FAIT Committee Meeting

37th PARLIAMENT, 2nd SESSION

Standing Committee on Foreign Affairs and International Trade

EVIDENCE

CONTENTS

Thursday, February 13, 2003

¿

0905

The Chair (Mr. Bernard Patry (Pierrefonds—Dollard, Lib.))

Ms. Gauri Sreenivasan (Policy Coordinator, Canadian Council for International Cooperation)

¿

0910

The Chair

Mr. Stuart Clark (Senior Policy Adviser, Canadian Foodgrains Bank)

¿

0915

The Chair

Mr. Mark Fried (Communications and Advocacy Coordinator, Oxfam Canada)

The Chair

Ms. Kathy Vandergrift (Senior Policy Analyst, World Vision Canada)

¿

0920

The Chair

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

Mr. Stuart Clark

Mr. Stockwell Day

The Chair

Mr. Keith Martin (Esquimalt—Juan de Fuca, Canadian Alliance)

The Chair

Ms. Kathy Vandergrift

Mr. Keith Martin

Ms. Kathy Vandergrift

The Chair

Mr. Stuart Clark

¿

0925

The Chair

Mr. Keith Martin

The Chair

Mr. Stuart Clark

The Chair

Mr. Antoine Dubé (Lévis-et-Chutes-de-la-Chaudière, BQ)

Ms. Gauri Sreenivasan

¿

0930

Mr. Antoine Dubé

Ms. Gauri Sreenivasan

¿

0935

The Chair

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

The Chair

Mr. Stuart Clark

Mr. Mark Fried

¿

0940

The Chair

Ms. Alexa McDonough (Halifax, NDP)

Ms. Kathy Vandergrift

Ms. Gauri Sreenivasan

¿

0945

The Chair

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.)

The Chair

Mr. Stuart Clark

The Chair

Mr. Murray Calder

The Chair

Mr. Stuart Clark

¿

0950

The Chair

Mr. Bill Casey (Cumberland—Colchester, PC)

Mr. Mark Fried

Mr. Bill Casey

Mr. Mark Fried

Mr. Bill Casey

Hon. Diane Marleau (Sudbury, Lib.)

Mr. Bill Casey

Ms. Kathy Vandergrift

Mr. John Harvard

Mr. Bill Casey

Mr. Stuart Clark

Mr. Bill Casey

The Chair

Mr. Bill Casey

Ms. Kathy Vandergrift

¿

0955

The Chair

Mr. Mark Fried

The Chair

The Chair

À

1005

Mr. David Mulroney (Assistant Deputy Minister, Portfolio Asia-Pacific, Department of Foreign Affairs and International Trade)

À

1010

The Chair

Ms. Jill Sinclair (Director General, International Security Bureau, Department of Foreign Affairs and International Trade)

À

1015

À

1020

À

1025

The Chair

Mr. Jean-Marc Métivier (Vice-President, Multilateral Programmes Branch, Canadian International Development Agency)

Hon. Art Eggleton (York Centre, Lib.)

The Chair

Mr. Art Eggleton

The Chair

Mr. Jean-Marc Métivier

À

1030

The Chair

Mr. Stockwell Day

Ms. Alexa McDonough

The Chair

Mr. Stockwell Day

À

1035

The Chair

Mr. David Mulroney

Mr. Jean-Marc Métivier

The Chair

Ms. Francine Lalonde (Mercier, BQ)

À

1040

Mr. David Mulroney

Ms. Jill Sinclair

Ms. Francine Lalonde

The Chair

Mr. David Mulroney

The Chair

Mr. Art Eggleton

À

1045

The Chair

Ms. Jill Sinclair

The Chair

Mr. David Mulroney

À

1050

The Chair

Mr. Jean-Marc Métivier

The Chair

Ms. Alexa McDonough

Mr. Ernest Loevinsohn (Director General, Food Aid Centre, Canadian International Development Agency)

À

1055

The Chair

Ms. Alexa McDonough

The Chair

Mr. Jean-Marc Métivier

Ms. Alexa McDonough

The Chair

Mr. John Harvard

The Chair

Mr. David Mulroney

Á

1100

The Chair

Mr. Bill Casey

The Chair

Mr. David Mulroney

Mr. Bill Casey

Ms. Jill Sinclair

Mr. Bill Casey

Ms. Jill Sinclair

Mr. Bill Casey

Ms. Jill Sinclair

Mr. Bill Casey

Ms. Jill Sinclair

Mr. Bill Casey

Mr. Ernest Loevinsohn

The Chair

Mr. Keith Martin

Á

1105

The Chair

Mr. David Mulroney

Ms. Jill Sinclair

The Chair

Mr. Keith Martin

The Chair

Mr. Deepak Obhrai (Calgary East, Canadian Alliance)

The Chair

Mr. Ernest Loevinsohn

The Chair

Mr. David Mulroney

Mr. Deepak Obhrai

The Chair

Á

1110

Ms. Francine Lalonde

The Chair

Ms. Francine Lalonde

The Chair

The Vice-Chair (Ms. Diane Marleau)

Mr. Mark Malloch Brown (Administrator, United Nations Development Programme)

Á

1130

Á

1135

Á

1140

The Vice-Chair (Ms. Diane Marleau)

Mr. Deepak Obhrai

Á

1145

Mark Malloch Brown

Á

1150

Mr. Deepak Obhrai

The Vice-Chair (Ms. Diane Marleau)

Ms. Francine Lalonde

Mark Malloch Brown

The Vice-Chair (Ms. Diane Marleau)

Ms. Francine Lalonde

The Vice-Chair (Ms. Diane Marleau)

Mr. Murray Calder

Á

1155

The Vice-Chair (Ms. Diane Marleau)

Ms. Alexa McDonough

The Vice-Chair (Ms. Diane Marleau)

Mr. Keith Martin

Â

1200

The Vice-Chair (Ms. Diane Marleau)

Mark Malloch Brown

Â

1205

Â

1210

The Vice-Chair (Ms. Diane Marleau)

---

CANADA

Standing Committee on Foreign Affairs and International Trade

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NUMBER 018

l

2nd SESSION

l

37th PARLIAMENT

---

EVIDENCE

Thursday, February 13, 2003

[Recorded by Electronic Apparatus]

¿  (0905)  

[Translation]

    The Chair (Mr. Bernard Patry (Pierrefonds—Dollard, Lib.)): With your permission, we will begin our meeting.

    Pursuant to Standing Order 108(2), we are considering food and agriculture policy issues in relation to development matters.

[English]

    It is our pleasure this morning to have as witnesses, from the Canadian Council for International Cooperation, Ms. Gauri Sreenivasan; from the Canadian Foodgrains Bank, Mr. Stuart Clark; from Oxfam Canada, Mr. Mark Fried; and from World Vision Canada, Ms. Kathy Vandergrift, who is a senior policy analyst.

    As you know, you have a few minutes each to make your statement. The meeting is going to last until 10 o'clock. For the members, this morning questions and answers are five minutes.

    We're going to start with Ms. Gauri Sreenivasan, from the Canadian Council for International Cooperation.

    The floor is yours.

    Ms. Gauri Sreenivasan (Policy Coordinator, Canadian Council for International Cooperation): Merci.

    My name is Gauri Sreenivasan. I work with the Canadian Council for International Cooperation.

    We're going to try to address you all very briefly so that we can maximize time for discussion with you. Just to remind you in essentially a sentence, we represent all agencies active in the Canadian Food Security Policy Group. These are agencies that are working concretely and historically with some of the poorest farmers in the world, in Asia, Africa, and Latin America. We bring an extremely strong ethical commitment to both their food security and development needs, but also the importance, we underline, of Canada's own commitment to target reducing the number of people who are living in hunger in this world by half, by the year 2015--very shortly.

    Canada has committed to the right to food, and the issues of food security and the poor we think bear directly on Canada's obligations to the UN human rights convention.

    Why are we here to speak to you today about WTO negotiations? Just to say that we know there is a major ministerial meeting, the fifth ministerial meeting of the WTO, in Cancun this year, 2003. For us, essentially Cancun represents a critical litmus test of action on the Doha development agenda. Over a year ago in Doha, countries of the world made a number of commitments to address development issues in trade. Doha was very important for this, but effectively the Doha conference was a series of words. It was about committing to work on development.

    Cancun is the moment for action. Cancun is the first instance where countries of the world will be put to the test of whether what they said in Doha really will translate into concrete action for the world's poor or not.

    For us, without overstating it, agriculture is the central development issue on the table at the World Trade Organization. All the issues are important, but we're looking at situations of countries, and developing countries, where at least 50% of the population derives their livelihood from agriculture.

    In the least developed countries, that is closer to 70%, sometimes 80%. This is a phenomenally important file. It's not a sector of the economy; this is almost the economy. Nothing is more important than agriculture for development.

    We're here before you now at the end of February because the timing is critical. Although this ministerial meeting is in September, in fact the timeline for the negotiations on agriculture mark the end of March as a key time for countries to step to the plate.

    By the end of March, there is a commitment to address what they call, in WTO lingo, the “modalities” for the negotiations. It means all the proposals for what will potentially be offered need to be on the table by the end of March. So we need pressure now to assure that the Canadian position by the end of March is clear.

    Lastly, we're here to close a very important accountability loop with you. This committee took up with considered vigour and interest the issue of food security and the concerns of the poor, last May, when you looked at recommendations for the government on how to implement the Doha agenda.

    You made a very important and specific recommendation, that the Canadian government look very carefully at proposals, for example, for a development box.

    Over the summer the minister responded to you and to the Canadian public. They agreed with you that the issues were important. They agreed with you that they would look at those proposals, and they essentially promised to have a session in the fall with NGOs to look at what those proposals might mean.

    We've had that session with them, and we've just come back to you to let you know that at that round table--reports of which are available in the kits here at the back, and I believe have been circulated to you--essentially Canada had not responded to any of the core proposals in the development box.

    They have their own strategy for addressing development issues, and we can talk about that a little bit later, but none of the core proposals from developing countries have been addressed.

    So while the Canadian government did promise you a session to look at these in the fall, in our mind, to date, it has not yet stepped to the plate. So we think it's vital that, between now and the end of March, we raise these issues with them again.

    My colleagues will further address the proposals and the key areas for action.

¿  (0910)  

[Translation]

    I would just like to say that all the presentations will be in English, however, we would be pleased to reply in French to any questions in that language.

[English]

    The Chair: Mr. Stuart Clark is senior policy adviser to the Canadian Foodgrains Bank. Mr. Clark, please.

    Mr. Stuart Clark (Senior Policy Adviser, Canadian Foodgrains Bank): Thank you, Mr. Chairman.

    We are here to tell you what we are concerned about. I think we very briefly want to say that we are very supportive of some things that Canada has done in these negotiations. Particularly, we would like to note the efforts of Minister Whelan to increase the support for agricultural development, which was a key element in what was called the Marrakesh decision, and for the review of Canadian food aid policy, food aid program, which has been cut by 70% over the past decade. We are quite optimistic that there are positive changes in that direction.

    We also want to affirm Canada's continuing support for supply management and for the Canadian Wheat Board, both of which structures give farmers a little more market power, which we think is a huge issue for many developing country farmers.

    Now I want to move to the things we don't like, and to hit those fairly hard.

    The first issue I want to touch on is a core issue in the understanding of the GATT agreements. The major world trade distortion today is the problem of northern subsidies. None of you are unaware of the problem of European and U.S. subsidies. They have a serious effect here. They have a life and death effect in developing countries. Canada's strategy on this so far has been to point out the high level of these subsidies and to utter ever stronger words about how bad those subsidies are.

    However, developing countries have been requesting a defensive tool to use against these subsidies. They have asked specifically for a simplified countervail measure: the ability to apply an additional tariff for those imports coming from high-subsidy regimes, a duty whose size would correspond to the level of subsidization. This has been a strong proposal put forward. In the words of many of the southern farmers, “In the Uruguay round, you gave us a house with no door. In the Doha round, we are demanding that you provide us with a door and a lock so that we can keep the thieves from walking in whenever they want.” This is a core issue, not to do with development but with the fundamental structure of the international trade regime. These defensive tools are absolutely essential.

    Second is the whole area around development questions, ones that we raised with you last year, particularly the need for developing countries to have a flexibility in their tariff policy. About the only policy tool available to many developing countries is their tariff policy. They have no money to provide subsidies to their farmers, disaster assistance, crop insurance, etc. For them, tariffs are the only thing they have standing between them and massive unemployment in their most important economic sector. So the importance of Canada providing some support to the notion that specific crops would be exempt from further tariff reductions is key.

    And lastly on that point is the issue of the way in which limited government assistance is used. In the north, we want to use government assistance to restrict production because we have a problem of overproduction driving down prices. The problem is the reverse in developing countries. They need to use whatever limited public finances they have available to increase production. So we call for Canadian support for a kind of domestic support that would increase production.

    These, Mr. Chairman, are the key points we want to make: first on the issue of justice and the basic structure of the international trade regime, and secondly on development.

    Thank you.

¿  (0915)  

    The Chair: Thank you very much, Mr. Clark.

    Now we'll pass to Oxfam Canada's Mark Fried, a communications and advocacy coordinator. Mr. Fried, please.

    Mr. Mark Fried (Communications and Advocacy Coordinator, Oxfam Canada): Thank you very much.

    Very briefly, I'd just like to reiterate that we unfortunately have found Canada's strategy in these negotiations to be inadequate to achieve even the goals the minister has set. The minister has said quite clearly that there is to be real development in this round of trade talks, that there will be something there for the developing countries to bring them into the world trading system. Unfortunately, in this particular agriculture agreement, which is the most important one for developing countries, Canada has not put forward or supported measures that really will support development.

    As well, Canada has focused narrowly on its own self-interest--namely, to reduce subsidies in the United States and in the European Union and to promote greater market access for Canada's exports. We don't believe Canada has pursued even those goals very astutely. If Canada wishes to really make a dent in the U.S. and EU subsidies, Canada will have to support measures that are actually going to put pressure on those countries, that will create an economic cost for continuing to have a high-subsidy regime such as the countervail, which my colleague Stu Clark just laid out.

    This countervail, I should note, is a simplified measure. It's one put forward by the Philippines, but it has gained the support of our Cairns Group allies, including Australia and New Zealand.

    There are other measures Canada could support. Canada needs to address the real needs of developing countries if we're going to gain developing country support for what Canada wants. These include measures to address dumping, which is the major distortion in the world agricultural trading system; measures to promote food security, such as the ones on domestic support; and some exemptions from tariff reductions for staple crops, which Stuart mentioned very briefly.

    If developing countries don't see they have anything in this agricultural agreement, if there's nothing there for them, they'll walk away from it. The delegations have been very clear in telling us that. If they walk away, there's not going to be a Cancun agreement or a development round.

    Thank you.

    The Chair: Merci beaucoup, Monsieur Fried.

    Now we'll go to Ms. Kathy Vandergrift, from World Vision Canada, where she is a senior policy analyst. Ms. Vandergrift.

    Ms. Kathy Vandergrift (Senior Policy Analyst, World Vision Canada): Thank you.

    In addition to the report this committee did prior to the Doha round, this committee also made important statements on this agenda in its report before the G-8 summit on Africa, in which you called for trade rules “that are explicitly designed to benefit the poorest people and regions, with particular attention to the needs of Africa”. I think we have put before you reasons that the current strategy being pursued by the government is inadequate. We are suggesting that this committee ask the government to revise its strategy, first of all because it may be inadequate in the fight against northern subsidies. We need some teeth as well as exhortations to the EU and the U.S. to reduce their subsidies.

    Secondly, the strategy that is being pursued now is dangerous for poor producers. This committee could ask the government to move from the existing approach and revise its strategy. Second, you could ask for a report on the specific proposals in the development box: What will Canada support? Those, I think, are two very specific requests. If they could be made prior to the end of March, it certainly would help.

    This agreement is going to have major implications in Canada and in other countries. Some would suggest it might be worth a parliamentary debate. I'm not sure about that, but at least this committee could at least take another look at the issue before the end of March.

    Thank you.

¿  (0920)  

    The Chair: Merci beaucoup, thank you very much. You were very concise and to the point in your statement.

    Now we're going to go to questions. We'll go to Mr. Day, please.

    Mr. Stockwell Day (Okanagan—Coquihalla, Canadian Alliance): Thank you, Mr. Chairman. I'll split my time with Dr. Martin.

    Thanks so much to each of you for your time and also for your forthrightness. We appreciate that.

    Perhaps I can get a comment on this. Two days ago our leader, Stephen Harper, and I met with all of the EU ambassadors to Canada. This was one of main concerns...and obviously we're also concerned about the U.S. Farm Bill and the distorting effect it is having. Our concern was sort of put to the side by a response from the spokesperson for the EU ambassadors, who said that they have a special arrangement with African countries that helps them deal with the problem of subsidies, one that, if it does not remove the problem, effectively reduces it.

    I was not aware of that; it was news to me. Are you aware of this special arrangement under which they can avoid the distorting effect of these unfortunate and unrealistic subsidies within the EU?

    Mr. Stuart Clark: I believe, Mr. Day, that what they are speaking about is the question of access to their markets. Under the Cotonou agreement there is special access for African countries to the European market. I am not aware at all of any way this addresses the reverse problem, which is the highly subsidized imports entering African markets.

    Mr. Stockwell Day: Okay. Thank you.

    The Chair: Mr. Martin.

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

    Thanks to you all for being here today and for the fine work you all do on this important issue.

    Rapidly, Mrs. Vandergrift, could you tell us what teeth you'd like to see put in to deal with European and North American subsidies?

    Second, Mr. Clark, could you extrapolate on the countervailing duties you would like to see? Could you just educate some of us a little bit on this?

    Thank you.

    The Chair: Ms. Vandergrift.

    Ms. Kathy Vandergrift: The teeth we're referring to are allowing developing countries defensive mechanisms against these subsidies. If those are in place, then there will be real pressure to reduce the subsidies if the subsidizing countries want access to the developing countries. It's a case of allowing countries the defensive mechanisms, and that is a position the Canadian strategy does not so far include.

    Mr. Keith Martin: You're referring to the countervail.

    Ms. Kathy Vandergrift: Yes.

    The Chair: Mr. Clark.

    Mr. Stuart Clark: If I can, I'll add to that only to provide a little bit of information for you. Each year countries have to notify the WTO Committee on Agriculture of the subsidies they provide. These are provided each year, so they're one year out of date. The countervail proposal, which was first tabled in September by the Philippines and then more broadly supported by a number of developing-country Cairns Group members in November, picks up on that and says countries should have the right to apply a countervail duty equivalent to the level of subsidy given the previous year on that commodity.

    It's not that this would necessarily be applied. A countervail is not an obligatory move, it's a potential move, where under the rules they would be able to do this kind of thing.

    Many developing countries are very sharply constrained by their IMF loans as to the kind of trade measures they can take. But if this countervail were available, then they could use that, and that would be some way for them to protect their farmers during the period in which these high subsidies exist. Once these subsidies drop, then the countervail would no longer be available.

    I'll make one last, small point. Of course, there is the potential that some Canadian exports might incur a small countervail because of the level of subsidies we provide to our farmers. However, these would be small compared to the much higher countervailing duties that would be applied to imports from Europe and the U.S., so in fact the market would probably expand and Canada would benefit. This, I think, is the argument that persuaded Australia to support this strategy.

¿  (0925)  

    The Chair: Thank you.

    Do you have a supplementary, Monsieur Martin?

    Mr. Keith Martin: Yes.

    Mr. Clark, I really thank you for all the work you're doing, particularly the help you've given in dealing with the famine problem in southern Africa.

    Could you just briefly tell us what major obstacles you have encountered getting the foodstuffs you need, which you send to alleviate the acute famine, and what you would recommend that we propose to enable you to get more foodstuffs into the region?

    The Chair: Mr. Clark.

    Mr. Stuart Clark: Briefly, the issue there is the one you are most familiar with, resource constraints. The Canadian Foodgrains Bank ships about 50,000 tonnes of food each year. This year we had a very large response to the food crisis in southern Africa, and then this was followed immediately by calls for assistance in Ethiopia. We have absolutely cleaned out the cupboard to send 10,000 tonnes of food to Ethiopia.

    The problem with food aid in Canada generally is that it's been a sharply declining resource, down 70% during the decade of the nineties. As I said in my opening presentation, there's some indication that with further funds being made available for international assistance and the minister's interest in food aid, we may see some recovery in that area. But that's the principal problem. The problem has not been logistical, and it hasn't been in terms of monitoring or getting the food there and seeing it well used; it's simply about getting access to the resources to be able to do it.

[Translation]

    The Chair: Mr. Dubé.

    Mr. Antoine Dubé (Lévis-et-Chutes-de-la-Chaudière, BQ): My question is to the representatives of the organizations we have with us today. You say you belong to a coalition that is making representations to the Government of Canada, in this case, through your appearance before our committee today.

    We are talking here about an international approach. Could you describe your connection to organizations with an international mandate?

    We are not talking here about a single country. Personally, I have heard the Canadian government speak out against certain situations. I am thinking, for example, of Mr. Chrétien's comments at the G-8 Summit. However, the remarks often last only five minutes; they are reported, but the process ends there.

    In other words, I am asking for a brief description of the ways in which you can make your voice heard internationally.

    Ms. Gauri Sreenivasan: Of course, that is one of the most important dilemmas, because, as you said, the problem is truly international in scope. It is not simply about the position taken by Canada.

    As far as we are concerned, we have very close working relationships with NGOs, and groups of farmers in Europe, the U.S. and other countries, and with our partners in the southern hemisphere.

    We exchange information on the strategies and positions that have been adopted, and on those that are being changed. We sometimes apply pressure as a group in Geneva. For example, Stewart is going to Geneva next week.

    We also have dealings with the media. This is how we found out that the Australian NGOs had also succeeded in convincing their government to support certain measures that Canada has not yet adopted.

    For us , the most important thing is our relationship with farmers and groups working in the countries of the southern hemisphere. The strategies used in these places are quite varied. I think we have to be frank and say that a great many groups want to take much more radical action. For example, at the moment, they are in favour of the idea of disregarding the WTO or of not having an agreement on agriculture.

    We find it very interesting to see that in the face of real and political pressure, the governments of some developing countries in the southern hemisphere have at least put forward some rather pragmatic proposals. It is clear that they are aware of the situation.

    Consider what is happening on the Mexican border. Thousands of farmers are demonstrating. Faced with these real pressures, the Government of Mexico and of a number of other countries from the southern hemisphere told us they affirm their need for greater flexibility to ensure the survival of their small farmers.

    I think there has to be an awareness of these political pressures; there is no point in dreaming about creating another Seattle Park in Cancun, for example. There will be a significant mobilization there. A great deal of pressure will be brought to bear.

    We are going through a period in which it is becoming critical to find a multilateral solution. We think it is important that Canada think about all these political signals we are receiving through our international networks.

¿  (0930)  

    Mr. Antoine Dubé: I took a relatively quick trip to the Scandinavian countries, where there is strong support for international aid. However, they have not shown exemplary behaviour in other areas, especially with regards to your requirements.

    As for countries that could be used as models, you have just mentioned Australia. On the other hand, the United States obviously has other concerns right now, namely Iraq. In your view, which countries should Canada join forces with to get what it wants?

    Ms. Gauri Sreenivasan: It is a matter of knowing where our allies are. It is interesting because at the WTO, the traditionally progressive European countries, for example, are in the European Union bloc. The trend there is to express their position as a group. It is not like at the United Nations, where you see the various European positions that give us a broader prospective. Canada is there as member of the Quadrilateral Group. We are in the group that has the strongest economic power within the WTO. In my view, besides its partners in the Quad Group, namely the European Union and the United States, Canada's real allies are the developing countries. It is more difficult to find allies in Europe, because they have the same type of problem with their support programs. But countries like the Philippines, Thailand and the countries with... Canada does not typically work very much with countries such as India or those from the African bloc. They are the ones who tabled these proposals. They are the ones looking to see whether the north is flexible enough to strike other agreements within the WTO, on investment or on other matters. That is where Canada has not found any allies. I therefore think it is very important to look to the south, not only to promote our interest on other issues, but also as concerns development, because that is what is being said. In Canada, we say we support a development agenda, but we follow our own strategies, which are not very comprehensive. It is important to work more with the southern countries.

¿  (0935)  

[English]

    The Chair: Now we're going to pass to Mr. Harvard, please.

    Mr. John Harvard (Charleswood—St. James—Assiniboia, Lib.): Thanks, Mr. Chairman.

    I want to hear a little bit more about the countervail proposal. Countervail is in effect a wall, perhaps temporary, but a wall around a country. Subsidies have the opposite effect of driving prices down. One can be as destructive as the other. Are you suggesting that the countervail tool be available only to third-world countries, that it wouldn't be available to a country like Canada, the United States, those that have the high subsidies?

    I guess the other thing I would want to ask is can you give me an example of how destructive these subsidies have been on the third-world economies--in other words, cheap imports going in and competing unfairly and perhaps destroying the local agricultural economies?

    Finally, I think I heard you say that the countervail tool would be perhaps a temporary tool, in that it would be removed, providing the subsidies came down. Do you think in a dream world--and I guess we're really talking about a dream world--in a world where there are no subsidies, in Canada, the United States, Europe, or wherever, do you think that the third world has the infrastructure to compete with the rest of the world, especially countries like Europe and Canada and the United States, which have the most modern, productive, efficient agricultural technology?

    The Chair: Thank you, Mr. Harvard.

    Mr. Clark.

    Mr. Stuart Clark: I would like to answer the first part and then pass it over to my colleague Mr. Fried for the last two parts of Mr. Harvard's question.

    On the question about countervail, I think the first thing we need to recognize is that within GATT and within all of the trade regimes, countervail is a legitimate move: it's a way you prevent passing your problem on to some other country. It's absolutely fundamental to the international trade regime. The agreement on subsidies and countervail allows this to happen.

    The difficulty is that you must normally prove injury to 80% of the members of any particular sector before you apply such countervail. Well, you could imagine that the farmers in Mali, who make up 80% of the population--to try to get their signatures or thumb prints or whatever on a document to indicate that 80% had been injured is clearly impossible. This tool, which is an entirely legitimate tool within GATT, is simply not available to developing countries.

    Of course I do understand concerns with making it easier may mean that this may be used more widely. This special countervail would only be available to developing countries. It would only be on the basis of the subsidized exports, and only on those commodities. And it's entirely possible... The actual basic mechanism makes it time-limited. It of course is a question of how those subsidies are calculated as to what is going to be legitimate or not. There is detail in the Philippines proposal on that.

    Mark.

    Mr. Mark Fried: That's a good question.

    First, on how damaging dumping is, the dumping of goods is the selling of goods below the cost of production. Those poor countries that have adopted open-market policies have few defences against the entry of below-production-cost goods.

    When goods are sold internationally below the cost of production--and the United States and the European Union on average sell grains at about 60% of the cost of production overseas, which is cheaper than anyone could possibly grow them--the world price is driven down. When a poor country adopts an open market policy, the world price becomes the local price, so farmers are unable to sell their crops even in their own villages, and even in the national market. It's a question of access to their own markets, not access to the world market, that is confronting poor farmers.

    An example would be the rice farmers in Haiti--and we have a study that I'd be happy to give you a copy of. Oxfam has worked with the rice farmers there for many years. There were 50,000 people who lived from rice, and, yes, they were protected behind a tariff barrier. The tariffs came down under pressure from the United States, and the United States flooded the country with very highly subsidized rice. Virtually all of them lost their livelihoods. These are 50,000 families that have no alternative livelihood. The price of rice is just too low for them to afford to be able to continue growing it, and they have no other place to go and no other way to survive. This has happened in countries around the world.

    As to the question of whether third world countries have the capacity to compete, the challenge facing third world countries, perhaps facing the international system, is, if we're moving towards a more liberalized system, who bears the cost of this? The way the rules are currently structured, the costs are put onto poor countries and poor farmers who don't have the resources to be able to bear those costs. So if barriers are coming down worldwide, it's the poor rice farmer in Haiti who loses his livelihood, but the Government of Haiti doesn't have the capacity to provide any sort of safety net for these farmers.

    The measures that the developing countries have put on the table in these negotiations are to try to right that balance somewhat so that the costs are borne more equitably. For developing countries participating in the world market, developing exports that they can compete in--and there are exports that developing countries are very competitive in--is an essential part of their own development scheme, but it's one piece of the puzzle. Their development of exports in the case of agriculture has to be in order to serve their poverty reduction goal. It's part of a strategy for reducing poverty, not as an end in itself, because we've had export production that has only benefited a few elites or has not been integrated into a broader development strategy or anti-poverty strategy in many countries.

¿  (0940)  

    The Chair: Now we'll go to Ms. McDonough.

    Ms. Alexa McDonough (Halifax, NDP): Thank you very much, Mr. Chair, and thanks very much to the delegation, who have made a very direct presentation on very complex issues.

    I have two quick questions. I want the time to be yours to address the issues.

    One is, very specifically, when you approached this committee at the end of January you asked about the possibility of a joint meeting with the agriculture committee. That didn't happen. I'm just wondering if you have a separate meeting scheduled with them.

    Second, I read the stated objectives of the Canadian Food Security Policy Group and I think Canadians would overwhelmingly embrace the objectives, recognizing that there are invariably some competing and conflicting interests between Canada's own food producers and the hungry in developing countries to whom we have a responsibility to express genuine solidarity--meaning not just words, as you say, but concrete policies.

    My question is whether, at this point, having done your homework.... We're dealing with a situation where we're coming up to Cancun. The window is going to close on Canada's position on the modalities and trying to shape that. Is it a question that Canada hasn't come to grips with these competing and conflicting interests--in other words, because the reconciliation of those has not been solved--or is it more by default that Canada seems not to be putting itself forward as a real player? This really is part of a larger question we've been struggling with about Canada's role in today's world as it relates to being a progressive, proactive, international citizen.

    Ms. Kathy Vandergrift: During the dialogue we had with the department in November, I specifically asked them about that question. It was stated by the chief negotiator that at that point they thought the single-minded focus against the EU and U.S. subsidies was the best strategy. We are arguing that the strategy may not be the best one, certainly not at this point.

    That is what we were told, that they wanted to focus on that and that alone, nothing else.

    The other is a commitment to one size fits all. That theme came up. We are arguing the gap is too big at the present moment to use a one-size-fits-all policy--maybe someday, but not right now.

    I will quickly close off on the question that Mr. Harvard had and bring it back to Canadian donors. Canadian citizens support projects with farmer co-ops--for example, micro-credit loans and those kinds of things--and those projects are at risk. So the very things that Canadians are supporting are at risk from the scenarios that Mark Fried raises.

    In terms of the infrastructure, I don't think any of us are saying that this is the only answer. That's why we mentioned that CIDA's agriculture policy is also a piece of the puzzle. But this is a very important piece of the puzzle, and it will jeopardize all the others if we don't get it right.

    So we feel Canada's very narrow focus is in error.

    Ms. Gauri Sreenivasan: I have a quick follow-up on your first question. We don't have a commitment yet to appear before the agriculture committee, but we are pursuing it and we know they have an interest because we've appeared before. We haven't found the time, but we will continue to do that.

    I have a supplement on the question of what is it with Canada, has it just not come to grips or is it just intransigent? I think part of the question is that for Canada, agriculture, although it is an extremely key file, is one of many.

    On the question about how we reconcile development agendas, traditionally it has been a more narrow approach. We are actually much more reluctant to address the substantive terms of agreements--like investment and agriculture. This is the one-size-fits-all problem. We have tended to approach the need to address development as more of a technical issue. Our approach to development to date has been to offer technical assistance to developing countries to trade better and faster, and/or to offer them more time to get on the bus and get into the one size fits all.

    So our analysis is different.

    I guess we're fundamentally saying it's too narrow to approach the problem of development as one of assistance--timeframes and money--and we need to look more substantively at each agreement for ways that offer specific flexibility to developing countries, given their specific conditions, which goes against the one-size-fits-all answer.

    I think Canada has answered in its mind what it will do for development, and we're saying it's not substantive enough.

¿  (0945)  

    The Chair: Now we'll go to Mr. Calder.

    Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): Thank you very much, Mr. Chair.

    Your fair trade rule number 4 is one that interests me, whereby you're referring to:

Farmer-controlled marketing structures, including single-desk exporters, must be retained as an option for developing country farmers.

    The question would be then, as we go to the WTO, what is the understanding of the developing countries of our marketing systems, in particular, supply management and the Canada Wheat Board, because I believe that's what you're referring to?

    And once we have found out what the level of understanding is, what's their level of support at the WTO for these marketing structures?

    The Chair: Thank you.

    Mr. Clark.

    Mr. Stuart Clark: On this point, this is a very key issue, but from talking with developing country delegations, they by and large do not understand how the Wheat Board works. Some of them know a little bit about supply management but assume that with the abolition of quantitative restrictions it was impossible to run such systems, so they don't necessarily understand very much about how Canada does it.

    The question of TRQs for them is usually a problem of them trying to export into TRQ regimes rather than having the sophistication to be able to use TRQs in the way we have--for example, to protect our supply management system.

    That said, I know that large players like India have taken a lot of interest in the way Canada has used TRQs to make their supply management system work, because India has the largest small producer dairy system in the world, bar none. And this is all based on mostly women who are milking three or four cows. They put in all the infrastructure, but that only survived because they were able to keep out cheap imports, and they've expressed a lot of interest.

    On the question of the Wheat Board, certainly what are called “state trading enterprises” don't have a particularly pristine record. They've been used as a way to extract a lot of money from farmers rather than to help farmers, so there has been a kind of education process for us to go through.

    The Canadian Foodgrains Bank sponsored a study on international trade and market structures, which was received very well by developing country delegations. It was explaining for them how the international markets in cereals are changing and what kind of role single-desk structures might have, and other types of marketing structures.

    So I think there is interest, but for a lot of these countries they've been paddling so hard to deal with the impact of the Uruguay round that many of them haven't been particularly offensive in terms of thinking how they could use these tools.

    The Chair: Thank you.

    Mr. Calder.

    Mr. Murray Calder: One other thing I see with the developing countries is that while obviously when the United States and the EU go to the WTO they have a whole bank of experts on any one sector of trade, and of course they can put their point across, on the other hand a developing nation is probably very cash-strapped and their negotiating team might consist of one or two people. And they can't be an expert on everything, and therefore they must be citing site-specific; the rest of it they just let go to the wind.

    Is there an opportunity for us to take these developing nations underneath our wing at the WTO table and help them to strengthen their negotiating position?

    The Chair: Mr. Clark.

    Mr. Stuart Clark: The issue is one that received very early attention with the establishment of an organization called the South Centre, which does a lot of work on specific trade agreements and has a fairly strong team working on agriculture. Canada has been approached to assist the South Centre.

    The question about taking developing countries under Canada's wing is a little bit like asking--at least they would regard it as asking--the lambs to lay down with the wolf. So I think that level of proximity would not necessarily be welcomed, but certainly Canadian support for third parties like the South Centre plays a very important role. It's one of the organizations that links very tightly into all the NGOs doing this kind of work, so any research that we do is fed into the South Centre and then is shared with the various developing country delegations.

    CIDA has received a request recently from the South Centre for some assistance with their agriculture program, and I'm hopeful that will be supported.

¿  (0950)  

    The Chair: Thank you, Mr. Clark. Now we'll go Mr. Casey.

    Mr. Bill Casey (Cumberland—Colchester, PC): Thank you very much.

    I want to make a comment first. You mentioned India. My late father-in-law went to India. He ran a dairy in Nova Scotia for ACOA for years and years, and he went to India. He worked in several dairies there several times to try to help them organize.

    You really raise a fundamental question there when you say that the small industries survive by keeping out cheap imports. That's a big question: Where do you draw that line? Do some people not have access to dairy products because they don't have access to the cheap imports, while at the same time the government is protecting the industry? It really is a big question.

    But to get to my first question, you mentioned in the letter that Canada has slashed its assistance to agriculture in CIDA; how much was slashed, and where did the money go?

    Mr. Mark Fried: The amount that was cut was quite significant. It came down over 50% from 1990 to this year. However, with the new announcements of apparently a new focus on agriculture at CIDA, it may be coming back up again. The minister would certainly like that to happen.

    On the question of whether protection for small producers deprives consumers of access to cheaper food, a key fact to keep in mind is that in the poorer developing countries up to 80% of the people survive on farming, are farmers or pastoralists, so that they live from agriculture. So by depriving them of their livelihood, even if the food that can be bought is cheaper, they won't have any money because there aren't alternative livelihoods. They can't afford to buy it. That's a key factor to keep in mind.

    Even in the larger developing countries, the percentage of people who live from farming is huge.

    Mr. Bill Casey: Is it 80%?

    Mr. Mark Fried: In the least developed countries it can be that high. It's on average about 60% to 65% in the developing countries.

    Mr. Bill Casey: You didn't answer the other part of my question. It was reduced by 50%, but where did the money go, or was it just that the budget was cut? Was it transferred to...

    Hon. Diane Marleau (Sudbury, Lib.): The budget was cut.

    Mr. Bill Casey: Oh, it was cut.

    So it's not your fault, then.

    Ms. Kathy Vandergrift: I don't have the figures with me, but certainly research shows that the proportion going to agriculture was also reduced. It's both budget cuts and that the proportion going to agriculture, certainly in places like Africa, was also reduced. We can get you that information.

    Mr. John Harvard: It all went to ACOA in Nova Scotia.

    Mr. Bill Casey: There you go.

    Mr. Stuart Clark: I have a few key numbers. Overall ODA was cut by about 35% to 40%. The impact on agriculture generally was 60%. The impact on agricultural assistance to sub-Saharan Africa, the most food-insecure region in the world, was 80%.

    I think it was really a question that other priorities were demanding attention and there was no voice speaking for agriculture.

    Mr. Bill Casey: Thank you.

    I have one other question, Mr. Chair.

    The Chair: Go ahead.

    Mr. Bill Casey: Ms. Vandergrift, you said that Canada has a narrow focus and it's in error. Could you just elaborate on that statement, that our focus is too narrow?

    Ms. Kathy Vandergrift: The focus has been single-mindedly on reducing the EU and U.S. subsidies by talking about them, and I suppose by applying direct pressure. What we are saying is that by allowing other countries defensive mechanisms for them, that broadens that focus.

    It was stated, we want to singularly focus on this little piece, whereas we think by using a variety of tools you would actually have a better strategy for reaching that goal but also benefiting poor producers in poor countries.

¿  (0955)  

    The Chair: Thank you. I have a question for Mr. Fried before we finish our meeting this morning.

    I want to know if it's possible to elaborate on the way the Canadian government subsidies work, because as I understand it, according to our rules we cannot give more than 10% cash and the rest needs to be food itself.

    If you're looking at Zambia, south Zambia has some hunger and north Zambia has some surplus. They cannot transfer the food from north to south because of transportation costs, anyway. It's the same between two countries. You have Zimbabwe with problems and Mozambique, which is not that far away, with surplus, and because of these types of rules they cannot transfer food from Mozambique, buy food in Mozambique to transfer to Zimbabwe. They prefer to pay for the costs from Canada here to that far, as far as Zambia or Zimbabwe.

    What will be a solution to this?

    Mr. Mark Fried: I believe you're raising two issues. One is with regard to the rules for what counts as domestic support--that is, what counts as a subsidy under the agreement on agriculture. There are a number of key policies that could support rural development in poor countries, ones that count towards the maximum they're allowed to spend to support farmers. An example is moving food from a food-surplus region of a country to a food-deficit region of a country, which is counted towards the maximum domestic support you're allowed to provide. One of the proposals on the table Canada should support is to increase the amount of domestic support. This would give more flexibility for countries to spend more to increase food production and to move food from one part of the country to another; Canada should be part of that.

    The other issue you raise is regarding food aid and CIDA's rules on food assistance. The 10% you're referring to, I believe, is that only 10% of Canada's food aid can be bought locally, can be bought outside Canada. Quite often, when there is a shortage of food in a particular country, food can be purchased in some other part of that country or in neighbouring countries. This is much more cost-effective than bringing it from Canada, and it also helps to stimulate that economy when food is purchased there rather than brought in. When food is brought in, it can have a detrimental effect on small farmers by lowering prices in the market for them.

    Currently, the rules require CIDA to buy 90% of its food aid in Canada and only 10% as local purchase. We have suggested to CIDA that 25% would be a more appropriate number than 10%, so at least some more can be purchased in the country or in that region where the food is needed.

    The Chair: Thank you very much. Thank you to all the witnesses, Mr. Fried, Ms. Sreenivasan, Mr. Clark, and Ms. Vandergrift. Thank you for appearing before us this morning.

    I just want you to know that next we're going to talk about North Korea, and maybe you'll want to stay. It could be good for you as well.

    We're going to recess for five minutes.

    Thank you.

¿  (0958)  

---

À  (1004)  

    The Chair: Pursuant to standing order 108(2), we will now begin consideration of the situation in North Korea. It is our pleasure to have with us this morning, from the Department of Foreign Affairs and International Trade, Mr. David Mulroney, who is the assistant deputy minister, Asia-Pacific; and Ms. Jill Sinclair, director general, International Security Bureau.

[Translation]

    From the Canadian International Development Agency, we welcome Mr. Jean-Marc Métivier, Vice-President, Multilateral Programs Branch, and Mr. Ernest Loevinsohn, Director General, Food Aid Centre.

[English]

    I understand you're going to make a brief statement, and after that there will be a question and answer session with the members.

    We're going to start with Mr. Mulroney, please.

À  (1005)  

    Mr. David Mulroney (Assistant Deputy Minister, Portfolio Asia-Pacific, Department of Foreign Affairs and International Trade): Thank you, Mr. Chairman.

    What I thought I would do is give you a brief history of Canada's bilateral relations with North Korea, bringing it up to where we are now. My colleague Jill Sinclair will talk about the security and multilateral dimensions, and then CIDA will provide some commentary on the humanitarian situation.

    Briefly, North Korea in the 1990s began a process of gradual engagement with the international community. That was in part as a result of the resolution of an earlier nuclear crisis in 1993-94. It was also as a result of global change, namely the collapse of the former Soviet Union and a widening economic gap between north and south, which led some thinkers in North Korea to realize that their only option for survival was greater engagement with the wider world.

    I would hasten to add, however, that unlike the reform we saw in China, which had preceded this by 20 years and which was very flexible and adaptable, the North Korean response to the international situation and its opening up were largely predicated on keeping the regime in place.

[Translation]

    When Kim Dae-jung was elected President of South Korea in 1998, it meant the country would be led by someone willing to promote bilateral relations. The Sunshine Policy led to an inter-Korean dialogue and then to the June 2000 Summit, where President Kim Dae-jung met the North Korean leader, Kim Jong-il, in Pyongyang.

    Canada and other western states supported Kim Dae-jung's initiative to reduce regional tensions.

[English]

    Following the opening created by Kim Dae-jung and his Sunshine Policy, a number of nations began to explore the possibility of closer links with North Korea, Canada among them. First there was a visit by a parliamentary delegation to Pyongyang, then there were discussions between former Foreign Minister Lloyd Axworthy and his North Korean counterpart, and finally former Foreign Minister Manley established diplomatic relations in 2001.

    It's important to note that the objective throughout the establishment of diplomatic relations, and it continues to be our objective today, has been to bring North Korea into the family of nations and to encourage it to play a more supportive and constructive role.

[Translation]

    Canada's involvement resulted in improved relations between North Korea and the other countries, such as Japan, Italy, the United Kingdom, Australia and the United States.

[English]

    In our dialogue with the North Koreans--and Jill will talk more about this--we've taken every opportunity to stress the importance of engagement in a multilateral, rules-based system. Our initial dialogue at the level of senior officials included references to the IAEA and IAEA safeguards; curbs on the proliferation of missiles; human rights; human security; famine relief; and regional stability.

    What we said, essentially, to the North Koreans when we met them for the first time in August of 2001, post-establishment of diplomatic relations, was that Canada, in its relations with partners when it establishes bilateral relations, expects to be able to talk about these issues. It expects to be able to have a realistic dialogue on such things as human rights and on such things as curbing the proliferation of weapons of mass destruction.

    However, in all honesty, I have to report that since establishing relations and up to the crisis that erupted last fall, the going had been very slow. We had made a number of concrete suggestions to the North Koreans, with a number of scholarships and efforts to ensure that our aid and assistance distribution was tracked successfully in North Korea. The going was very slow throughout the process, and the responses from Pyongyang were less than enthusiastic. Our approach was to be patient but not to ignore the importance of establishing this ability to have a serious dialogue with them.

    Certainly, our relations have been strained by the revelations beginning last fall of the DPRK's program for highly enriched uranium. Minister Graham has spoken out on a number of occasions, expressing Canada's grave concerns. He has said and made it very clear most recently that it cannot be business as usual in our bilateral relations until this issue is addressed, although we will continue to respond to North Korea's humanitarian needs. He has addressed these concerns in the form of a letter to the North Korean foreign minister.

    It's important to remember that because we have established diplomatic relations, we do have channels through both New York and Beijing. Our ambassador, Joseph Caron, is accredited to Pyongyang, and we continue to talk to their embassy in Beijing.

À  (1010)  

[Translation]

    Canadians were directly involved in helping meet the serious humanitarian needs in North Korea, a subject that will be broached shortly by my colleague from CIDA. Let me just say that the UN Secretary General's special envoy, the Canadian Maurice Strong, recently went to North Korea, and upon his return, he said he feared an imminent humanitarian disaster. He indicated that aid should be dealt with separately from the concerns about nuclear weapons.

[English]

    In summary, it's important to note that on our side our opening to the DPRK, to North Korea, was intended to support its engagement with the wider world, certainly intended to support South Korean efforts to improve inter-Korean relations and to bring North Korea into the family of nations.

    While it appears that our bilateral relations are valued by the DPRK as providing alternative sources of material goods and humanitarian assistance, there has been slight indication of any fundamental opening of DPRK society. It's evident that regime survival is the prism through which its government examines every contact with the west, including Canada. Nonetheless, we consider that ignoring or isolating North Korea would be counterproductive. It is through engagement that we can best contribute to the achievement of security and non-proliferation and address the humanitarian challenges in the region.

    Of course, achieving these ends depends on finding a willing partner in Pyongyang, and achieving success in our efforts to influence the governing paradigm in the DPRK will take considerable time and effort.

    Thank you, Mr. Chairman. I'll turn things over to Ms. Sinclair.

    The Chair: Mr. Mulroney, thank you.

    Ms. Sinclair.

    Ms. Jill Sinclair (Director General, International Security Bureau, Department of Foreign Affairs and International Trade): Thank you very much, Mr. Chairman.

    It's a pleasure to be here with the committee today, and indeed, it's a propitious moment because, as those of you who have been following this issue will know, yesterday the IAEA adopted a further resolution on the issue of North Korea. So I welcome this opportunity to be in front of the committee today.

    And forgive this statement, which is going to be a little bit longer than we would normally draft for you, but I think it's important to get a number of these complex issues out so we can then have a full discussion with committee members. Some of my comments may be a little bit more undiplomatic than usual because I think it's important to speak clearly about these issues.

    The DPRK is an isolationist, insular, inward-looking state, whose actions and reactions to the rest of the world are coloured by suspicion, fear, and paranoia. The country's political, social, and economic development has remained stunted and withered for the past half-century since the Korean War. Again, I say this in stark terms because, when you talk about the security environment, you have to get into the psychology of countries. It's important to know the broader context of the country we're dealing with.

    The Korean Peninsula remains technically in a state of war, as the 1954 armistice was intended to be a temporary measure to suspend hostilities pending the conclusion of a peace agreement that never actually occurred. The DPRK has maintained a war footing under the regime of Pyongyang since then.

[Translation]

    Canada continues to maintain a limited presence in the UN Military Command on the Korean Peninsula, a U.S.-led multinational military structure which monitors the armistice.

    North Korea has a long history of patently ignoring established international norms of behaviour. Its foreign policy is largely one based on creating crises affecting the stability and security of the Korean Peninsula and northeast Asia, and then extracting concessions from the world community before returning to the status quo.

[English]

    The economy is in shambles. A large portion of its civilian population is suffering from malnutrition. Again, our colleagues from l'ACDI will speak about this. At the same time, this regime maintains armed forces of over one million people, and in addition to a possible nuclear weapons capability, which is the focus of much of the attention these days in the press, the DPRK has produced other weapons of mass destruction, notably chemical weapons and ballistic missiles. It is alleged to have clandestinely cooperated with other countries in developing these weapons, and a major portion of its foreign currency earnings come from the export of arms, including missiles and chemical weapons.

    This latest crisis is not new, unfortunately. The DPRK ratified the Treaty on the Non-Proliferation of Nuclear Weapons, the NPT, as a non-nuclear weapons state in 1985, but from the very outset it was clear that the DPRK was in non-compliance with its obligations under the treaty.

    Let me walk you through what these obligations mean, just briefly, so you understand the importance of this.

    Non-nuclear weapons states party to the NPT must conclude a comprehensive safeguards agreement with the International Atomic Energy Agency, the IAEA, covering all of their nuclear activities within 18 months of the ratification of the treaty. Canada has such a safeguards agreement, and in the question period we can talk a little bit about that if you like. The DPRK delayed conclusion of its safeguard agreement for seven years before finally concluding one in 1992.

    Verification by the agency of the DPRK's initial declaration of its activities subsequently revealed certain discrepancies, including evidence that the DPRK had reprocessed more plutonium than originally disclosed. This is important because reprocessed plutonium is what you need for nuclear weapons. When further information and special inspections of other sites were requested by the agency in 1993, the DPRK refused and withdrew from the NPT.

    The IAEA board of governors referred the DPRK's non-compliance to the UN Security Council in April of 1993, so serious were the concerns. Negotiations were initiated to resolve the crisis, and as a result the DPRK announced that it would suspend its withdrawal from the NPT in June 1993. This was just one day before the end of a three-month notification withdrawal period. Nevertheless, the DPRK continued to conduct activities at its nuclear facilities that were incompatible with the requirements of the safeguards agreement it had signed. For example, it refused to allow inspectors to see some 8,000 fuel rods that it had removed from its research reactor.

    In June 1994, following the suspension of further non-medical technical cooperation with the DPRK by the IAEA board of governors, the DPRK decided to withdraw from the agency itself. It remains a non-member to this day although its safeguard commitments still pertain.

    Notwithstanding their behaviour, diplomatic efforts were continued to try to engage the DPRK. These efforts were led by the United States. After 17 months, the DPRK and the United States concluded an agreed framework in 1994. The major provision of this agreed framework was a freeze on the DPRK's existing nuclear program in return for economic assistance, including the construction of two proliferation-resistant light-water reactors and the provision of fuel oil pending the completion of these reactors. The IAEA was to monitor this freeze, and other elements included DPRK's compliance with the safeguards agreement and the eventual normalization of the U.S.-DPRK relationship.

    The U.S. was also offering to the DPRK assistance in safely storing fuel rods that had been removed from one of its reactors. Indeed, these fuel rods had enough spent fuel within them to have plutonium that some have estimated could have resulted in the production of up to five nuclear weapons.

    A new organization was established, what has become known as KEDO, the Korean Peninsula Economic Development Organization. It was established to implement the economic aspects of the agreed framework. Canada is a charter member of KEDO and has contributed $6 million to date to help with the delivery of fuel oil. Other members of KEDO include the United States, the Republic of Korea, Japan, New Zealand, and Australia.

    Let me now fast-forward 10 years into the future, to the current time. For the past decade the IAEA has remained unable to verify the completeness and correctness of the DPRK's compliance with its safeguard agreement. The IAEA has reported annually to the Security Council on the situation. Certain milestones in the construction schedule for two light-water reactors under the 1994 agreed framework are absolutely dependent on the IAEA's ability to certify the DPRK's compliance.

À  (1015)  

    Without certification, major components of reactors simply cannot be delivered. In October 2002, following a visit to Pyongyang by a senior U.S. official, the U.S. indicated that the DPRK had admitted that it was engaged in a previously unreported uranium enrichment program for weapons purposes. The DPRK subsequently, in formal declarations by its foreign affairs ministry, asserted its self-proclaimed sovereign right to possess nuclear weapons and other weapons of mass destruction.

    As a result, the KEDO executive board, which is the U.S., Japan, EU, and the Republic of Korea, decided in November of 2002 to suspend future oil shipments to the DPRK although they proceeded with the one oil shipment that was en route at the time. The IAEA board of governors adopted a resolution later that month calling on the DPRK to comply with its safeguards obligations and report this new nuclear activity.

    I should note in this regard the important role that Canada has been playing within the IAEA with regard to the core group of countries that are working on the DPRK issue. Canada was the lead in negotiating many of the resolutions that the IAEA has produced.

    The DPRK rejected the November IAEA resolution, as they have rejected much of the outreach from the IAEA. In December the DPRK removed IAEA surveillance equipment from its facilities in Yongbyon and ultimately expelled the agency's resident inspectors. Following a further resolution by the IAEA on January 6, 2003, condemning the DPRK's actions and again requesting it to come into compliance, Pyongyang again rejected the resolution and announced its withdrawal from the NPT on January 10. It stated that it considered its withdrawal immediate and unconditional in light of the last-minute suspension of its previous withdrawal in 1993.

    If you recall way back in my statement, they withdrew with one day to go on the three-month period. So they considered their withdrawal to be immediate. Canada and the rest of the international community do not accept this interpretation of their withdrawal provisions.

    There has been universal condemnation of the DPRK's actions. Their behaviour undermines the integrity of the NPT and the international nuclear non-proliferation regime. This is a regime that is a common security framework for countries around the world. It's been adhered to by 188 countries. It has established the norm against nuclear non-proliferation. It is extremely important to Canada and its friends and partners around the world.

    That's why Canada joined other nations in calling on the DPRK to reverse its withdrawal decision and to come into full compliance with its NPT and safeguards obligations. As I said, we do not recognize the DPRK's withdrawal as being immediate and irreversible. On the contrary, it is utterly reversible.

    The DPRK has rebuffed numerous diplomatic efforts by a number of countries. The South Koreans, the Chinese, the Russians, a great many, have been trying to engage it in dialogue to resolve the crisis. However, the DPRK has demanded direct bilateral negotiations with the United States for the provision of security guarantees, the conclusion of a non-aggression pact, and the supply of economic assistance and humanitarian aid.

    Recent statements by the U.S. administration, notably Secretary of State Powell, have indicated a willingness on the part of the United States to engage the DPRK but through an appropriate multilateral mechanism and only if the DPRK renounces its nuclear weapons efforts and makes this sort of effort verifiable, transparent, and irreversible.

    In the interim, there are indications unfortunately that the DPRK has restarted the research reactor it has and that it may be preparing to reactivate its reprocessing facility, which could separate plutonium for nuclear weapons purposes. We're obviously unable to verify this in the absence of any international verification means. But the IAEA, as I mentioned at the outset, adopted a further resolution on February 12 expressing its concern about this situation. The matter is now to be reported to the Security Council, an action that is consistent with the IAEA statutory obligations and one that Canada fully supports.

    Mr. Chairman, we're very concerned by DPRK's actions. We're a strong supporter of the nuclear non-proliferation regime. We have considerable economic and trade interests in the region, which are at stake given the instability created by DPRK's behaviour. Clearly, open conflict on the peninsula would be unthinkable in terms of the casualties and the impact on North Korea's neighbours.

    The DPRK has been very skilful in identifying, creating, and exploiting divisions between those it confronts. It's essential therefore that those of us who are trying to address this issue maintain a very common international front and common messaging. We really need solidarity in the way in which we approach the DPRK.

À  (1020)  

    There's an obvious pattern of DPRK non-compliance with any undertaking in which it becomes engaged. In fact, Mr. El Baradei, whose name is now known to people in other contexts, said that DPRK is in chronic non-compliance and complete defiance of its obligations internationally.

    International stability and security are built upon the adherence of the world community of nations to established international norms of behaviour. Adherence to such norms creates an environment of predictability that's necessary to foster confidence-building and cooperation.

    The DPRK unfortunately has chosen to follow a deliberate policy of unpredictability and non-compliance with these international norms. This is all the more surprising given the fact that they actually signed these treaties of their own sovereign state's volition. This was their own decision that they took politically.

    The behaviour of the DPRK could not but have a negative impact on the stability and security of not only the DPRK's immediate neighbours but also the DPRK itself. In this regard, the DPRK's actions undermine the very security it claims to be seeking.

    In conclusion, Mr. Chairman, the Canadian government continues to support multilateral efforts, playing an active role in the IAEA, and working with key regional states. We have communicated, and will continue to communicate, our grave concerns directly to the DPRK. As David has said, this has been done on several occasions--privately through the contacts that we have in New York; in Beijing, through the letter that our minister wrote to his counterpart; and also through more public diplomacy by way of press releases expressing our distress with regard to DPRK's behaviour.

    We've emphasized again, as David said, that it cannot be business as usual with Canada, or indeed with the international community, until this issue is satisfactorily addressed.

    Thank you very much.

À  (1025)  

[Translation]

    The Chair: Thank you, Ms. Sinclair.

    We will now move on to Mr. Jean-Marc Métivier, Vice-President of Multilateral Programs Branch.

    Mr. Métivier, please.

    Mr. Jean-Marc Métivier (Vice-President, Multilateral Programmes Branch, Canadian International Development Agency): Thank you, Mr. Chairman.

    From a humanitarian perspective, the situation in The Democratic People's Republic of Korea...

[English]

    Hon. Art Eggleton (York Centre, Lib.): Mr. Chair, wouldn't it be better to ask questions about the political aspect of things before we get into the relief and humanitarian?

    The Chair: Mr. Eggleton, we have another five minutes to go. After that, we'll go to 11:15; we're not stopping at 11 o'clock.

    Mr. Art Eggleton: So they have only five minutes.

    The Chair: Yes. The text is five minutes.

    Monsieur Métivier.

[Translation]

    Mr. Jean-Marc Métivier: From a humanitarian perspective, the situation in the DPRK is particularly troublesome. Over the past seven years, economic collapse, drought, floods and crumbling infrastructure have contributed to prolonged food shortages. The DPRK's carefully controlled engagement with the outside world, which began in the mid-1990s, has suffered serious setbacks in recent months as a result of rising tensions on the issue of its nuclear program.

    The DPRK ranks as one of the 10 countries most affected by hunger in the world. The World Food Program estimates that over 7.9 million people in the country are currently in need of food assistance. However, shortfalls in donor contributions to the World Food Program's operations in the DPRK over the past few months have led to serious reductions in food distribution to the country's most vulnerable people. Without the resources traditionally provided by donors, the humanitarian situation in the DPRK will further deteriorate.

[English]

    Canada does not provide bilateral development assistance to DPRK. However, in response to the humanitarian needs, Canada, through CIDA, has provided over $43 million in food assistance since fiscal year 1997-98. The majority of this assistance has been through two channels--namely, $22.3 million in food provided through the United Nations World Food Program, and $20.7 million in matching funds for the food through the Canadian Foodgrains Bank.

    The Canadian Foodgrains Bank also provided an additional $8.4 million in food aid as well as small amounts of agricultural inputs.

    Included in these figures is CIDA's contribution of $6.8 million for this fiscal year 2002-03. This is an increase from our contribution of $5.6 million provided in fiscal year 2001-02. Our 2002 contribution ranked Canada as the fifth-largest donor to the World Food Program for the DPRK.

    The bulk of CIDA's contribution to the DPRK through the World Food Program has been Canadian canned fish, while the Canadian Foodgrains Bank has also provided grains and lentils. Last year some CIDA funds were also used to purchase vitamins and minerals for the fortification of wheat and maize flour.

    In addition, Canada has provided other types of humanitarian assistance to the DPRK, such as life-saving vitamin A capsules for children through UNICEF. In 2002 we also provided $400,000 to the Canadian Red Cross and the International Federation of Red Cross and Red Crescent Societies to support health care, disaster preparedness, and organization development of the North Korean Red Cross.

[Translation]

    Mr. Chairman, the principles of humanity, impartiality, equity, accountability and transparency underpin CIDA's Humanitarian Assistance Program. The international community's ability to plan, implement and monitor its humanitarian assistance effectively faces several challenges in the DPRK. CIDA shares concerns, voiced by the World Food Program and others, about the following basic systems and conditions needed for the effective delivery of humanitarian assistance in the DPRK: accurate lists of institutions and beneficiaries; increased access to populations in need; ongoing nutrition surveys; and improved monitoring of humanitarian operations.

    As the number of food monitors in the country is linked to food aid disbursements, recent shortfalls in donor contributions have led the government of the DPRK to put pressure on the World Food Program to reduce the number of international monitors. Fewer monitors will certainly have a negative impact on the World Food Program's capacity to effectively monitor the distribution of its food.

À  (1030)  

[English]

    On a positive note, some progress has been made since 1995, when the World Food Program first provided food assistance to the DPRK. From no access to the country at all, the World Food Program is now able to access and monitor operations in 163 of 206 counties and has opened four sub-offices in remote areas.

    Food aid provided by the Canadian Foodgrains Bank is monitored by a consortium of seven NGOs through the Food Aid Liaison Unit, using field visits and meetings with representatives at all levels of the DPRK administration. Donors and humanitarian agencies should use these contacts with DPRK officials to advocate for greater access and transparency.

    Regardless of political events, we must not lose sight of the plight of the people who are suffering under the current regime. Despite encouraging increases in crop production levels this year, it is clear that there will be continuing need for humanitarian assistance in DPRK. Significant structural changes are needed to address the situation of chronic food shortages. These changes include improvement in governance and economic reform.

    Thank you, Mr. Chairman. Mr. Loevinsohn will not make a statement but will assist in answering questions.

[Translation]

    The Chair: Thank you very much, Mr. Métivier. We will now move on to questions.

    Mr. Day, please.

[English]

    There will be five-minute rounds.

    Mr. Stockwell Day: Thank you, Mr. Chairman, and to each one of you for some very effective reporting. There's no question that if we think Iraq is presenting some difficulties and challenges, North Korea is huge.

    We've already had some comments related to nuclear capabilities. We know that on February 5, of course, North Korea announced that it reactivated the Yongbyon reactor. There has already been, as you've mentioned, their 8,000 fuel rods and the possibility that within a few months they can be making bomb-usable plutonium.

    Our information is, should it come to some kind of military action, that despite the fact that North Korea has their MiG-29 fighters and the SA-2 and SA-5 artillery anti-aircraft capabilities, the nuclear facilities in fact are highly vulnerable to attack by cruise missiles. The downside of that, as some of you have already intimated, is the retaliation.

    Again, there are intelligence reports indicating some North Korean capabilities: 500 170-mm Koksan guns; 200 multiple-launch rocket systems that could hit Seoul with artillery and chemical weapons; between 500 and 600 Scud missiles that could hit anywhere in South Korea. We know they have at least 100 No-dong missiles that could hit Japan, 70% of their armed units are within 100 miles of the DMZ, and estimates are that those units could fire up to 500,000 artillery rounds per hour for several hours. U.S. military estimates of their retaliation would be between 300,000 and 500,000 casualties on the U.S. and South Korean side. This stuff is not exactly motivating; it's hugely a problem.

    So we have to ask ourselves, what are the tools that we would have in our arsenal, other than military?

    This brings me to the aid question, and it's a very tough question. We do know that as long as dictators like this--and there are only a few left in the world of this nature, so I'll use the word “evil”--

    Ms. Alexa McDonough: Mr. Chair, on a point of order, it seems to me, out of respect for our witnesses, it would be good if we could hear from them rather than have a long dissertation on what a particular committee member knows or believes about--

    The Chair: Ms. McDonough, he has five minutes. He has already used two and a half minutes. If he goes four and a half minutes, there will be a 30-second answer. It's his privilege.

    Go ahead, Mr. Day.

    Mr. Stockwell Day: And I hope that unnecessary interruption will not detract from this very serious problem. This is no time for political partisanship and silly interjections.

    One commentator described the nature of the North Korean regime as being--and I quote--“beyond evil”, saying that it exists in a parallel moral universe, and that we can be secure only when it finds itself on the ash heap of history, where it belongs. And that's talking about the regime, not the people.

    I'm concerned about the people. Is there any other way of tying some kind of intervention to the humanitarian aid? Without the aid, hundreds of thousands are dying right now. Without the aid, more will die. With the aid, this dictator continues to be able to exist and stave off a revolution from within.

    Is there a way to get communication in with the aid--pamphlets, brochures? Think of Radio Free Europe and the capabilities it had. Is there anything at all? I can't think of what we can do on the military side, but on the aid side, is there any way of getting some kind of tipping of the balance into North Korea itself on these issues?

À  (1035)  

    The Chair: Mr. Mulroney.

    Mr. David Mulroney: You've posed the real challenge. As Jean-Marc made clear, one of the challenges we have is the effective distribution of aid. One small note of progress has been some willingness to see greater monitoring and greater activity at the county level, so we're able to reach out and ensure, first of all, that the aid is going to the people who need it most.

    The other thing we had in view, in terms of our own establishment of diplomatic relations, was to begin to negotiate with the North Koreans some ability to reach out beyond the government to actually get to the people, to get to the very beginning elements of civil society in North Korea, and these are in their infancy. We had proposed some ways. We had even looked at the possibility of having what's called a “Canada fund”, where there's some modest amount of money available to reach out and do local projects with local partners. To date, we haven't made any progress on that.

    Underlying our whole engagement with North Korea is this idea of reaching out and getting to North Korean--(a) to deliver the aid, and (b), to draw them into the community.

    Jean-Marc.

    Mr. Jean-Marc Métivier: I don't want to repeat what Mr. Mulroney just said, but it very much reflects the situation. I believe humanitarian assistance has contributed quite a bit in opening up the country through the monitoring system we have required. We have had to push all the time to expand that network, and it has not been easy.

    But going beyond that into the areas you mentioned, as Mr. Mulroney said, would involve some form of much broader opening up of the aid program with North Korea.

    We see conflict situations and civil war situations all over the place, in countries that are not really able to reform, and our experience is that the aid mechanism, beyond reaching the immediate humanitarian needs of the people, is not very effective, apart from trying to give and develop some networks with the civil population.

[Translation]

    The Chair: Thank you.

    Ms. Lalonde, please.

    Ms. Francine Lalonde (Mercier, BQ): Thank you for coming. I look forward to getting similar information on Iraq, especially the humanitarian plan.

    I have in front of me an article that I found this morning on the Internet, where government representatives, from the Department of Foreign Affairs, say

[English]

that, if provoked, the North could strike U.S. military command anywhere.

They said that the Security Council must discuss the United States' responsibility for the current dispute over Pyongyang's nuclear weapons.

[Translation]

    It is clear that they want to reach an agreement with the United States. Madeleine Albright said she does not see why the United States did not reinstitute the non-aggression agreement that had been negotiated over the course of a few months.

    I feel very uncomfortable with this situation and I think the entire population—not just Canada's— shares that view.

    On the one hand, everyone is focused on Iraq, which is supposed to represent the greatest threat, but there isn't any proof whatsoever to that effect. On the other hand, North Korea, who was priding itself this morning on being able to hit the American forces regardless of where they were, is ready to go to war and attacks the United States at the Security Council.

    A Japanese professor—this was a Japanese article—said that in any case, they do not even need to do that, because they are so skilled in terrorism. They have often used those means, especially against South Korea.

    I would therefore like to know what Canada's strategy is. In my view, the arguments promoting a war in Iraq are weak. I think we should review our position. The fact that, on the one hand, everyone is being extremely polite toward North Korea—it is not that I am such an advocate of war—and that, on the other hand, we continue to prepare for war against Iraq, as if we were dealing with a huge threat, shows that something is not quite right.

    Of course, once again, the Americans are at the heart of it all. Rumsfeld, from a tactical viewpoint, is, as usual, strategically astute, and says that war can be fought in two places at the same time.

    In summary, I would like to know what your strategy is. Of course, we could settle for issuing press releases, but do you not agree with me that there is an inconsistency in the way we deal with those two countries?

À  (1040)  

    Mr. David Mulroney: Ms. Sinclair can start; I can add something afterwards.

    Ms. Jill Sinclair: Thank you, Ms. Lalonde.

    I will try to answer your question.

[English]

    First of all, I wouldn't want to give the impression that we don't focus on DPRK. I must say, we spend a lot of time on this issue, on the proliferation issue, and not just now but for a long, long time. We've monitored it closely.

    The concerns we have with DPRK's proliferation behaviour have been expressed to them personally. I've had the opportunity to do it personally with them when they came to Ottawa. Our minister has done it.

    So in terms of the lack of balance and attention, I would just like to assure you that we are monitoring and doing everything possible with regard to DPRK.

    To address your reference to the United States, I would simply say that I don't know that anybody has the solution on how to deal with DPRK. And this relates a little bit to the last question, how do you engage someone if they don't want to be engaged?

    At the International Atomic Energy Agency, Mr. El Baradei, who you know in another context, over decades consistently tried to engage, to have dialogue with the DPRK, with no pickup at the other end. This is one of the essential challenges, I think.

    With regard to the United States itself, Mr. Powell at Congress last week said, “Look, we're pushing a diplomatic route on this. We want to work within a multilateral framework through the IAEA.” In a joint declaration between the U.S., the Republic of Korea, and Japan on January 7, he indicated flexibility.

    But our concerns are all shared with regard to the proliferation behaviour of North Korea. No one wants to negotiate with them when they are making conditions for closing down facilities and programs that are designed to produce nuclear weapons.

    So of course we're trying to engage politically and diplomatically through the IAEA in particular, which is the right route to take, but there has to be some pickup on the other end as well.

[Translation]

    Ms. Francine Lalonde: I am not asking you to tell me whether you have spent a lot of time together, I want to know whether there is a difference in the way we are dealing with Iraq and the way we are dealing with Korea.

    The Chair: Ms. Sinclair or Mr. Mulroney can answer, but very quickly.

    Mr. David Mulroney: With regard to our strategy, I would like to say that we have been in direct contact with Pyongyang as well as with officials in Peking and New York. Moreover, we are coordinating our strategy with that of more engaged countries such as South Korea, the United States, China and Japan.

    In my view, the greatest challenge right now is at the multilateral systems level. We are trying to do what Jill described. We are involved in many areas, but it remains a major challenge.

[English]

    The Chair: Merci.

    We're going to Mr. Eggleton.

    Mr. Art Eggleton: I thank the presenters for their very thorough submission. I must say, you make a very compelling case to be concerned about what's happening in North Korea, in terms of nuclear and other weapons of mass destruction. In fact, I think the case there is more compelling than it is against Iraq, yet all the war rhetoric is about Iraq. Here we're talking about--according to the United States--the diplomatic route. It's too bad they couldn't use the same language with respect to Iraq, where at least they can talk to the dictator. Here they can't even seem to get in the door.

    However, let me ask my three questions. North Korea has twice threatened war very openly. Even Saddam hasn't said that. Now, let me understand what would trigger a war. The IAEA, the International Atomic Energy Agency, has now submitted this to the Security Council. If the Security Council passes a certain resolution, will North Korea consider that to be a declaration or something that precipitates war? What would trigger the action of this threat? That's the real question I'm asking.

    As well, what does it mean? Does it mean they're going to go below the DMZ and attack South Korea, or do you think it could be wider than that? There's the suggestion that they have a missile that could reach the western part of the United States or Canada. Is that part of what you think they're talking about?

    My second question has to do with our relationship with China. China was there during the Korean War. They sent soldiers over there. The Russians are in a different sphere now, but I've always imagined the Chinese to be closest to the North Koreans, if anybody could be close.

    What is the nature of that relationship? How has it evolved since the Korean War? What is the nature of that relationship today, in the ability of China to have influence over North Korea, to be part of finding the solution here?

    My third question gets into humanitarian assistance. You've outlined here what you do. It's very impressive what you do, what Canada does in this context for these poor starving people. But you've indicated there are some problems. It strikes me that the biggest problem is the one you don't mention here, and that is if there's war, what do you do then? How do you get humanitarian aid to those people if there's a war on?

À  (1045)  

    The Chair: Ms. Sinclair is first.

    Ms. Jill Sinclair: Merci, monsieur le président.

    Your questions, Mr. Eggleton, ask us to get into the psychology of what I would term a kind of psychotic regime. It's hard to know what would trigger war in the minds of the North Koreans. On a more positive side, they issue a lot of rhetoric. Their statements are completely outlandish, and one can only hope that they get a lot of this off their chests. Now, clearly they have the wherewithal, as we've heard, to launch an attack if they would like to, but I'm not sure what would trigger one.

    In terms of the UN Security Council, the North Koreans have said that if the Security Council were to pass sanctions on them they would see that as a trigger for war. First of all, the Security Council is not going to be passing a resolution on North Korea. They will consider the work the IAEA has done. It has been referred to the Security Council for them to discuss the issue, but we don't expect they'll pass a resolution. It will go back to the IAEA, which is the appropriate forum for this to be dealt with. So I hope the ante will not be upped multilaterally for awhile.

    You also asked what would be their war strategy. You outlined--and I think we heard from others--what they have close to the border. I can't speculate on their war strategy; all I can say is that we're all going to engage diplomatically and forcefully to keep them at the negotiating table and not pay attention to their rhetoric, in the sense that we don't want to assume we're on a track to war with North Korea. On the contrary, every window of opportunity is being opened for dialogue with them.

    The Chair: What's the situation in relation to China, Mr. Mulroney?

    Mr. David Mulroney: This question comes up a lot. The good news about the current crises is that instead of being just a discussion between the U.S. and South Korea and North Korea, other players are involved and they're playing a constructive role, China included. And we might not have envisaged that 10 or 15 years ago.

    China does have an influence over North Korea, and it goes back to their alliance in the Korean War. But a lot of things have changed. First, one of the fundamental things about North Korea is its own philosophy, which they call juche, self-reliance. It's a fanatical desire to depend on no one other than themselves. So there's always a bit of a psychological barrier between the north and outside.

    North Korea has also been extremely concerned as they've seen China develop, as they've seen China open, and particularly as they've seen China establish relations with South Korea. This may have been one of the things that encouraged the North Koreans to reach out to the wider world.

    What does China want? The first big issue for China is the fact that there are lots of economic migrants in China who have come over the border from North Korea. As the economic situation has worsened in northeast China, there are tens of thousands, possibly more, North Koreans. So China, very pragmatically, is concerned about the possibility of an internal breakdown in North Korea leading to a flood of migrants over the border.

    China also does not want a nuclear-armed North Korea. First, North Korea is an unpredictable state. Second, China's political analysis of North Korea--and I stress this is China's political analysis--is that if North Korea goes nuclear and has delivery capability, other states, like South Korea and Japan, would be encouraged to do likewise for their own security. And that's a very real concern.

    So China is trying to play a cautious role. I had a chance to talk to their top North Korea people in Beijing in December. We talked with some other Chinese officials in January. But I don't think they have a handle on it either. They would like it to be resolved as quickly as possible, obviously without armed interaction. They're nudging the North Koreans in the right direction, but they don't have all the answers.

À  (1050)  

[Translation]

    The Chair: Mr. Métivier, you can speak about humanitarian aid, but quickly, please.

[English]

    Mr. Jean-Marc Métivier: The war scenario is frightening in terms of humanitarian assistance. As we have described, right now what we have is a very far-reaching food distribution program throughout the country, but it is done in collaboration with the government. In case of war, this would stop. There would be no more food aid shipments going in.

    In that case, what is the last resort? It's basically the Red Cross Societies and the International Committee of the Red Cross, the multilateral mechanisms we have in case of war. But definitely from a humanitarian perspective, this would be a disaster.

[Translation]

    The Chair: Thank you.

    Ms. McDonough.

[English]

    Ms. Alexa McDonough: Thank you very much, Mr. Chairman.

    I have three questions. And thank you very much for a crash course in a desperately frightening and dangerous situation that I think the whole world is looking on with horror. We would be well advised to try to figure out what's going on and what Canada in conjunction with others can be doing.

    You referred to the shortfalls in donor contributions several times in the presentation. Yet Canada, in the last year, as you pointed out, has increased its overseas development assistance to Korea. I wonder if you can talk a little bit more about what that represents. Are we talking about countries that have pulled back because of the pattern of systematic violations and so on?

    Secondly, in these desperate situations one always looks for whatever glimmers of hope there might be and for opportunities to try to work to build civil society, to reinforce any tiny progressive signs. I'm just wondering if you could elaborate a little bit on the progress the World Food Program has made in improving monitoring, reporting, and so on in the vast majority of the 206 counties. Does this represent any kind of emerging progressive political force? Is there more opportunity to reinforce this? Or if this takes on any kind of momentum, is it a question of just a brutal dictatorship that's likely to crack down and quash any of these progressive tendencies?

    Mr. Ernest Loevinsohn (Director General, Food Aid Centre, Canadian International Development Agency): With respect to the first question, about which countries have pulled back aid, a big factor has been Japan. It has dramatically reduced its support to the World Food Program for North Korea. Given Japan's size as an aid donor, it's had a huge impact, as you can imagine.

    With regard to the progress WFP has made in monitoring, it all depends what your baseline is. If your baseline is the initial situation before aid started, then they are in many more countries. If you look since then, over the course of the aid program, progress has been either uneven or two steps forward, two steps back. I think it would be difficult to say that there's been overall progress over the past two years.

    Certainly you cannot do a surprise visit--a sort of random check--on a food distribution site. It's all very tightly monitored. For example, when we have people from our unit go over there, they're escorted everywhere they go. They have a minder. They can't leave their hotel rooms without somebody walking with them. So the idea that we have some sort of ability to spot check is, let's say, a little optimistic.

À  (1055)  

    The Chair: Ms. McDonough, you have another 30 seconds.

    Ms. Alexa McDonough: By way of follow-up, leaping from the issue of monitoring food distribution to weapons inspections, to state the obvious, it is very, very discouraging to try to imagine how any successful kind of regime of weapons inspections could be mounted. Can you elaborate further on that?

    The Chair: Monsieur Métivier.

    Mr. Jean-Marc Métivier: Just as a quick comment on your earlier question, I think it would be very optimistic to qualify what has been successfully done, in terms of monitoring by the World Food Program, as the beginning of the building up of civil society. We're not there yet.

    Ms. Alexa McDonough: It's more a sign of the desperation for food than any kind of cooperative....

    The Chair: Merci, Ms. McDonough.

    Mr. Harvard.

    Mr. John Harvard: Thank you, Mr. Chairman.

    Thank you for your statements.

    I was just thinking that perhaps we'd all be better off if we all admitted, especially world leaders, that whatever we're doing vis-à-vis North Korea and Iraq, it's not working. When you think that the Gulf War ended 12 years ago, and here we are on the verge of another war... It's 50 years since the Korean armistice, and what do we have? We have a Korea with nuclear weapons and it's a menace. It's not working. Whatever we're doing as a world, it's not working.

    You mentioned, Mr. Mulroney, that North Koreans believe in self-reliance. Well, they're not doing a very good job. And I'm not an isolationist. Everything inside me resists isolationism. And I also believe in humanitarian aid.

    However, you say, Mr. Mulroney, in your statement that it would be counterproductive to ignore or isolate North Korea. I know that's how I feel, as well. But you also say that the policy of North Korea is based on regime survival, that their contact with the west is predicated on regime survival. In other words, one might say they're using us. They're using us for their own survival.

    Where does this leave us? They use us for their own survival and yet we continue this kind of contact, which doesn't get us anywhere at all, apparently.

    My question, then, is given the fact that the track record has not been very successful, do we--Canadians, the rest of the world--ever rethink our policies? Or do we just continue on and on with the same old same old?

    I know it sounds frustrating, and I'm frustrated, but I think that's where we're at.

    The Chair: Mr. Mulroney.

    Mr. David Mulroney: Thank you, Mr. Harvard.

    You're right, it's an incredibly difficult situation. When we're dealing with North Korea, we're dealing with the barest, vaguest signs of opening and possibility. Prior to the late nineties we had no diplomatic relations with North Korea, and they were more or less isolated. We responded to initial signs of opening, and those initial signs were probably based on, as I say, North Korea's desire to keep its regime intact. But at least it gave us the ability to begin talking to them, to begin to explore, and to begin to introduce some small inroads into their society.

    Has it brought about the change we sought? No, and in our dialogue with North Korea, it always has to be a mixture of.... First of all, you have to keep your expectations for North Korean cooperation low. You have to be prepared to speak frankly, which is what we're doing, and speak consistently. But at the end of the day it's even more dangerous to leave them to stew in their corner of northeast Asia and to leave them completely out of communications.

    Our opening in the late nineties was pretty pragmatic, and we repeatedly communicated to them that with each step they'd make, we might be able to offer another step in terms of cooperation, but we needed to see progress from them. We haven't seen that, so now what we've said to them is nothing is possible until they renounce their nuclear weapons program.

    It's probably one of the most difficult relationships to manage we have, but what we've tried to do is respond to even small openings to see if we can enlarge them.

Á  (1100)  

    The Chair: Now we'll go to Mr. Casey.

    Mr. Bill Casey: I heard someone indicate that the Koreans will deal directly with the United States bilaterally but that they won't deal multilaterally. Why is that?

    The Chair: Mr. Mulroney.

    Mr. David Mulroney: It's because they want to portray this as a DPRK-U.S.A. crisis, and all their rhetoric has focused on that. The problem is that what North Korea is doing is challenging not just the United States, but as Jill has said, the multilateral system we all depend on. So the Americans have said that their dialogue with North Korea would have to be in a multilateral context, and we're saying that too, that this is about more than a bilateral relationship. That's important for the defence of those institutions that mean a lot to us. But we also think that one of the North Korean strategies is always wedge-driving. They try to get a little bit of room between one country and another. So a consistent multilateral approach is really the way to go.

    Mr. Bill Casey: What tools does the IAEA have to work with? Do they have any tools?

    Ms. Jill Sinclair: Thanks, Mr. Casey. If I can, I'll just add a word in response to David's point too.

    The North Koreans seek the engagement of the United States above all else, so whatever the others are doing, whether it's the South Koreans reaching out or China or Russia, what they want is recognition by the United States for psychological as well as pragmatic reasons. I think we should keep that in mind.

    With regard to instruments of IAEA, indeed, they have a team of inspectors and they have the technical capability. When they were in Korea, they had 24/7 monitoring of the nuclear facilities the North Koreans allowed them to have monitoring on. So indeed, if the North Korean government decided that they would let the inspectors back in again, it would probably take a couple of years, but we would be able to determine the full range of what's going on in North Korea, reconcile the discrepancies in their declarations, and actually have an effective program that would let the North Koreans have their light-water reactors, have their safe energy source, and rejoin the international community.

    Mr. Bill Casey: Who does the IAEA answer to?

    Ms. Jill Sinclair: They answer to the member states, of which Canada is one.

    Mr. Bill Casey: What's the connection between that organization and the United Nations? Is there a direct connection?

    Ms. Jill Sinclair: They're an agency of the United Nations, but they're an independent body. They don't actually report to the UN on a daily basis, but they are able to refer issues to the Security Council when those are of sufficient magnitude.

    Mr. Bill Casey: Is Canada under any direct threat right now from North Korea?

    Ms. Jill Sinclair: Based on my ability to answer your question, the answer is no.

    Mr. Bill Casey: The other question is just out of curiosity. You had the food monitors. How many are there in Korea now?

    Mr. Ernest Loevinsohn: I don't have the exact figure. We'd have to get back to you, sir.

    The Chair: Thank you, Mr. Casey.

    We'll go to Mr. Martin.

    Mr. Keith Martin: Thank you all for being here today.

    If anything, this sorry saga really demonstrates an absolutely abysmal failure of our international mechanism to control the proliferation of fissionable material. It really does, and I hope that Canada can play a role in trying to tighten that situation up for the future.

    I like to divide things up into acute and chronic problems. Security threats, humanitarian threats, and long-term issues of governance and economics in North Korea are acute problems that have to be addressed. I would like to ask the question, why are we so obsessed about Iraq versus North Korea when you have a proven nuclear arsenal, an expressed threat--as Madame Lalonde told me yesterday, North Korea has explicitly said they can hit the west coast with ballistic missiles--and lastly, an unstable, paranoid leadership? This is a serious threat.

    What more can we do as Canadians? Do you think the multilateral approach would be better, or would the Chinese approach, when they said recently that a quiet diplomatic approach would be better in dealing with this relationship? Is that a better thing?

    Also, who's providing North Korea with WMD material, and are there any links between North Korea and terrorist organizations?

Á  (1105)  

    The Chair: That's a good question.

    Mr. Mulroney.

    Mr. David Mulroney: Perhaps I can start by saying that Canada takes both situations seriously, and a common denominator in both situations is the importance of having a multilateral inspection regime functioning. Certainly, in the case of the DPRK it's the only realistic option we have. In terms of Chinese offers to provide or to offer quiet diplomacy, that is helpful. As I said, that's a new element in the equation.

    But there are wider issues here. The ROK, South Korea, has considerable interests at stake, as does Japan. We just have to think back to the visit by Prime Minister Koizumi in the fall and some of the personal dynamic that underlies the Japan and North Korea relationship. Russia has historical links, and the wider international community is involved. We think the road to a solution lies in the multilateral path.

    An encouraging sign, I think, in the recent past has been the relatively successful trip of, as I mentioned in my opening remarks, special envoy Maurice Strong on behalf of the United Nations. The United Nations has had an uneasy relationship with North Korea because it was the United Nations forces who fought the Korean War. Mr. Strong did have good access. He did succeed in passing on some messages, and I know Minister Graham has been in touch with him on a regular basis. So that's another option that's out there for encouraging dialogue.

    Ms. Jill Sinclair: Thanks, Dr. Martin.

    On your question of fissionable material, I know you're aware of this, but just for the committee members, we have been trying to pursue a multilateral ban on the production of fissionable materials for some time in the Conference on Disarmament. Unfortunately, those negotiations aren't going anywhere, but we continue to press.

    The multilateral approaches are being complemented, I would say, by bilateral.... I wouldn't want to give the impression here that it's an either-or. These are supposed to be sort of mutually reinforcing efforts, and I think that while we're focusing on the IAEA, there's a lot of bilateral work that's going on that's very important.

    You asked who provides the DPRK with its material. Again, there are open sources if you want to look at some of the websites. Carnegie, Monterey, and other sources, as well as simple common sense, suggest that there has been some collaboration between the DPRK and Pakistan with regard to the nuclear program. That's one of the links.

    When it comes to some of the other weapons of mass destruction, North Korea has been able to develop its own indigenous capability, certainly on the missile front. They sell their missiles now because they've developed that capability.

    The Chair: Thank you.

    Go ahead, Mr. Martin.

    Mr. Keith Martin: In the long term, I think just exposure of civil society in North Korea to the international community is the only way we're going to be able to put in a wedge to try to break this barrier that exists around this isolationist country. That's the only way the people will be able to rise up and perhaps change that so we can deal with the governance and structural economic changes that must occur in the country if we are to deal with the humanitarian catastrophe.

    The Chair: Mr. Obhrai, you may have a very short question--without a preamble.

    Mr. Deepak Obhrai (Calgary East, Canadian Alliance): I have no preamble, just two very short questions.

    Is food aid the only Canadian presence in North Korea?

    Secondly, is there any kind of opposition worth mentioning within North Korea itself?

    The Chair: Thank you.

    Mr. Loevinsohn.

    Mr. Ernest Loevinsohn: The bulk of our aid has been food aid, but not all of it. As Jean-Marc mentioned in his statement, we're also doing some other non-food nutrition and support to the Red Cross--health care, disaster preparedness, that kind of thing.

    With regard to the second question, perhaps...

    The Chair: Mr. Mulroney.

    Mr. David Mulroney: There are also some NGOs who are active and looking at things beyond food aid.

    There is no opposition that we're aware of inside North Korea, and the system is designed so that there is absolutely no freedom of expression. There are pretty horrifying stories that come from prison camps, from the people who have escaped through China to the west. It's a society that has very rigid control from the top, and no means of expression of opposition that we are aware of.

    Mr. Deepak Obhrai: Thank you.

    The Chair: I want to thank our witnesses, who appeared on short notice this morning on this very important issue. It is very much appreciated.

    Also, colleagues, I will seek, through the clerk, to have Mr. Maurice Strong, the UN Secretary General's adviser on North Korea, appear before our committee to present his views regarding the North Korean crisis.

    We're going to recess now for five minutes.

Á  (1110)  

[Translation]

    Ms. Francine Lalonde: Have we scheduled a meeting with the representatives who could provide us with information on the humanitarian situation in Iraq, on this question?

    The Chair: We have asked Minister Whelan to appear before the committee and we are waiting for her answer.

    Ms. Francine Lalonde: It seems to me this is urgent.

    The Chair: That is why we did this this morning. We will now take a break.

[English]

    Thank you. We'll take five minutes.

Á  (1110)  

---

Á  (1127)  

    The Vice-Chair (Ms. Diane Marleau): I'd like to call the meeting to order.

    I'd like to welcome Mr. Mark Malloch Brown, who is the administrator of the United Nations Development Program. I'd like to say, Mr. Brown, that normally we give our presenters about ten minutes to make a presentation, and then we open it up to questions and answers.

    Mr. Mark Malloch Brown (Administrator, United Nations Development Programme): Thank you very much for inviting me here today.

    I hear that I come after a morning when you've already covered food aid, agriculture, and North Korea. I'm not quite sure what I can say that would retain your attention compared to those issues. But perhaps what I could do is applaud you as a committee for keeping going on the rest of the world.

    One of the things the Secretary General and I feel most at the moment is the difficulty of keeping a non-Iraq agenda in front of people. These are difficult times. If he and I totted up our time in recent weeks, and I could say the same for your distinguished fellow national Louise Fréchette, I think the three of us would say that we had spent a huge amount of time on Venezuela; a huge amount of time on the famine and agriculture crisis in Africa, which is growing in intensity and scale and is deeply complicated by the HIV/AIDS issue; and not inconsiderable time on other crises-cum-development-cum-humanitarian issues elsewhere in the world. Of course, it's not only hard at a public press level, but even in our own private deliberations, to keep all these balls in the air as the focus narrows ever more exclusively on to Iraq. So we applaud you on this.

    In terms of introducing UNDP and our current priorities to you, perhaps I could say to you that it is, of course, this link between the political side of the UN and the Secretary General and development that UNDP personifies.

    I am really the first-ever UNDP administrator who is very much the personal choice of a secretary general, chosen as an old colleague of his with whom he could work closely. All of my predecessors had been nominated by different American administrations, very much on the model of how a World Bank president is selected, but they had not been the hand-picked choice of a secretary general.

    We have at the top of the UN a group of us who share that similarity. We are very much a team assembled by a remarkable leader to try to support him in a vision he has, which links peace and development, and the fight against poverty is very much interrelated.

    The vehicle he has settled on framing the development part of this are the millennium development goals, eight terribly straightforward goals adopted at the Millennium Summit of the United Nations in 2000 but distilled from the international conferences of the nineties down to seven simple outcomes in terms of what development means if you are a poor person in today's world. These goals are: reducing poverty by half by 2015; getting every boy and girl into school; making sure that inequalities of educational access for girls at all levels are removed; reversing infectious diseases, the great scourges of HIV/AIDS, malaria, and TB, which are devastating communities in Africa and have a real possibility of doing the same in Asia and the Caribbean in coming years; and reversing environmental degradation as it touches on the lives of ordinary people, with the loss of the forests and the villages where they grew up and the absence of clean drinking water or affordable energy in their lives.

    All of these are a pocketbook agenda for the poor of the world. They're not fancy international targets selected by international officials based on some abstraction or other. They're the things that people in the south care about. They're every bit as much the pocketbook issues as in Canada there are issues of how much you pay in tax, whether or not you have a job, or what kind of education you think your kids are getting out of public schools. It's exactly the poor person's equivalent in the south.

Á  (1130)  

    I say this because in a sense there is always a little bit of a sort of development cynicism: “Oh, another UN set of goals”. This is something very different. These are goals poor people everywhere care about. We're offering them an astonishing new source of data and hence political power, because we're close now to being able to offer them every year how they are doing as a community. How are they doing versus other parts of their country? How are they doing compared to the country next door that has a similar economic profile but perhaps is doing a lot better in terms of education, poverty reduction, or providing health care? That suddenly relates a poor person's individual experience to a comparison that becomes the basis for political action. It really is extraordinary.

    I was at a town hall meeting in Kinshasa in the Democratic Republic of Congo some weeks ago. If you know the Congolese, they have been grumbling and complaining since 1960 about what a bad hand the world has played them; how the legacy of Belgium colonialism has made it impossible for them to enjoy and sustain the wealth they believe is properly theirs; and given their huge asset base, if just they got a decent break they'd be Europeans in terms of their per capita income. That runs through the head of every Congolese I know.

    So imagine the power in a town hall meeting, with a rather self-important minister sitting beside me, when I told them that according to our millennium development goal data, the per capita income of the Congolese had fallen to one-third that of their country bumpkin neighbours, the Ugandans and Rwandans.

    You have to imagine, you just don't understand it, the citizens of Kinshasa looking down their very long noses at people from Rwanda and Uganda. Those are small isolated little countries with no real assets except coffee, whereas Congo is resource-rich. It has Kinshasa, which is one of the best capitals in Africa in many ways. But $90 per capita income is what this war has done.

    They had to take that minister off the stage by the back door because people were so enraged at this sense of comparative performance. I didn't even get to the education numbers.

    I'd come from a country, Rwanda, where for all its problems and inter-ethnic tension, you have a president who leads an ethnic minority and knows that within the next year or so he will have to win an election based on his government's performance. He was absolutely focused on the fact that since 1997, when his government got its feet under the table in Kinshasa, the numbers on health access, education access, and poverty have all gone the right way. But what was on his mind was that since 1990, when the war began there, things had remained net worse off. So he was thinking all about how to show MDG improvement at the country level to his people before he faced the test of an election.

    We have managed to make development mainstream politics. I can't overstress the importance of this, because we're dealing with an environment where since 1980 the number of countries that are democratic has doubled. As we reported in our human development report last year, 70% of the world now lives in democracies, many of them very imperfect, with only a limited set of rights, maybe not much more than a vote every five years. But the trend and momentum are very clear. It's like Canada when the franchise was extended, or Britain.

Á  (1135)  

    We've created the institutions of democracy. Now we have to create the language, coalitions, and manifesto for democracy. These millennium development goals are beginning to have exactly the same impact in developing countries that we've seen for the social reform efforts in Britain I'm particularly familiar with.

    When you report that there's poverty in the inner city, you puncture the complacency of political elites and make them respond to public anger expressed at the ballot box. That's what this is creating. It's about creating these millennium goals, not a new kind of international set of unrealistic targets, but something real. But we have to support it.

    We have to support it with goal 8, which is all about what the developed world, the donor countries have to do. It doesn't limit itself to saying they just need to deal with development assistance levels--the famous elusive 0.7%. It takes on the other issues of trade and openness to agricultural exports and other goods from poor developing countries; of access of those countries to affordable generic drugs to treat issues such as HIV/AIDS.

    When you look across that agenda, there is so much still to be done. In a sense, for myself, Kofi Annan, Louise Fréchette, and many others, that's where we stand now as a UN system. We want to kick this issue of development out of the traces of just a little bit of technical assistance here or there, a little bit of a band-aid on completely unacceptable levels of global poverty. We want to create a global mobilization around achieving this.

    While the very tragedy of September 11 in many ways created the path that has taken us to the doorstep of war over Iraq, it also created the path of highly enhanced international cooperation and development assistance. The United States, the same country that is alarming so many people with its plans for Iraq, is the same administration that has made pledges to increase its development assistance by 80% by 2006.

    President George W. Bush will have done more for development assistance than any president since Truman. In the years of Bill Clinton, development assistance declined. So it's taken a right-wing Republican president responding to a totally transformed political situation to put in place this kind of growth. Whatever the rationales and reasons, we see this as a huge opportunity, a recognition by leadership in North America and Europe.

    We really applaud the commitment of Prime Minister Chrétien in proposing an 8% increase in Canadian ODA. We see it as part of a girding to action across not just Canadian politics but U.S. politics and European politics as well. We are all coming to recognize that as much as a war in Iraq, tackling disease and poverty at source is critical to managing a globalized world in the interests of all, and therefore in the stability and security for all. We cannot separate these issues any more in a world without borders.

    I was last here before September 11 and was struck, in trying to get here on time, by how different this building has become with the new security arrangements in place. Globally we face the same alternatives. We either create gated communities in the north with fortress economies, or if we are to continue to enjoy the extraordinary prosperity and wave of change that affects our lives in so many exciting and exhilarating ways and enjoy this phenomenon of global integration, we have to ensure we don't allow such poor neighbourhoods in the global economy that it jeopardizes safety and prosperity and the future of all of us.

    In that sense, HIV/AIDS is a form of public health terrorism in the way it feeds on the whole global community when we don't treat it at source. Immigration is also a force that comes back and hits us hard when we leave development and poverty untended at source.

Á  (1140)  

    It is not only terrorism that needs a strategy of both containment and addressing its root causes. These global issues have to be managed globally. In that sense, I think national government is going through a change, and when we look back at it we will be amazed we didn't see more clearly at the time. Parliamentarians everywhere are recognizing that your government's responsibilities to Canadian citizens do not stop at Canada's borders any more, that the health and prosperity of your citizens and their children depend as much on what you do abroad as what you do at home.

    Thank you very much.

    The Vice-Chair (Ms. Diane Marleau): Thank you very much.

    Now I will go to Mr. Obhrai.

    Mr. Deepak Obhrai: Thank you, Madam Chair.

    I've been wanting to talk to the United Nations Development Programme for a long time. I say that because I grew up in Africa, in Tanzania. I've seen the poverty. I very well understand what you've just described here about the Congo and Rwanda. I can understand the feeling.

    Interestingly, on my last visit to India, in one of the provinces where there were reports of famine, the elected official discussed the same issue you discussed of human index indicators. He mentioned education and everything.

    My feeling here is that you have this great goal for the millennium, but based on my experience in the past--and I'm sure it's going to change--the UNDP is actually detached from the local people. When we were there and saw the UN we kind of said “Well, okay, they're here only to feed us and that's it”. It was looked at as an elite organization and everything.

    Now that you have come up with these development goals, which I agree are excellent, what changes has your organization made and what roadblocks are you facing at UNDP to achieve these goals? Money is not the issue. Let's not go to that issue. You mentioned the Liberal government has said 8% and so has Mr. Bush. I want to know from you exactly what challenges you are facing, the roadblocks you are facing at the ground level to meet these development goals.

Á  (1145)  

    Mark Malloch Brown: I came to UNDP from a background that had exposed me to some of the same things that you describe, sir. I was born of a South African father. I had Africa running all through my blood, although I then grew up in England. But as soon as I could, I got back to Africa and spent time in probably some of those same towns in Tanzania that you grew up in and was very angry at what I saw as a UN riding around in four-wheel-drive vehicles and so on.

    I then came back to development via working for the High Commissioner for Refugees, getting totally frustrated by the UN at that time, and going off and running a consultancy to help developing countries in their politics, and worked for lots of politicians around the world who I thought were reformers, to help them get elected in developing countries.

    I then watched the international development system being hopelessly slow in responding to these reformers' need for support. By the time they got their act together, these guys had left office, often being thrown out of office because they'd failed to address the poverty of their citizens, because the international agencies said sorry, it's going to take a few years before we have a new program; or we have to do this, that, and the other before we'll even give you money.

    Just watching the detachment and the cynicism of the international development community shocked me. Coming into it and being lucky enough to come into it at the level I have, I feel a huge privilege of being able to reform it.

    I also found out, once I was on the other side, that actually the people in it were pretty impressive, incredible people who had come out of the same kind of experience you or I might have and decided to go and make their lives in development. But it was the institutions and the processes and the whole middle-age spread of a poorly run multilateralism that just confined them and imprisoned them and didn't allow them to be as effective as they could.

    So I took the bull by the horns and didn't accept this argument that you can't reform the UN. I saw myself as a sort of combination of Chairman Mao and a few other types rolled into one. I kicked 25% of the staff out of New York and into the field, and before I'm done, probably more are going to be going their way.

    We cut the overall size of the agency by a very significant number. We cut 20% of the field staff, as well, because they just didn't have the right skills for what I and my colleagues felt was what we needed to do.

    We brought in an extraordinary group of managers. We promoted young, able, dynamic individuals from inside and added to them really impressive outsiders.

    One of the things you may have heard about what we do is that we published this report a year ago on the Arab states, a human development report for the Arab region, saying the problem with this region is that it has no democracy, no rights for women, and turns its nose up at knowledge from the rest of the world. Did you know that the Arab world, as a whole, translates into Arabic one-fifth as many books a year as the Greeks translate into Greek? Well, you know, the Arab world is a huge community, and Greece is a very small country.

    The idea of a UNDP that would put a finger in the eye of those Arab governments and make these kinds of statements would have been inconceivable a few years ago.

    Mr. Deepak Obhrai: Agreed.

    Mr. Mark Malloch Brown: Even under me, it would have been inconceivable. I was damned scared that I was going to get into deep trouble, but who was doing it?

    The woman I had brought in as regional director for the Arab bureau was the highest-ranking woman in Arab politics, Rima Khalaf, a former Deputy Prime Minister of Jordan, who had fallen out with the elderly gentleman who was the Prime Minister. So King Abdullah has lent her to me for a few years before I'm sure she'll go back and be Prime Minister one day.

    It's these kinds of people who are in a tremendous hurry to change their regions. They just feel a huge incentive.

    You mentioned Tanzania. Let me close on this point. The young guy I have as our resident coordinator in Tanzania happens to be Canadian. He joined UNDP at a pretty early age. He was the youngest resident representative we had. He kept on threatening that he was going to leave; the place wasn't changing enough. Now he has one of our most important country programs, Tanzania. And I bet if you went back there, you wouldn't hear the same thing.

Á  (1150)  

    Having said that, on reform, you never get far enough. I think we've got back in connection with people.

    Last week there was this big global HIV announcement by President Bush. He asked me to the White House while he made it, and I found sitting beside me a wonderful Maryknoll priest, an American priest from Kenya who runs a very innovative HIV/AIDS program there. I turned to him and asked what he thought of UNDP in Kenya. He said exactly what you've said: he said they're out of touch; they don't relate to what we do.

    So I don't pretend for a moment we've got all the way there, but we have a fantastic group of people who believe luck has given us an extraordinary moment in time, that the world is changing because of the tragedy of September 11. We have a secretary general of a stature and world power that we've never seen since Dag Hammarskjöld, and we have an opportunity to change the world. These development goals can be a global manifesto for doing that. So you have a group of people who just can't believe their good luck.

    Mr. Deepak Obhrai: Thank you.

    The Vice-Chair (Ms. Diane Marleau): We love to listen to you, but we have some other people who want to ask questions, so we'll let them ask some questions and let you go on some more.

    Madame Lalonde.

[Translation]

    Ms. Francine Lalonde: Thank you very much, Mr. Malloch Brown. I had the pleasure of hearing you at the Council of Europe when you were at the World Bank, on the economic crisis. It was extremely interesting.

    The UNDP figures may indeed help developing countries. I am digressing here. I know that the 20 top countries are somewhat interchangeable, but those figures were prepared for developing countries. Are you not concerned that a renewed arms race could drain the money that would otherwise be used for all of the tasks you mentioned? Drinking water, forestry, food, aids, everything that requires money, and you see that Kofi Annan, with his AIDS fund, has not drained much money. My first question is therefore on the arms race.

    The second question is on the demand. There must be clear ways for owners of small farms, for example, to run a viable business. I saw what happened to the Nawal Kamel project, which petered out. Now we have the WTO that will be dealing with the question of providing means to developing countries to help the owners of small farms. I would like to hear your answers to those two questions.

[English]

    Mark Malloch Brown: Madame Chair, would you like to take a few more questions, and then...

    The Vice-Chair (Ms. Diane Marleau): What I thought we'd do, because we're enjoying you so much, is to allow the hours to extend a bit.

    I hope, with the committee, you would allow me to allow the others to ask their questions and ask Mr. Brown to answer everything afterwards.

[Translation]

    Ms. Francine Lalonde: I will read the “blues”. Thank you.

[English]

    The Vice-Chair (Ms. Diane Marleau): Okay.

    Mr. Calder, you want to ask something?

    Mr. Murray Calder: Thank you very much, Madame Chair.

    Actually, my question is going to fall right in along with Madame Lalonde's question, because as we take a look at the developing countries--and you've already said, Mr. Brown, that the UNDP is going to get much more active than it has been--we know right now that in the WTO, looking at world negotiations, subsidies are going to be a big problem. Subsidies are causing these developing countries, their base industry, agriculture, to be hampered in their ability to feed themselves.

    So I'm wondering, is the UNDP going to take a proactive approach towards the WTO, maybe to the point of coming out and criticizing some of these subsidy programs, and maybe making recommendations as to how to help these developing countries and about the damage that is being done?

Á  (1155)  

    The Vice-Chair (Ms. Diane Marleau): Ms. McDonough.

    Ms. Alexa McDonough: Thank you, Madam Chair.

    I know our guest has a very broad mandate, and of course that can result in a very wide-ranging series of questions, but I'm going to try to be fairly specific with two.

    It's very evident that the horrifying HIV/AIDS pandemic is a major challenge for the world and a tragedy for Africa, and potentially for the whole world, and there is a severe shortfall in the world's response to the Secretary General's appeal for funding to deal with this. I wonder if you could speak a little bit about that in terms of where we are. What is being done to try to harness the kinds of funds that are basic to deal with the lives of millions and millions of people?

    Second, I want to say I appreciate your candor in speaking about how the UNDP in various countries has been seen as somewhat out of touch and detached. In fact I think Mr. Obhrai used the term “elitist”. I've just come back from two and a half weeks in the Middle East, and there's nothing more dangerous than spending a few weeks somewhere and then thinking you understand what's going on, but I have to say--and I welcome the opportunity of saying this--that what I saw of the work of UNDP in the occupied territories was truly heroic, herculean work being conducted under terrifically difficult circumstances.

    One of the things I was totally unprepared for was the extent of the signals from many of the Israeli officials, both military and governmental, with whom we had contact of the notion that the UNDP is some kind of a hostile force. I was totally unprepared for that. It was clear that many things were happening. For instance, ambulances trying to take people to emergency health facilities were being blocked at illegal checkpoints, curfews were making it impossible for people to work, and on and on. And it seemed, given the massive challenge of UNDP workers to deal with the human tragedy in Palestine, that it just added to the burden and the difficulties that turn up in that work.

    I wonder if you might comment about that.

    The Vice-Chair (Ms. Diane Marleau): We have one last question for you from Mr. Martin.

    Mr. Keith Martin: Thank you, Madam Chairman.

    Thank you, Mr. Brown, for being here. I've wanted to meet you for a long time.

    When I used to work on the Mozambique border during that war, it struck me that a lot of the problems and the devastation we saw were entirely preventable. Goals are wonderful, but of course the effect on the ground is the most important thing. I would submit to you, sir, that corruption and the lack of good governance is the major obstacle to Africa being able to reap the rewards of that continent, which is an incredibly rich continent on one hand, but incredibly poor on the other. So what is the UNDP doing to deal with corruption and a lack of good governance?

    Second, no matter what wonderful work any of us do in development, and your organization in particular, conflict will devastate all of that for decades to come. I would submit to you that we're no further ahead today in preventing genocide than we were in 1939, despite all the wonderful and beautiful rules-based mechanisms we've constructed. So what is the UNDP doing, or the UN, in terms of developing what I'd like to see as a rules-based mechanism, a multilateral mechanism that deals with economic levers through the IMF and World Bank as a carrot and stick, right through to the possibility in the future of having a standing UN force that can go in there as a last resort to defuse the situation?

    Thank you.

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    The Vice-Chair (Ms. Diane Marleau): Now we'll allow you to try to give brilliant answers, as I know you will, to answer each one of them and in as brief a time as possible, because we're already past our time in this room and I don't know how long they'll let us stay here before they throw us out. So good luck.

    Mark Malloch Brown: I'm glad the building management still prevails in sovereignty terms over mere MPs. It happens everywhere.

    Perhaps I could take, particularly as Madame Lalonde has gone, very quickly the issue of armaments and agriculture in Africa.

    We're all working very hard to try to cut arms spending in Africa. The problem is there is a little bit of a chicken and egg issue. We have one or two very ugly wars we've still not resolved. If there's one area where the Secretary General's and my work go hand and hand it's this. He needs to strike a peace deal between warring factions. Then we have to push in hard with a disarmament and reintegration program to try to build the peace, build the confidence, where we can get military budgets cut and get people redeployed into peacetime activities and all the rest of it. We see that as a huge thing because conflict is so clearly, in Africa particularly, a cause of poverty and vice-versa. We have to break that link.

    So it's a combination of what we do with what the big lenders, IMF and World Bank, do. They're all trying to say they're not going to give money because it's all going to get redeployed into arms purchasing. You've seen a number of major confrontations between the lending institutions and governments in Africa over levels of military spending in recent years.

    Let me move to agriculture. Africa needs an agricultural strategy. It needs to address a couple of internal problems and then the big external one of trade.

    On the internal side, we're doing a lot of work, which shows that while everybody tends to throw up their hands sometimes and say it's all too complicated, there are a couple of key entry points in the case of Africa. One is that no region in the world has seen its soils so nutrient-depleted as Africa in recent decades. Too many people farming in ways that don't replenish the soil have depleted an already relatively poor soil. Add to it the economic factors, no existing infrastructure to move food products around Africa, let alone the rest of the conditions needed for good markets, and you have a crisis.

    We need to be serious about addressing that. There's too much of a tendency to say just get rid of the marketing price boards and African agriculture will take of itself. It's much more complex than that.

    To give you a sense of the scale of the crisis, WFP, the UN's food agency, plans to import food aid into Africa in 2003 equivalent to its total food aid for the world in 2002. This is because we have a famine in southern Africa, we have one in the Horn, and we have nasty smaller famines in west Africa as well, many of them reinforced and exacerbated by conflict, I should add. So we have to get a strategy to deal with this.

    But we also have to deal with the external markets dimensions. We look at these millennium development goals, the eighth of which is this donor support for development, as allowing us to create a focus on this issue of agricultural subsidies. It's easy to be a bit “sound bitish” on this, but when you have a situation where half the world lives on less than $2 a day yet where every cow in Europe enjoys a $2 a day subsidy from the common agricultural policy, there's something seriously amiss.

    I think we're going to see agricultural subsidies replacing land mines and debt relief as the next focus of international NGO and civil society campaigning. And I think it's a good thing too, frankly, although I know that's a somewhat controversial point. I think we have to push that, because a development vision that just tells developing countries to get the factors right in your own economies and doesn't address the disadvantages they enjoy within the global economy is never a total development vision or a sustainable one.

    On the issue of HIV/AIDS, some years ago the Secretary General said we're not funding at anything like the level that needs to be funded. We fought hard to create this global fund, which actually is not a UN fund, as the Americans and others didn't want the UN managing it. Nevertheless, for us the point is to mobilize the resources; we don't mind how it's managed.

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    In that way, President Bush's announcement the other week is good news. It's putting U.S. funding now at $15 billion over five years. This is a major number. That means $3 billion a year. If the other countries match that, we would be at something like $9 billion a year. That is the kind of level we estimate is needed to deal with HIV/AIDS. The problem is that he's given it in a highly bilateralized way, which may not encourage that matching funding from others.

    I think on the ground, the other critical point about the Bush announcement is that there is finally a focus on treatment, not just prevention. In Africa today, we have only 25,000 to 50,000 people being treated with anti-retrovirals, out of an infected population of 25 million to 30 million. You cannot do prevention without treatment. It is the critical carrot for prevention that people come up and be tested. No one who is involved in prevention says you can do it without a treatment component.

    So we're making huge progress from where we were several years ago, but we have not yet persuaded the world that this is a public health war every bit as devastating and serious as Iraq. Stephen Lewis, the Secretary General's representative for Africa on AIDS, is doing a wonderful advocacy job, but we've just pushed this further.

    On your point about the occupied territories, the UNDP has had a wonderful program in the occupied territories. We've been able to work for many donors, including Canada, to bring basic services to those populations, and basic institutions to try to help build a functioning Palestinian authority, and we've done so with relatively good cooperation with the Israelis.

    You know, I have made a point of bringing Israeli staff into the UNDP. I was shocked to find when we arrived that for no other reason than just the accident of these things, we didn't have any Israelis. If we were to be a global organization, we had to have Israeli staff. I've always made it a point to make sure we let the Israelis know what we're doing in the Palestinian territories, to stress to them our developmental, non-political character, and work on our relations with them. I think we've been pretty successful there.

    Actually, hostility is much more focused on the UN Refugee Agency. It is the one that really moves the ambulances around. In fact, when their ambulances were stopped, we had to send UNDP cars in instead to move people around because there was greater Israeli trust for us.

    But, you know, we're dealing with a situation where Israel is having fundamental doubts about our basic mission, and where this war has long since, unfortunately, skipped into being not just between combatants. Non-combatants on both sides are also targeted, and it inevitably raises real doubts in the minds of Israelis about what we're doing for civilian Palestinians. We just have to manage it. I don't think there's any easy solution to it.

    Finally, on Mozambique and corruption in Africa, 60% of our technical assistance in the world now is spent on governance, because we've come to understand that the institutions of government and their non-corrupt, honest operation is the fundamental software of development. You can build roads, bridges, and the rest, but if you don't have trusted, honest institutions and laws and good policy-making capacity, the rest goes for naught. So we've really focused on that.

    If I take Mozambique, I would say with some success that Mozambique is not the country you remember. It's a big success story about a remarkable woman finance minister, Louisa Diago, who keeps such a tight rein on those funds that even the president's sons have difficulty putting their fingers into them. It really is impressive, and it's all under the extraordinary leadership of President Chissano. So while there's a corruption trial going on at the moment there, and a trial of some people who killed a journalist who was investigating corruption, I would look at these as symptoms of the fact that we are cracking corruption in Mozambique, because there's a good government committed to the development of its country.

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    We are starting to get a track record of those successes in Africa. We just have to keep at it; it won't happen overnight. I could not confirm more my sharing of your view of what's so important in this, Mr. Martin.

    Thank you.

    The Vice-Chair (Ms. Diane Marleau): Thank you very much, Mr. Malloch Brown. It was most interesting to listen to you. We wish you well in your endeavours.

    That's it.