done. I'm just saying there's an opportunity to....

One thing that has helped us as an industry was there was some federal and provincial money put together for a hog industry development fund. I know there were some cattle industry development funds. These were very useful to the industry. I'm just saying there are some things there that are quite substantive that can be worked on.

The Acting Chair (Mr. John Harvard): Before we turn to Martin, I gather from what you said, Mr. Hodgman, that there is some work we could do at the level of the WTO with respect to green box and so on.

With respect to the subsidies, you were indicating earlier, Mr. Scarlett, that chances are the Americans are not breaking any international commitments and that it would be pointless to take this particular issue of subsidies as a grievance to the WTO. We may want to get changes in the rules down the road, but in terms of whether they are violating any particular rule at the moment, that would be a waste of time. Is that what you're saying?

Mr. Rod Scarlett: No, I wouldn't say it's a waste of time. We may not prove to be successful, but bringing it to the attention.... It may assist in the next round of negotiations.

The Acting Chair (Mr. John Harvard): We'll go to Dr. Martin to finish this off.

Mr. Keith Martin: I have two questions, and I'm not a farmer so you'll have to explain things in very simple terms.

What is our capacity to produce wheat and edible grains versus our actual production? The reason I ask is there are places in the world, as you well know, that suffer from terrible famine, and I thought there may be an avenue for a global fund that will actually buy the unused capacity of edible grains, which we could actually donate or we could pay farmers for that capacity and it could be a form of aid. Or we could actually pay farmers for that capacity. It could be a form of aid, and it would be a win-win situation. We'd get to increase our official development assistance through getting food products to people who need them, and farmers would gain because they'd be able to generate an income.

My second question is, do you think that farmers, people who grow wheat, should have the option of joining the Wheat Board? If so, would that enable farmers to diversify their crops? As you know, in British Columbia small farmers have diversified their crops. They're growing ginseng and other crops that have a very high rate of return for them. Is that something we need to look at?

¹ (1530)

Mr. Rod Scarlett: To answer your first one, I'll ask, what type of capacity do we have? Conversely, we have to look back and say that right now the problem is overproduction in the world. That has been driving the price down. We're also looking at land set-aside programs and trying to get that marginal land out of production and into something else. The capacity is unlimited, but there are a lot of other things happening that maybe negate what you're trying to suggest.

Mr. Keith Martin: What would be those obstacles that would enable you to actually take a plot of land and say, okay, there'll be no production of wheat; why don't I produce barley, ginseng, or some other crop?

Mr. Rod Scarlett: The marginal land is part of this land set aside. What we are striving towards is to take marginal land out of production and put it into pastures for cattle, into trees, or into something other than grain production, because grain production--

The Acting Chair (Mr. John Harvard): A lot of land we have now should never have been put into grain production.

Mr. Rod Scarlett: Exactly. The capacity there is unlimited, but whether or not you want to do it is another thing.

The Canadian Wheat Board is an issue that is overemphasized far too often. Really, our association is neutral on whether or not belonging to the Wheat Board is a benefit or not. We have an elected board of directors, and how those elected directors are voted in will determine how the board will operate, whether they be pro-board or anti-board delegates. Really, farmers decide how the board will operate right now.

The Acting Chair (Mr. John Harvard): Here's a note on the history of agriculture in this country. If you go back to the sixties, the governments of the day were telling farmers, produce, produce, produce, produce; that's your way to salvation. So they took a lot of land that really should have been left fallow or left to grass and they brought it into production. Well, that didn't work. Then they were told about 15 years later, diversify, diversify, diversify. Then they tried that and that didn't work. Now it's all value-added, value-added.

God only knows what the next stage will be, but the poor farmers have been put through this series of notions for the last three or four decades. We're still spinning our wheels in many ways.

As to the land set aside, I don't know how familiar you are with the Ducks Unlimited proposal. I think that's a good one. That would cost the federal government a lot of money, about $100 million, for three to five years. It would also depend on partnerships with municipalities and the provinces, but I think it would be a good way to go.

Mr. Rod Scarlett: Wild Rose has endorsed the ALUS proposal of Manitoba.

The Acting Chair (Mr. John Harvard): Good for you.

Mr. Paul Hodgman: Further to the question of grains, this country is not set up so we can grow things like ginseng. In a climate like Alberta's it's just not on.

This is a very complex issue, and I appreciate where you're coming from. Not all the rest of Canada even produces grains that are really destined for human consumption. We have odd areas where we grow barley. You can use parts of barley and so on in food, but it's not generally like a wheat product or something like that, something that has a much wider application.

Of course, the next issue is that once you get a country with a higher standard of living, the next thing they want to do is buy protein. Then they look to having pork or beef or chicken. So it's not an easy issue, but I appreciate very much what you're trying to do.

I don't have too many comments on the Wheat Board, other than that we believe people need options. Personally--and this is a personal opinion--I find it a real tragedy that a farmer in this country would get jail time for hauling grain across the line because of whatever those regulations are. That's not an Alberta Pork comment; that's a Paul Hodgman comment. I do find it a tragedy when a man's trying to do business and that happens to him. I think as Rod puts it, this is an issue for farmers to vote on and deal with.

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The Acting Chair (Mr. John Harvard): One man's marketing board is another man's curtail. Thank you very much, gentlemen.

Mr. Paul Hodgman: Thank you very much for hearing us.

The Acting Chair (Mr. John Harvard): Okay. We're going to now go to one of our esteemed senators from the province of Alberta, Doug Roche.

Thank you for your patience, Senator. I know you've been here since before 1:30. We didn't think you would want to sustain such injury going through this, but I want to thank you very much. I understand you're here as one individual senator, representing the Middle Powers Initiative.

Senator Douglas Roche (Chairman, Middle Powers Initiative): Monsieur le président, membres du comité, bienvenue à Edmonton.

Mr. Chairman, I believe my brief has been made available to the committee in French as well as English. With your permission, I'll go through it--it's not very long--and then take questions. In the brief it explains why I'm here.

I appear before you in my capacity as chairman of the Middle Powers Initiative, an international non-governmental organization composed of eight prominent international organizations specializing in nuclear disarmament matters. MPI has on two occasions, in 1999 and 2001, appeared before your committee. I wish to address that part of the G-8 Kananaskis summit dealing with fighting the scourge of international terrorism.

Immediately after the terrorist attacks of September 11, 2001, UN Secretary General Kofi Annan noted that as terrible as the attacks were, how much worse they would have been had the terrorists used nuclear weapons. The Secretary General said, and I quote:

We must now strengthen the global norm against the use or proliferation of weapons of mass destruction. This means, among other actions,redoubling efforts to ensure the universality, verification and full implementation of key treaties relating to weapons of mass destruction.

It is MPI's submission to you today that far from redoubling our efforts, the reverse is occurring. In the case of the Nuclear Non-Proliferation Treaty, the largest and most important arms control and disarmament treaty in the world, it is not multiplication of effort we are witnessing, but subtraction. This brings me directly to the G-8. The group of eight rich and powerful industrial countries includes the United States, the United Kingdom, France, and Russia, which all possess nuclear weapons, and Germany, Japan, Italy, and Canada. This group, which accounts for 51% of world economic output and thus dominates the international economy, has the following track record. The G-8 holds 98% of the 31,000 nuclear weapons in the world, spends 75% of the $800 billion annual military expenditures, accounts for 87% of the $40 billion annual trade in weapons, and provides only 0.22% of their gross domestic product in official development assistance.

In other words, this group that is supposed to be setting economic and political standards for the rest of the world maintains nearly all the nuclear weapons in the world, accounts for most of the world's spending on the military, is the principal arms trader, and is the stingiest in providing aid to the poor.

Prime Minister Chrétien, who chairs this year's summit, should be commended for putting renewed focus on aid to Africa, a continent that contains 36 of the 48 poorest countries in the world. But Canada will have to overcome the G-8 policies of militarization to find enough money among its partners to truly advance the social agenda in Africa. If the G-8 would even limit the sale of arms to African countries, that would go a long way toward building the conditions for human security throughout the continent.

It is in their reliance on nuclear weapons that the G-8, both the nuclear weapons states and the non-nuclear weapons states, which all live under a nuclear umbrella, show their recklessness. All these states are signatories to the non-proliferation treaty, which stipulates that good faith negotiations are to be held, leading to the elimination of nuclear weapons. Moreover, at the NPT 2000 review, the nuclear weapons states made an unequivocal undertaking to the total elimination of their nuclear arsenals and embodied that commitment in a program of 13 practical steps.

At the NPT meeting at the UN, April 8 to 19, 2002, the nuclear weapons states walked back from that commitment. The United States said it no longer supports the Comprehensive Test Ban Treaty and the anti-ballistic missile treaty. Further, the U.S. said its new approach consists of a mix of nuclear and non-nuclear offensive systems, which is in direct violation of the historic decision in 1996 of the International Court of Justice.

Some may ask what this has to do with the G-8 agenda dealing with fighting the scourge of international terrorism. The attacks of September 11 provided a wake-up call to face the threat of nuclear terrorism. It is prudent to assume, especially after the highly coordinated surprise attacks on the World Trade Center and the Pentagon, that terrorists are seeking and may already have acquired the know-how for building nuclear weapons.

The International Task Force on Prevention of Terrorism has warned that the probability of nuclear terrorism is increasing because of, among other things, the vulnerability of weapons-usable nuclear materials to theft. The continued presence of nuclear weapons materials in a growing number of countries is an invitation to steal this material to make what are called suitcase nuclear weapons. It is a known fact that there have been instances of missing plutonium and enriched uranium in Russia. India's and Pakistan's stocks of nuclear weapons materials are not safeguarded by the International Atomic Energy Agency.

The IAEA is currently trying to implement a plan of action to improve protection against acts of terrorism involving nuclear materials and other radioactive materials. But the IAEA is severely underfunded and has to rely on voluntary contributions to fund its anti-terrorism program. Thus there is a continuing uncertainty about the effectiveness of full safeguard systems.

The IAEA says the responsibility for preventing the theft of a nuclear weapon lies with the states that possess nuclear weapons. It ill avails the world to take a wide range of anti-terrorism measures while leaving the door open to the proliferation of nuclear and other weapons of mass destruction.

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The G-8 is properly concerned with stopping terrorism. But as long as the G-8 remains indifferent or passive in fulfilling its responsibilities to reduce its dependence upon, and then totally eliminate, nuclear weapons, the threat of nuclear weapons will remain.

The principal point the G-8 leaders must understand is that the only certain way to save the world from nuclear terrorism is to eliminate all nuclear weapons, which they have committed themselves to do under the terms of the NPT. Properly funded verification systems operating under international law can ensure compliance of all states. Nuclear materials must be put under the most stringent international safeguards.

The G-8 must work towards this goal. The longer they delay fulfilling their responsibilities, the more dangerous the world will become. The G-8 have a special responsibility to set a model for other countries in adhering to international law and truly building a safer, more stable world.

Canada may not be able to turn the G-8 around in one meeting, but our country is instrumentally placed to use its access to the G-8 nuclear powers and insist that world safety today requires demonstrable progress on all 13 practical steps NPT parties said they would take. In turn, this committee is instrumentally placed to respond to Prime Minister Chrétien's invitation to “bring a uniquely Canadian perspective to global issues” and bring this matter forward to the summit planners.

Thank you, Mr. Chairman.

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The Acting Chair (Mr. John Harvard): Thank you, Senator; well put.

Now we'll go to questions. We have 25 minutes.

Dr. Martin.

Mr. Keith Martin: Thank you, Mr. Harvard. Thank you, Senator Roche, for being here.

Would you agree, Senator, that the world today is more dangerous than it has been in the last 50 years? I put that in the context of Warren Buffet's comment, who said that the probability of a terrorist nuclear attack on the United States is 100%. By that I think he means not an ICBM, but rather a dirty nuke, such as you referred to, in a suitcase.

The question I have for you is this. Do you think one of the key commitments in the context of September 11 last year is that the G-8 absolutely, positively, must fund the IAEA properly and must have an action plan to get control over the lost fissionable material, which is lost primarily from Russia but also from other areas?

My second question is, given the devastation that conflict has wrought on the continent of Africa, do you think that a doable outcome of G-8 is to have an automatic weapons arms registry that starts off with the G-8? The G-8 commits itself to an arms registry dealing just with automatic weapons--well defined, specific, doable.

Lastly, how do we deal with Iraq, China, and North Korea? How do we deal with those countries that are very difficult to deal with from a diplomatic perspective and yet, I would argue, pose a really significant threat to the international community?

Thank you.

Senator Douglas Roche: Thank you, Dr. Martin. I'll do my best, Mr. Chairman, to answer as briefly as I can. But they're pretty deep questions, each one of them. I'll just go through it as quickly as I can.

I agree with you, Dr. Martin, that the world is a more dangerous place. You quoted Mr. Warren Buffet; I agree with him. I do not get up myself in public as I now am and make dire forecasts of impending disaster. I don't think it's incumbent on me to do that.

I would only say, Mr. Chairman, that if I had come before your committee on September 10 and said, “You know, we should be careful about terrorists, what they might be able to do in attacking big cities”, you might have said “Well, that's interesting”. The point I'm making here is that the public generally is not nearly appreciative enough of the dangers we're facing as a result of the lack of full control of weapons of mass destruction, and particularly fissile materials.

You mentioned the G-8 and their responsibilities to the IAEA and its action plan. The International Atomic Energy Agency is the only place internationally where full-scope safeguards are implemented. It is true that the countries of the world subscribing to the IAEA, through the NPT process, are assigned figures for payment.

It's interesting that the technological side of the IAEA is voluntary contributions. When, after September 11, the IAEA brought together its forces to produce what we called an eight-point action plan to combat nuclear terrorism, the program was costed at $12 million and was voluntarily funded.

I submit to you, with respect, it is shocking that the G-8, particularly, as leaders of the world, would not implement an action program that has mandatory funding to do the job fully. I went out of my way in my statement to say they are the leaders of the world.

On Africa and the arms registry, there is, after all, an arms registry that the UN was able to get started. It encompasses seven categories of weapons. It's not the largest weapons, certainly not weapons of mass destruction, and it is not small arms. The weapons are in between, such as tanks and battlefield-type weapons. It is a voluntary registration. Only a small proportion of the countries of the world follow or implement the arms registry. I'm glad to say Canada does.

With respect to small arms, it is the major problem in Africa. I said in my statement, if the G-8 was really serious about combating terrorism of all kinds, they would stop the sale of arms into Africa. I mean small arms, AK-47s, pistols, and all sorts of things that are used in the wars and conflicts in Africa.

At the small arms conference held by the United Nations a year or so ago, the resistance of the United States to put some teeth into a statement to encourage governments to implement stronger domestic laws, because of the gun lobby inside the United States itself, left the thing wide open. Thus, we see Africa today exposed to importation of arms.

On Iraq, China, North Korea, and the diplomatic problems, we'll take North Korea first. Again, I would have to pay a compliment to the Government of Canada for not only getting relations with North Korea going, but doing active work in what I would call diplomatic spadework for discussions and negotiations between South Korea and North Korea on the implementation of previously arrived at agreements. Light-water reactors are going to be brought up to North Korea in exchange for North Korea's promise not to build a nuclear weapon. It's a program that went off the rails when North Korea itself tested a ballistic missile system.

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So I myself believe the pressures that have arisen on North Korea, diplomatically and politically, have brought it to a stage where I do not consider that they are going to have weapons of mass destruction in the foreseeable future and that we ought to.... The G-8, helped by Canada, as I said, took an initiative already that the G-8 would press for the implementation of diplomatic measures to bring North Korea back into full compliance with a non-proliferation treaty.

Regarding China, there is now going through the Canadian Parliament a bill on enhancing Canada-China trade relations as a result of China entering the World Trade Organization. That itself is a manifestation of China's desire to play an increasingly stronger role in developing its own economy and in world relations.

With respect to weapons of mass destruction, China is the only one of the five nuclear weapons powers that has voted consistently at the United Nations for no first use, for a comprehensive program for nuclear negotiations, for adherence to the International Court of Justice. China has said consistently that it will negotiate the complete elimination of its nuclear weapons once Russia and the United States bring their extremely high number down to a lower number.

On Iraq, the International Atomic Energy Agency said at the NPT conference that I referred to, which I was at a couple of weeks ago in New York, that Iraq was in compliance--I repeat, Iraq is in compliance with the IAEA's safeguard systems and inspection programs--but that Iraq had not complied with the United Nations resolutions for inspectors. Now, what's the difference between the IAEA inspections and the inspections that would be carried out under the UN Security Council? Very little, from a technical point of view, but a lot politically.

So I think, here again, the G-8 can play a role in influencing the United States, especially, to recognize that it is not a future war against Iraq--which is now being contemplated and discussed, as you know--that will meet the needs of bringing Iraq back into full compliance in the international community. It is, rather, diplomatic relations and the shoring up of Kofi Annan's position as Secretary General of the United Nations so that he can play a mediating role with Iraq.

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The Acting Chair (Mr. John Harvard): Thank you, Dr. Martin.

Senator Roche, did I hear you say the IAEA's action plan was estimated to cost $12 million?

Senator Douglas Roche: Yes, sir, you did.

The Acting Chair (Mr. John Harvard): The Americans would spend that in about ten seconds in Afghanistan.

Senator Douglas Roche: I don't want to mislead the committee, Mr. Chairman. It is correct that the eight-point program to combat nuclear terrorism, adopted by the IAEA following September 11, cost $12 million and it's voluntarily funded, but that's a separate category from the main safeguards program of the IAEA, which is about $92 million. That is a program funded by assessments to governments. Then they have a technological helping program on nuclear materials for medicines, isotopes, and things like that, that is voluntarily funded.

But you're quite right, if I took you to make the point a second ago, in your astonishment that a program of this importance would be so little; $12 million for such a program is woefully inadequate. When I remind the committee that the United States alone spends $100 million a day--I don't want anybody to think I've made a mistake; the United States spends $100 million a day--on the maintenance of its nuclear weapons, you can see the contrast in those figures.

The Acting Chair (Mr. John Harvard): It's amazing.

Anyway, sorry to keep you waiting, Mr. Rocheleau.

[Translation]

Mr. Yves Rocheleau: Thank you, Mr. Chairman.

Thank you for your testimony, Mr. Roche.

Senator Douglas Roche: Thank you.

Mr. Yves Rocheleau: I would like to come back to the three figures you gave us with respect to the G-8: you said that it accounts for 75% of annual world military expenditures, which amount to $800 billion; it is involved in 87% of all arms trade, which amounts to $40 billion a year; and its members spend only 0.22% of their GDP on ODA, despite the fact that the UN recommends that this figure be 0.7%.

Do you not think that these three statistics illustrate the problem very well? We can look at the issue as you do, in terms of nuclear terrorism, which is an extremely serious threat, but in that case, we are focusing on effects, not causes. What causes the terrorist threat? In the case of Africa, I think we are getting close to the real answer when we talk about poverty. I'm referring to the institutional and structural poverty faced by Africa and other continents such as Latin America. People from the G-8 member countries systematically exploit these continents and their people, and cannot even give them back a tiny percentage of the profits they make.

Does the genuine solution for the future not lie in this area? Morally, we must demand a 180-degree turn, so that half of the $1000 billion we are talking about—when we add up the $800 billion, the $40 billion and the percentages, we can talk in terms of $1000 billion—can be used to fight poverty. I think that if we were to proceed in this way we could eliminate any attempted terrorist act or any thought of terrorism. There would always be discontent, because that is part of human nature. Nevertheless, by trying to improve the lot of humanity, we would avoid the threat we are facing because of the profound injustice in this world. This could be seen as an act of God, but we might also wonder why human beings sometimes tend to be so violent.

Some countries and continents have been facing terrorism for decades. The reason we have avoided it for the most part, may be because America is a relatively young continent. So should we not be taking the bull by the horns and taking legal action against certain individuals, when we see figures as staggering as those I have mentioned? As you were saying earlier, it costs $100 billion a day to maintain our stock of nuclear weapons. That is abominable! I think that is decadent. If we, as human beings, cannot change our course, I think we are quickly heading for our doom. Moreover, as regards the environment—and all these issues are connected—a humanist recently said, on International Earth Day, that the catastrophes that are supposed to happen in 100 years, according to the forecasts, will happen rather in 50 years. Dolphins are visibly thin, because there are no longer enough cod for them to eat, the Pacific Islands are disappearing because of global warming, and we could give many other examples that are flagrant, even to people who do not follow this subject all the time. Of course, we could take a piecemeal approach to the issue, but perhaps we should adopt a more comprehensive strategy.

For my own personal interest, I would also ask you to tell us what is meant by “president of the middle powers initiative”. That intrigues me.

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[English]

Senator Douglas Roche: Mr. Rocheleau, thank you very much. I agreed with virtually everything you said. I didn't find anything I disagreed with. I share what I sense is your very deep concern; I share this completely.

I may, Mr. Chairman, add a word or two to flesh out some of the things Mr. Rocheleau raised, going to the root causes of terrorism. I would like to be clear here. I think it cannot be said that poverty, per se, produces terrorism. I think that would be a ridiculous position to take, since there are a lot of poor people who are not terrorists. It is the systems of poverty--the endemic thing that entrenches itself in certain areas--that produces an alienation and a feeding ground that terrorists plug into.

I'm well aware that the terrorists who flew the planes into the World Trade Center and the Pentagon were not poor people. Perhaps in some cases they were upper middle class, and as we all know, Osama bin Laden comes from a millionaire class.

That is not the point. The point is that terrorism as a political act based on an ideology finds its support in the masses who are themselves alienated as a result of the domination of the economy and their way of life by--I'm sorry to say this--the western way of life that has arrogated unto itself the lion's share of the resources of the world. It is well known that the 20% of people in the north hold and occupy 80% of the wealth, the technology, the capitalization.

The imbalance is terrible and is getting worse. The population of the world today is a little over six billion. It will go to at least nine, perhaps ten billion people. That is certain. And of the births that will occur, 95% will occur in lands that are already disadvantaged today. Thus the forecast and the prognosis for alienation into which terrorists will plug is getting worse.

Mr. Rocheleau, I can only say to you, sir, that I write books on this subject--I know the chairman doesn't want me to go down a long avenue in responding or buttressing, but to what you have said, I can only say how much I agree with you, and that piecemeal approaches, as you've said, are not going to do the job.

Actually, sir, we have to consider the attitude of a society. That's a very large question, and we poor politicians cannot really do this. We're dealing with the crises of the day, and that's what the G-8 is doing too.

I would here like to commend again the Prime Minister for at least trying to lift up the sights by going into Africa and saying, let us do more. Here's Africa, where the figures on HIV/AIDS are astounding...and what it is doing to debilitate that continent.

I'll probably stop here, because I think you can see the direction of my argument, Mr. Chairman. I agree with Mr. Rocheleau that there's a moral requirement here to approach the issues of social injustices of the world and that the G-8 carry a large share of the responsibility.

I said in my opening statement, sir, that the G-8 controls more than 50%--and I'll give you the exact figure if you want it--of the world economy.

Can we take the bull by the horns, as Mr. Rocheleau says? I hope the G-8 will do this. In my political life I've learned that while the issues are very big and you can wander around intellectually discussing them all, it's better to try to focus as sharply as you can in order to get some political action.

So I am making a respectful plea to this committee that you focus your report that the Prime Minister has invited you to give sharply on Canada, reminding the G-8 of these things and taking some real action. And the real action, of course, is the improvement of the rule of law, not undermining it.

It is a very sad commentary that the United States is today undermining the rule of law by walking away from international treaties, making it very difficult for a country like Canada, which has put itself forward in espousing international law through the whole United Nations system. Our whole country stands for that, going right back to the earliest days of the United Nations.

I see the conflict between Canadian values and what we want to do, and I'm sure what the Prime Minister wants to do. I know the man. I think he wants to move forward like this, but he's hamstrung by the forces that drive the United States administration today, which I'll just say are reckless forces in the way they put America first.

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Finally, Mr. Chairman, Mr. Rocheleau asked me to say a word about the Middle Powers Initiative, to say what it is, and I'll be very brief in this.

Four years ago, Mr. Rocheleau, eight prominent non-governmental organizations, eight international organizations that are prominent in nuclear disarmament matters, banded together to start a new initiative. It was that concentration would be made on what is called middle power countries, of which Canada is certainly one. The NATO countries without the nuclear weapon states are middle power countries, as is Australia and so on. There are about 20 or 25 such countries in the world that are very important countries. They're not the superpowers. They're not permanent members of the Security Council. They do not have nuclear weapons. They have good track records, and they are friends of the United States.

I'm speaking for them because I am the chairman of this group. As I say, it's an international group, and we send delegations to middle power countries to help them to become aware of what can be done to move the nuclear weapons states, to use their access to nuclear weapons states to remind them of their responsibilities.

We have on three occasions sent delegations from the Middle Powers Initiative to Canada. They have been received all three times, in 1988, 1999, and 2001, by the Prime Minister, the foreign minister, and the defence minister. On two occasions they testified before a joint meeting of the Senate and House of Commons foreign affairs committees.

This is the work the Middle Powers Initiative does.

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The Acting Chair (Mr. John Harvard): Senator, I have only one question to close this off. You alluded to the Prime Minister's invitation to this committee to “bring a uniquely Canadian perspective to global issues”. I'd like to think that we as a committee could do that, and I think we can do that within the mandate of the committee. Whether or not it can be done out there in the real world, I don't know.

There's no doubt that there are major differences between the two countries. One of the obvious ones, of course, is that the Americans are a superpower and we are not. There are other differences, of course, many of them, and vive la différence, but there are also many similarities. We share the longest open border in the world. We share, to a large extent, an integrated economy. We work together in so many ways and we play together in so many ways.

So how realistic is it when we talk about this Canadian uniqueness, this separateness from the Americans? We share the same continent, and to some extent, certainly in terms of security, we will perhaps share the same fate. When we talk about this unique Canadian dimension, are we kidding ourselves to some extent? I hope not, but I'm just asking the question.

Senator Douglas Roche: Mr. Chairman, I'll try to respond briefly. I do not think we're kidding ourselves. If I may, I'll just give a little preamble for a second on this uniqueness and difference.

I lived in the United States for the better part of ten years of my life, and thus I know the American people very well. I travelled professionally as a journalist through the country, and I think the American people have an aspiration for--if it's not too simple a word--goodness. They're not a Machiavellian people, and they want to do what is right in the world.

Some of the political dimensions of the U.S. today feel the U.S. is being trod upon and is not being appreciated and so on, and that's led to a whole lot of things. But with respect to Canada, I do not see what the American people and the Canadian people want to be essentially different at all, nor in my travels have I found that peoples around the world want things different. They want a decent life for themselves and their children, education, health, and so on.

Canada has always put a very strong emphasis on the rule of international law in its international relations. That is why we have paid attention to what the International Court of Justice, as the highest legal authority in the world, has said. When the ICJ says there is an obligation on countries to conclude negotiations for the elimination of nuclear weapons, Canada would like to take that seriously, but the United States is not.

I think what you're raising here is the question that because we have an integrated economy, and in the case of Canada we are so dependent on the United States and trade and all these figures we're well aware of, does that mean we cannot espouse our values? I would say, sir, that my approach to these questions is not to go at the United States, but rather to manifest our friendship with the United States--which we have done in countless ways I won't take time to enumerate--and say to them, as perhaps Mr. Pearson said on more than one occasion, that as your good neighbour and your good friend, we have to tell you some things. We see security in the world coming out of a basis of international law and an agenda in which the social and economic conditions of the world are related to developing the conditions for security. We do not see security coming out of the barrel of a gun or that more weapons and more nuclear weapons are going to produce security.

That's a fundamental difference in our views. I think it ill behooves the Government of Canada, let alone all the people like us in Canada, to pretend that there are not these distinctions in how each of us approaches questions of security. I think, moreover, we would not be faithful to our obligation to the United Nations and everything it stands for were we to sort of knuckle under to the U.S. security demands being made upon us today, when thinking Canadians recognize that those demands are wrong.

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The Acting Chair (Mr. John Harvard): Well said.

On that, we will close this meeting. We appreciated your appearance here today. Thank you for sharing your thoughts with us.

Thank you, members. This meeting is adjourned.