AGRI Committee Meeting

STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD

COMITÉ PERMANENT DE L'AGRICULTURE ET DE L'AGROALIMENTAIRE

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, February 19, 1998

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[English]

The Chairman (Mr. Joe McGuire (Egmont, Lib.)): Order. Today we'll be looking at the views of the industry on the MAI. Next Tuesday we'll be looking at the departmental views on MAI.

Welcome, Mr. Qualman, to the committee meeting. If you're ready to go, please proceed.

Mr. Darrin Qualman (Executive Secretary, National Farmers Union): Thank you, Mr. McGuire, committee members, for asking the National Farmers Union here today to present our views on the Multilateral Agreement on Investment, the MAI.

I'm the executive secretary of the National Farmers Union. I work out of our national office in Saskatoon and I farm just south of Saskatoon.

The Multilateral Agreement on Investment is the latest in a long series of trade and investment agreements: the Canada-U.S. trade agreement, the North American Free Trade Agreement, and the World Trade Organization agreement, otherwise known as the WTO or GATT. As a farmers' organization made up of farm families across Canada, we are interested in what these trade and investment agreements have done for farmers.

I was told this graph could be circulated to the members of the committee. Does everyone have a copy?

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The Chairman: Yes.

Mr. Darrin Qualman: Please refer to that graph. The graph shows agrifood exports from the years 1989 through 1997, as well as realized net farm income for the same period. Note that agrifood exports have doubled in the last eight years, rising from just under $10 billion annually in 1989 to over $20 billion annually today.

But now let's look at realized net farm income. Notice that while agrifood exports are up over 100%, net farm income is down 23% over the same period.

Farmers have not benefited from previous trade agreements. They have not benefited from the increases in agrifood exports to which these trade agreements might have contributed. The size of the Canadian agrifood industry continues to expand even as farmers' incomes fall. The pie is getting bigger, but the farmers' share of that pie, in both absolute and relative terms, is shrinking.

For farmers, the size of the agricultural economy is expanding but the distribution of revenues and profits within that economy is becoming increasingly less fair and equitable. Farmers have been forced to accept the vast majority of the risks in the food production chain, be they from weather, insects or commodity price fluctuations, but at the same time they have been largely excluded from participating in the profits.

Given the system in which they operate, with its large, powerful, and growing players, it is very hard for individual farmers to believe they will be better off without a strong government presence. But it's a strong government presence that the Multilateral Agreement on Investment and other trade and investment agreements are designed to curb.

I want to look now specifically at the MAI and orderly marketing institutions.

While recent trade and investment agreements have provided few, if any, benefits for farmers, such agreements have had several adverse effects. These agreements have embattled and endangered Canada's orderly marketing institutions, such as the Canadian milk marketing boards, the Canadian Wheat Board, the Canadian poultry and egg marketing boards, and the Ontario Wheat Producers' Marketing Board. These orderly marketing institutions give farmers power in a marketplace increasingly dominated by huge foreign agribusiness corporations. These institutions also help increase and stabilize farmers' incomes, and they provide safe, predictable supplies of vital staple foods to consumers at predictable, stable, and competitive prices. While there is little evidence that the trade and investment agreements increase farmers' incomes, there is much evidence that the orderly marketing institutions endangered by those agreements certainly do increase farmers' incomes.

The Multilateral Agreement on Investment will make it difficult to create or expand orderly marketing institutions. The MAI guarantees compensation to investors in the event of expropriation. It then goes on to define expropriation so broadly that an MAI trade dispute tribunal might rule that adding oats to the Canadian Wheat Board constitutes partial expropriation of the grain handling facilities of various grain companies. If the expropriation provisions of the MAI were thus interpreted, the government, or farmers, might have to pay compensation to all affected companies or face a lawsuit.

To be clear, if you sign the MAI, you as legislators will be giving up part of your rights to make laws. Whether you support orderly marketing or you do not, you should ask yourself if it's in the interests of Parliament and Canada to give away legislative powers.

I will turn now to land ownership law.

The MAI will make it difficult to maintain Canada's land ownership laws. It is a violation of the MAI to treat foreign investors less favourably than domestic ones. Thus it will be very hard to maintain and enforce current provincial laws restricting foreign ownership of agricultural lands. While governments may win a temporary exemption for Canadian land ownership laws, the roll-back provisions contained in the Multilateral Agreement on Investment will quickly erode and then eliminate any such exemptions.

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The MAI has several effects on agricultural credit and farm safety nets. The MAI would prevent any future government from creating an agricultural lending institution that worked for the benefit of farm families and that worked differently from the banks. If the government attempted to do so, the banks could claim unfair competition and demand compensation.

What we mean there is that if the government decided it was in the interests of Canada and farmers to give very low rates to beginning farmers or to take extraordinary measures to prevent farm foreclosures, and if they created a lending institution to undertake those goals, the chartered banks could claim unfair competition under the MAI and demand compensation.

The situation is similar, although not exactly the same, for farm safety nets. There is some evidence that safety net programs, such as crop insurance and the net income stabilization program, or NISA, are increasingly designed to conform to international trade and investment regulations and agreements and decreasingly designed to meet farmers' needs for greater security and assistance.

It is ironic that trade and investment agreements first limit and endanger those orderly marketing institutions that increase and stabilize farmers' incomes and then go on to attempt to limit the safety net programs designed to cope with decreased incomes and increased instability. For farmers, the MAI offers few benefits, if any, and brings with it many costs and dangers.

In conclusion, I want to turn to the effects of the MAI on the larger economy. Free trade and economic globalization proponents promise greater wealth through trade. The case for free trade rests upon David Ricardo's theory of comparative advantage. Ricardo's theory states that each country should produce those products it is best suited to produce and can produce most cheaply—those in which it has comparative advantage—and trade with other countries to acquire the balance. In this way, each country will have a greater sum of products than it could have produced itself, and all countries will be better off.

Ricardo states, however, that the positive effects of free trade in comparative advantage will be realized only if capital is prevented from crossing national boundaries. If capital movement is unrestricted—and the MAI is a treaty to remove restrictions from capital flow—the result will not be increased wealth due to comparative advantage, as Ricardo predicts, but a levelling down as wages and standards fall to that of the lowest country. Capital will move across borders to seek the highest returns and lowest costs and regulations.

We see this today as companies attempt to employ where labour is cheapest—China at $1 or $2 per day—or where environmental laws are the most lenient, and to pay taxes where rates are the lowest.

This isn't a restatement of the old argument that if you bring in these agreements everybody is going to go south. This is a statement that if you look at what the classical economists say about trade, they're quite clear that if you want the benefits of free trade you must restrict capital flows. If you don't restrict capital flows, you'll get a lot of trade, but you'll get everybody moving to the places where they can produce the cheapest, the laws are the most lenient, and the regulations are the lowest.

That comes from Adam Smith and David Ricardo, two of the most oft-quoted economists of the free trade movement.

Thus, the Multilateral Agreement on Investment, which gives us the free movement of capital, coupled with NAFTA and the WTO, which give us the free movement of goods and services, puts Canadian wages, environmental standards, tax rates, and health and safety standards into direct competition with those in China, Indonesia and Mexico.

Free trade in goods, plus free movement of capital, yields economic integration, which is something quite different from free trade. Economic integration is the end of economic borders. Once our goods and services markets are pooled and our labour pools merged, how can we maintain differentials in wages, health standards or environmental regulations? The multilateral agreement, in effect and in intent, will destroy those differentials.

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The economic experiment we're undertaking is unsupported by economic theory of any kind. It is not supported by the theories of left-wing economists, nor is it supported by the theories of right-wing economists. There is no body of theoretical work that predicts that the combination of free trade and goods, combined with the free movement of capital, will bring prosperity either to farmers or to Canadians in general.

In conclusion, the National Farmers Union recommends that the Canadian government not sign the Multilateral Agreement on Investment. We go into several more recommendations and reasons in our brief, and I urge the members to read that brief.

I would like to end by thanking the members of the committee and the chairperson for giving us this opportunity to appear.

The Chairman: Thank you, Mr. Qualman. Your brief couldn't be passed out, because it is not in both official languages. We have a rule that we won't pass out our briefs unless they are in both languages. Once that happens we'll send the brief to all members. Thank you for your presentation.

Mr. Friesen, are you going to speak for the federation?

Mr. Bob Friesen (First Vice-President, Canadian Federation of Agriculture): Yes, thank you very much, Mr. Chairman.

As you know, the three of us represent the Canadian Federation of Agriculture. I'm not going to go into a discussion of how many farmers we represent and how good a representation it is. Suffice it to say we feel comfortable that we do represent a large chunk of the farming community in Canada and we appreciate the opportunity to share our views on the MAI here this morning.

I probably also don't have to tell you that we are very keenly interested in any trade negotiations that happen, bilaterally, unilaterally, or multilaterally. We always have an interest when negotiations take place and when our government suggests negotiations should take place.

We also recognize the advantage of having clear and equitable trade rules. However, it is the CFA's trade policy that these fair and equitable trade rules should be negotiated at the WTO. Of course, we are also very interested to ensure these rules do not impede Canada's ability to maintain and establish programs and regulatory regimes that are so very important to our domestic interests. Again, our interests in the MAI deal exclusively with how the MAI could impact on agriculture.

Since the circulation of the draft MAI, a considerable amount of discussion has been focused on it and the possible implications and merits of this deal to Canadian agriculture. However, it is unfortunate and regrettable that it is taking place at such a late date, because Canada has already, through the NAFTA MAI, made a couple of basic commitments that it's currently using as its strategy to approach the MAI negotiations.

We're very clear that as we continue to study the NAFTA MAI and how it might relate to the current MAI negotiations we are less than comfortable that the implications might be severe to Canadian agriculture, in some cases. It's very clear also that during the NAFTA MAI, agriculture fell through the cracks. There wasn't sufficient consultation with the agriculture community. It wasn't explored through the SAGIT. We feel we're starting off behind the eight ball now, because to date we have not been able to get any assurance from the current negotiators that, first of all, the NAFTA MAI doesn't have implications for agriculture. We're also unsure what the implications would be if the current MAI were signed.

We have reviewed the draft MAI text in detail and we do have a few concerns. We have concerns about where we feel we're vulnerable in the NAFTA MAI, and we have concerns that if the wording were changed in any way from what is currently in NAFTA we would be vulnerable. We also have concerns about any new elements that might appear in the current MAI negotiations.

Whether the MAI negotiations are successful or not, there will certainly continue to be ongoing negotiations in the future. There is a WTO work program dealing with investment issues, and investment provisions will be on the table in the coming free trade in the Americas negotiation. As we participate in these negotiations, it is very important that we use the knowledge gained during this current review of the MAI to achieve clarity in provisions that may affect agriculture and affirmation of the legitimacy of Canadian agriculture's regulatory and policy practices.

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It has also become clear that agriculture can be significantly affected by negotiations outside what is normally considered the agricultural sphere. Of course, at the outset, one wouldn't think that the MAI would have a lot to do with agriculture, but again, I have to say that with our review of the MAI agreement in the NAFTA and the current draft wording in the MAI that is now being negotiated, there could be implications for agriculture. Agriculture could in fact be vulnerable.

Again, part of that reason is that to date we haven't seen any clear, articulate or concise outline as to the goals and objectives that are to be achieved by the MAI. And as you very well know, when there is a dispute and the text is interpreted, the goals and objectives of any deal are very important and play very heavily on the interpretation of the dispute.

First of all, we have a couple of recommendations that we are asking you to make to the government. The first is that at the initial stages of any new trade-related negotiations, the government should review with the agricultural SAGIT and organizations such as the CFA the potential agricultural implications of the negotiations and continue to consult with these bodies during the negotiations.

I would also like to say that in future negotiations the government should seek affirmation of the legitimacy of Canada's approach to agricultural policy within the context of the following:

- affirmation of our right to establish and maintain agricultural marketing bodies with the power to regulate the production and/or marketing of domestic product, operate a central-desk selling system and pool producer returns;

- affirmation of the right of government-mandated agricultural marketing entities to carry on the same commercial practices as private firms when they are marketing producers' products; and

- affirmation of the right of governments to give preference to Canadian residents and citizens in the areas of agricultural land use policy and the availability of safety net and risk management programs.

We have a few specific recommendations in regard to the MAI negotiations. The basic mandate of “nothing more than NAFTA” must be followed. Provisions particularly sensitive to change in context or wording include, first of all, the definition of “investment”. The current MAI is very broad in its definition of investment and does not exclude any economic activity whatsoever, while the NAFTA MAI in fact does exempt some economic activity.

Secondly, with regard to performance requirements, the wording of the provisions regarding performance requirements must be worded so that it is absolutely clear that these provisions do not proscribe the normal activities of Canadian agricultural marketing bodies, particularly the regulation of the volume of domestic product marketed, the operation of a central-desk selling agency, and the pooling of returns. We could go on and on as far as the performance requirements are concerned: our export and reimport policy and how would it be impacted, our production for export, and so on and so forth. And the performance requirement to achieve a given level or value of production must not be included in the list of proscribed performance requirements.

Thirdly, with regard to exceptions, all the exceptions that apply to Canada in NAFTA must be included in the MAI in a manner that makes it clear that these exceptions are accepted by all parties to the MAI. This is a place where we feel particularly vulnerable. If exceptions, reservations and exemptions are not worded very carefully and very articulately, they are open to interpretation, and again, because there are no clear objectives as a preamble to this negotiation, they could certainly leave us very vulnerable.

Additionally, these exceptions must not be sunsetted. A few of these exceptions that we feel are very important to agriculture are: the general exception for government grants and subsidies—and of course in the current MAI, subsidies are not excluded, whereas they are in the NAFTA MAI; Canada's exception for agricultural credit programs; Canada's exception for all existing non-conforming measures of all provinces and territories—and again, there is not a delineation in the current MAI negotiation to give provinces the right to exceptions or exemptions; and Canada's exception for the Export and Import Permits Act. Those are the key ones that we would be concerned about.

Next, the NAFTA provision proscribing anti-competitive behaviour by monopolies should not be included in the MAI. We feel the MAI is not the forum in which to discuss competition policy. As you well know, at the ministerial meeting in Singapore they decided there would be a working group on competition policy at the WTO. That's where it should be discussed. That's where the analysis and information should take place. If there are any negotiations, that's where the negotiations should take place.

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I refer you back to our policy that any clear and equitable rules should be established at the WTO. As well, because the MAI is not negotiated in the context of a larger trade deal, this definitely is not the forum in which to talk about competition policy. Canada should participate in multilateral competition policy agreements only after clear understanding has been reached on the definition of anti-competitive practices.

As to what is necessary to ensure that Canada continues to apply competition law in a manner suited to our domestic needs, and what is necessary to prevent abuse of anti-competitive provisions, I'll refer you specifically—and I will not read it in detail—to the wording in NAFTA's article 1502:3(d), where it talks about anti-competitive practices in a non-monopolized market.

The draft MAI identifies almost identical wording to this as an alternative supported by our Canadian government. This clause must not be included in the MAI. We feel that's considerably important.

Next, Canada should monitor legal judgments regarding two NAFTA-based provisions and reserve judgment as to whether the wording of those two provisions should remain unchanged. This has to do with expropriation and compensation.

I'll refer you briefly to the current case that's under binding arbitration, the Ethyl Corporation case. If by chance the Ethyl Corporation does win the arbitration, NAFTA may have created an advantage that entitles foreign investors to compensation for regulatory change that is not available to Canadian investors. This outcome, of course, would be totally unacceptable and could seriously interfere with Canada's ability to carry out necessary regulatory practice.

Very quickly, in terms of performance requirements, regulatory activities and the provisions of opportunities to use certain public resources often involve the imposition of performance requirements. This needs to be done in a responsible and sensitive manner, but is a necessary part of the regulatory process.

Again, we do not want any performance requirements included in the MAI that would make agriculture vulnerable and that would make our current marketing structures and legislated ability to have marketing boards vulnerable under any performance requirements that might be included.

Grandfathering does not resolve future problems. We must retain the ability to make the regulatory decisions needed to meet changing knowledge and circumstances.

In conclusion, I want to say how important it is that consultation be done in the early stages of any negotiations that take place. I have to emphasize that we feel agriculture fell through the cracks when the agreement on investment was made in the NAFTA. We were not consulted. Although we have not yet received any assurance or confirmation that we are in fact directly implicated in that investment agreement, we have to date failed to receive any assurance from the negotiators that in fact we are not vulnerable and that if the NAFTA MAI is used as a starting point in the current MAI negotiations, we might not increase that vulnerability.

I would like to say that we have excellent access to the negotiators. They have expressed their commitment and willingness to work with us. We have no reason to think that the consultation that is going on with them currently will not help us to feel more reassured and in fact might help us to be able to include some of the important factors in that negotiation, but again, we have not received assurance that we are not vulnerable in the investment agreement in the NAFTA.

Of course, there's always a risk in raising red flags and telling other participants that we in fact do feel vulnerable. We do not want to go that route. However, we want to make sure these vulnerabilities are not replicated in the current MAI negotiations.

Thank you very much.

The Chairman: Thank you very much.

Has the industry been consulted yet by government on what's going on?

Mr. Bob Friesen: We are currently consulting with the negotiators.

The Chairman: Right now.

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Mr. Bob Friesen: Yes. In fact we had a meeting with Bill Dymond about three weeks ago: he spent part of a day with our trade committee and talked to us about the current MAI negotiations. We also have excellent access to the actual working group in that negotiating team.

Ms. Sally Rutherford (Executive Director, Canadian Federation of Agriculture): I think it's fair to say, though, that it's at our initiation, not theirs.

The Chairman: Mr. Penson, are you leading off?

Mr. Charlie Penson (Peace River, Ref.): Yes. Thank you, Mr. Chairman.

I'd just like to remind the members of the committee that when the Minister for International Trade introduced this area of the MAI to the committee studying the MAI, which is a subcommittee of the foreign affairs and international trade standing committee, and asked the committee to do a study, his opening comments were that the intention of the government was to move the NAFTA investment agreement over and expand it to 29 member countries at the OECD. He also said that it would be difficult to do this at the World Trade Organization, because it has 130 member countries and many of them are not ready for investment at this time, so it might be better to do it at the OECD and then expand it at some point later on to the WTO.

In addition to that, the chief negotiator told us the same thing: that that's the intent of the government.

A couple of times I heard it mentioned that under the NAFTA-type investment agreement that we already have, there was a problem with the Canadian Wheat Board, marketing boards, and supply management. Seeing that we've had an investment agreement with the United States for 10 years under the free trade agreement and seeing that those areas are exempt under the free trade agreement and the NAFTA agreement, and seeing that the minister and the chief negotiator stated that they intended to move it over from a NAFTA-type agreement to the MAI, where do you see the threat coming from in terms of the Canadian Wheat Board and the supply management?

Mr. Bob Friesen: Yes, you're right. Their position is that they do not want to commit to any more obligations than what they did in the investment agreement in the NAFTA. However, we are not nearly as confident as you sounded that in fact the exemptions are clear enough in the NAFTA agreement, and we have not been assured by the negotiators that in fact we are not vulnerable in exactly those areas that you talked about. Namely, one of them has to do with the definition of “state trading enterprises”, the definition of “monopolies”, the wording where it talks about sole provider and sole purchaser of a product, and then also under the performance requirements, where a given level of production cannot be contingent and/or dependent on a given level of exports, and so on and so forth.

Mr. Charlie Penson: Is that in the NAFTA you're talking about?

Mr. Bob Friesen: Yes. We have not been assured that the reservations and exemptions that Canada made in that deal in fact do give us any comfort that we are not vulnerable.

So yes, to some extent it gives us assurance that our government wants to only replicate the deal in the NAFTA and not go any further. At the same time, because we were not consulted on this particular aspect when the NAFTA agreement was signed, we were only made aware of what we perceived as weaknesses when this current MAI negotiation was started.

Mr. Charlie Penson: Maybe I could add one question, and I'd like Mr. Qualman to answer both of those, if I could.

Mr. Darrin Qualman: Yes, to answer those two questions you just asked, we're not as reassured by the intentions of the negotiators. All we know right now is what the MAI looks like as it's currently written.

As it's currently written, it differs quite substantially from the NAFTA in three specific ways. It applies to 29 countries, not three, greatly expanding the number of conflicts that might be handled under that. But more important, the MAI greatly expands the definitions of “investment” and “expropriation”; it thereby increases the number of policy areas in which the government will not be able to legislate without compensation.

The MAI defines “expropriation” and “investment” so broadly that, as it currently stands, while Ethyl may or may not win its case under the NAFTA, if that same case were brought under the MAI as currently written, there is some real reason to believe they might win that case under the MAI. Whether or not they will win it under the NAFTA I don't know.

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The third one is that the MAI can't be abrogated for 20 years, as opposed to 6 months in the NAFTA. If Ethyl wins its case and we suddenly find ourselves in a trade agreement where every time we pass an environmental law somebody wants $350 million from us, then we can get out of the NAFTA. If we had the same problem under the MAI, we couldn't get out.

Mr. Charlie Penson: I think in fact it's five years on a renewable basis.

What I'm wondering about is this. Since we already have an investment agreement that governs about 70% of our investments through NAFTA, which will stay whether we sign an MAI or not, the problems you are identifying are not going to go away unless we back out of NAFTA. Is that what you are telling us?

Mr. Darrin Qualman: I'm saying because the MAI greatly expands the provisions on investment, the definitions of investment and expropriation, if there are problems under the NAFTA, those problems get much bigger under the MAI.

Mr. Charlie Penson: About the case you are referring to, the Ethyl Corporation, it's my understanding that if that had been taken on the basis of a health concern or an environmental concern, both of those would have been allowed under NAFTA, because they are areas of exemptions. But it wasn't done on that basis. So I think we have to wonder about the case that's proceeding. Whether Canada wins it or not is not clear at this time, but if it had been done on the basis of fact, that it was a health hazard or a hazard to our environment, I think it's clear that under NAFTA Canada had the right to propose that kind of legislation.

Mr. Darrin Qualman: I'm not sure why Parliament, in its wisdom, chose to proceed the way it did.

Mr. Charlie Penson: But you did raise it, and I think it's important to deal with it.

The Chairman: Your time is just about up. You can come back.

[Translation]

Mr. Sauvageau.

Mr. Benoît Sauvageau (Repentigny, BQ): Thank you for coming today. I will continue in the same vein as Mr. Penson with whom I had the pleasure to work in the Sub-committee on the Multilateral Agreement on Investment.

I will begin with a few questions for Mr. Qualman.

Could you tell me what was the position of the National Farmers Union on the free trade agreement with the U.S. at the time? Was your position the same? And after a few years of the agreement being in a place, has your position changed or has it been confirmed following the first two major disputes on softwood lumber and wheat?

I don't mean to be rude, but I would like you to tell us why the Canadian government continues to negotiate against the interest of cultural groups, farmers, environmental groups, fishermen, and Canadians generally, if the Multilateral Agreement on Investment is so obviously bad. I would like to know if that agreement has any benefits at all or if it's really totally bad from beginning to end.

Instead of suggesting that we immediately withdraw from negotiations, don't you think that we should give an opening to negotiators, to the deal makers, for example by accepting expropriation without compensation? It could be a pre-condition to signing the agreement?

We could also better define what is meant by exemption or reservation, because if I'm not mistaken Canada has presented 52 pages of reservations, but no general exception, except maybe culture. That could be the stumbling block.

As Charlie said, right now, 70% of foreign investments in Canada come from the United States and we already have an agreement on investment with that country; and 54% of Canadian investments are directed to the U.S. Furthermore, Canada has signed 24 bilateral agreements on investment, mainly with OECD countries. So, what would really change? And are we getting rid of existing multilateral rules?

I hope to have been clear enough. Thank you.

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[English]

Mr. Darrin Qualman: Thank you for that question.

Clearly there is room for trade and investment agreements, and there is room for rules on investment. The irony of the Multilateral Agreement on Investment is that it's one big rule saying governments shall not make rules. The second thing is it clearly provides a great number of advantages for private interests, investors, but it does not seem to have a counterweighing set of provisions to protect the public interest and the public good.

We would be very interested in looking at investment agreements that helped governments to enforce regulations wherein corporations would pay fair taxes in the countries where they produce and wherein they would conform to the environmental rules. A rules-based system of trade and investment isn't the wrong way to go, but the Multilateral Agreement on Investment is merely a whole set of provisions that says the government shall not make rules to regulate trade and investment; and that is the wrong way to go.

Mr. Bob Friesen: I'd like to answer a couple of your questions as well. We are not saying the current MAI negotiation is bad. We are certainly not advocating that we reopen the NAFTA and redo the investment agreement there. We are not advocating that at all, because as I said before, there is considerable risk in identifying areas where we feel we are vulnerable. We would rather sit on those, since that deal is done. Our concern is specific to the concerns I mentioned, namely that our regulatory system not be affected, that our Canadian Wheat Board not be affected.

We are also concerned that we do not want to pay twice. If we do a deal now and competition policy is involved in the negotiation, certain restrictions are applied because of performance requirements, and then this whole thing is moved to the WTO, we do not want to be in the situation where we have to pay twice.

As I said before, our concern started only because we couldn't get any assurances from our negotiators. When we perceived that weaknesses applied to agriculture and we weren't getting assurances that those in fact were not weaknesses, that's where our concern started, and that's the premise we're working on now with the negotiators. We just want to make sure we are not making ourselves vulnerable.

[Translation]

Mr. Benoît Sauvageau: I still have some time left, Mr. Chairman, and I will put it to use. I'm not going to ask for your opinion on the MAI as a whole, but rather on those provisions that affect agriculture. If you could get the assurance that it will not affect you, would you find it acceptable for Canada to pursue negotiations and to sign the Agreement?

[English]

Mr. Bob Friesen: I have to presume you would be, yes, because to the extent that we represent farmers' interests, our interest lies only in where agriculture will continue to have the strong domestic viability we feel it needs to carry on our exports and our domestic production. If we had that assurance, then certainly we would have felt the consultation with the negotiators had been successful.

[Translation]

Mr. Benoît Sauvageau: Thank you.

[English]

The Chairman: We'll go now to Mr. Steckle.

Mr. Paul Steckle (Huron—Bruce, Lib.): I want to thank you for appearing this morning. Perhaps you people are at a better level of understanding of MAI than most of us parliamentarians are.

I might first ask both groups here this morning whether you have seen the preliminary text. Have both groups seen the complete text?

We're talking about sovereignty. We've talked about the sovereignty of land, the sovereignty of ownership. Where would you see this agreement taking us, given that in this country we have ten provinces? In the province of Prince Edward Island there are certain requirements to ownership of land that may preclude certain people in other parts of Canada from owning land in Prince Edward Island. How would you see that law affecting people who may want to invest in Prince Edward Island? Would that law be negated because this would supersede any laws locally subscribed to? I use that as an example because it's probably the only province where that may apply.

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Mr. Darrin Qualman: Saskatchewan, where I come from, also has that law, and I'm very familiar with the Prince Edward Island law. Under the MAI, without an exemption that law would be a contravention of the MAI. It would also be a contravention of the NAFTA.

Negotiators sought and received an exemption under the NAFTA, but if you look at the wording of the MAI, they quite specifically mention standstill and roll-back, wherein you cannot add additional exemptions. Over time they will either implicitly or explicitly try to get rid of those exemptions.

I want to point out that there are several ways in which one can achieve roll-back. In some ways, the renegotiation of the WTO every few years is a way of achieving roll-back. You negotiate it and then you come back again several years later and say, “All of the things we agreed to last time stay—you can't retreat from those positions—and we want additional concessions”. So constant renegotiation is a form of roll-back.

In some ways, I think, the MAI is a form of roll-back on the NAFTA. The NAFTA wasn't quite strong enough in some places. There were exemptions in some places. Now we're going to come along with the MAI and take one more shot at it. We're going to try to force countries like Canada to once again argue for an exemption on land ownership laws, and they might not get them this time.

Mr. Paul Steckle: What body, what nation, initiated MAI? We have 28 or 29 countries involved in this rather than the 130 or 140 countries we have in the WTO. Obviously someone initiated this further action. Where did it come from? Who's driving this?

These are broad questions, but we would like to know. I mean, someone had to drive this issue.

Mr. Darrin Qualman: Our understanding is that it was largely initiated by the United States but that Canada was right there, near the beginning—if not pushing, then at least alongside those people who were pushing.

Mr. Paul Steckle: Now, I understand the U.S. has some serious reservations. We have some serious reservations, largely surrounding the area of culture. My primary focus this morning, though, ought to be agriculture, which it is.

You mentioned that we have diminished our rights to create laws, and that this MAI agreement would seriously diminish this. Are you absolutely certain about that? What is the role of government if indeed we have a body that is now stronger than governments?

I have to ask some pretty serious questions. This is pretty serious business, as far as I'm concerned. How would you comment on that?

Mr. Darrin Qualman: To be clear, these agreements work in an insidious way. They don't say the government shall not do this of shall not do that. They say the government can do pretty much what it likes, but then they go on to say that these certain measures constitute expropriation. Under the MAI they even talk about measures tantamount to expropriation, and they explicitly mention certain taxation measures. They don't say you can't undertake this expropriation or taxation of certain laws, but they say if you do, you have to compensate everyone whose profits you affect. If those compensation numbers run into the hundreds of millions and billions, that in itself serves as a prohibition. If Ethyl wins its case, all of a sudden there'll be a large area in which the government can't legislate.

When the government was looking at plain packaging on cigarettes, there were objections brought by cigarette makers: “That will affect our profits. We may sue under NAFTA if you try to do that”.

So when you sign these agreements, clearly you do give up your right to legislate in many areas.

Mr. Paul Steckle: In terms of the question of in and out, once we sign on, as I understand it, we're committed. We can't even request out for five years. Is that correct?

Mr. Darrin Qualman: That's correct. Even if you then do request getting out, what you've signed says everything you've agreed to remains in place for another 15 years.

Mr. Paul Steckle: So if we don't decide to get out for 10 years, we're in for 25.

Mr. Darrin Qualman: That's correct.

Mr. Paul Steckle: Okay. Thank you.

The Chairman: Mr. Axworthy.

Mr. Chris Axworthy (Saskatoon—Rosetown—Biggar, NDP): Thanks very much.

It's good to hear your concerns...well, not “good” to hear them. It's unpleasant. But I'm glad you're here to present them. As the representative of the one party in this House that has serious reservations about the MAI, what you've said confirms much of our worries.

I'm here today because Dick Proctor is in Saskatchewan at a conference dealing with another problem generated by deregulation and privatization—that is, the abandonment of rail lines across the west, which has increased the stress on farm families even further. This is another example.

• 0955

I wanted to ask a question of the Canadian Federation of Agriculture. In the brief by Mr. Qualman, he points out in the graph—you might have it there—that the benefits, the fruits, of increased Canada agrifood exports have not been very evenly distributed. The farmers' income has stayed pretty flat, while the corporate interests within agriculture's returns have increased significantly. Does your analysis or your research confirm that farmers are in fact not really benefiting very much?

The reason I ask the question is that the question was asked, why would we be doing this if it places people at risk? Well, I presume we're doing it because it benefits certain interests, certain classes, in our society, even though it doesn't benefit others.

Mr. Bob Friesen: The way I read that graph is that it illustrates the level of exports and compares it to realized net farm income.

Mr. Chris Axworthy: Right.

Mr. Bob Friesen: Certainly that's a discussion we've had at CFA as to whether the push on for exports is putting any more money into the pockets of producers, which of course we have an interest in doing.

Yes, we promote export, and at the same time we hope that as we increase not only our exports but also our share of the international market, some of those benefits will accrue back to the producer. So yes, we would be strong advocates of that. But I wouldn't be prepared to make a judgment on what has been taking place to date.

Mr. Chris Axworthy: So you haven't done the same kind of analysis as Mr. Qualman has on this point?

Ms. Sally Rutherford: You're comparing apples and oranges here, because that is the amount of exports—it's not revenue from exports—versus income. It's not the same thing. You can't make the assumption you made without some more numbers being there.

Yes, exports have increased. There's no doubt that farm incomes are not in good shape; they're projected actually to continue to fall over the next few years. But all of our exports are in areas that are not actually confined by any regulatory systems—not supply management, nothing else. They are free market products and have not been significantly affected at all by trade agreements, and certainly not negatively. In just about all cases, the trade agreements that we have have actually benefited them in terms of providing access to dispute settlement mechanisms that have made life easier for a whole lot of people.

While the agreements are certainly not perfect, there has been a shift in the way Canada does proceed with its agricultural and agrifood exports. We can't continue to simply sell raw product; I think that's obvious to everyone. In many respects, although we see ourselves as a very large country and a very large exporter, we're a residual supplier on just about everything.

In terms of our ability to actually have an impact on world prices, it doesn't matter whether there's an agreement or no agreement; it's difficult. So what you're seeing there is the impact essentially of world prices on the market and on farm cash receipts, which have in truth very little to do with the agreements, because there has been very little impact of any of those agreements on that trade.

The Chairman: Mr. Qualman, it's your chart.

Mr. Darrin Qualman: No, I'm not sure this is an apples and oranges argument. We're making a very simple point: farmers, like all Canadians, are being told that through increased trade, they will become wealthier, and this chart clearly shows that for farmers, that simply isn't true.

The Chairman: Mr. Borotsik.

Mr. Rick Borotsik (Brandon—Souris, PC): Thank you, Mr. Chairman. I apologize for coming in a little late, and I also apologize for having to leave a little early. I have House duty today, and you can only be in one place at a time.

The Chairman: Mr. Borotsik, I forgot to tell you we have a motion that's been tabled that we want to discuss after the witnesses have left. I just want to remind everybody that's on the agenda.

Mr. Rick Borotsik: Thank you.

I'd like to welcome a fellow Manitoban to the table. Mr. Friesen and I have the tendency of travelling quite frequently on the same airplane, so welcome, Bob, once again.

I have a couple of questions, one that was asked earlier but was never answered.

First of all, Mr. Qualman, we now have the free trade agreement as well as NAFTA. What was your organization's position on NAFTA when it first hit the table?

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Mr. Darrin Qualman: Our position on NAFTA was that it provided few benefits or protections for farmers. I think we would agree with the CFA on that. One thing that's interesting with NAFTA is that here we are several years into this agreement and we're just now learning how it works. The Metalclad Corporation case in Mexico and the Ethyl Corporation case...these are the types of things that'll define just what that agreement means.

Mr. Rick Borotsik: My reference was particularly to agriculture, and with your organization, the NFU, being an agricultural organization, was your position on NAFTA when it was first put on the table one of support or not?

Mr. Darrin Qualman: No, we didn't support it because we didn't feel there were sufficient protections or benefits for agriculture.

Mr. Rick Borotsik: And you feel at this time that 10 years with NAFTA and free trade with the United States and Mexico have not in fact provided any type of benefits to the agricultural industry?

Mr. Darrin Qualman: Mr. Borotsik, if you look at that graph, net farm income is down 23%.

Mr. Rick Borotsik: So you would suggest that the trade agreement was not to the benefit of your organization.

Mr. Darrin Qualman: All the evidence shows that it is not to our benefit.

Mr. Rick Borotsik: And needless to say, the MAI is on the same plane. Your organization would be totally opposed to entering into the agreement, specifically with regard to with agriculture.

Mr. Darrin Qualman: We would recommend that you not sign it as it's drafted.

Mr. Rick Borotsik: Mr. Friesen, does your organization follows the same philosophy, that is, that NAFTA was not of benefit?

Mr. Bob Friesen: I'll comment on my position without trying to compare it to the position of my—

Mr. Rick Borotsik: It wasn't meant to be comparable. Please.

Mr. Bob Friesen: First of all, CFA is not against trade agreements. In fact, we are proponents of fair and equitable trade rules, and in fact in many instances we rely on trade agreements to increase agricultural production in Canada. Certainly our grain industry relies very heavily on exports, and many of our farm management agencies are increasing their exports as well.

We are not against trade agreements. We only encourage fair and equitable trade rules at the WTO level, as I said before.

Mr. Darrin Qualman: May I make a short point? First, the MAI is not a trade agreement. It's an investment agreement. Second, when you have trade agreements on the one hand and investment agreements on the other hand that allow capital to flow over borders, what you have in the combination are economic integration agreements, and what this committee should ask itself is not whether we want to trade more with Mexico; it should ask itself if we want to integrate our economies with Mexico, wherein Mexican problems become Canadian problems and Mexican wages start to pressure Canadian wages.

Mr. Rick Borotsik: Okay. Mr. Chairman, I have one other question, and that's actually a fairly reasonable segue. A number of years ago we wouldn't have thought that the European Common Market would be at the level it is currently, with the consideration right now of a Eurodollar. I'm sure you're aware of that particular economic initiative. Global trade and globalization have changed quite dramatically over the last number of years, Mr. Qualman, and there is now an integration of economies in the European market. Are you saying that in your opinion that's the wrong way to go?

Mr. Darrin Qualman: Economic integration is the wrong way to go, in my opinion.

Mr. Rick Borotsik: So the European Common Market is heading in the wrong direction.

Mr. Darrin Qualman: When you integrate certain countries in Europe, the negative impacts might not be as great as those of integrating every economy in North and South America, for instance.

Mr. Rick Borotsik: So it's okay—

Mr. Darrin Qualman: I think you can see the difference there and the problems that we might encounter.

Mr. Rick Borotsik: So in your opinion it's okay in Europe but it's not necessarily very good for us in North America.

Mr. Darrin Qualman: I'll reserve judgment on Europe but it certainly isn't very good for us in North, Central and South America to integrate all those economies.

The Chairman: Thank you very much.

Go ahead, Mr. Harvard.

Mr. John Harvard (Charleswood—Assiniboine, Lib.): Thanks, Mr. Chairman.

I have a couple of comments to make, a couple of questions for Mr. Qualman, and perhaps if we have time, one for Mr. Friesen.

Your opening statement, Mr. Qualman, was a little surreal for me. Your comments smacked of “stop the world, I want to get off”. Someone asked earlier whether you would sign the MAI or some other trade or investment agreement, and my guess, Mr. Qualman, is that as long as the NFU holds to some of its current policies you would never sign any kind of MAI or any kind of trade agreement.

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But let me say this. You, and sometimes others, come to a committee like this and you more or less throw up a mountain of concerns, leaving the spectre that if we were to go down a particular road, in this case the MAI, somehow the entire world would fall apart, would collapse, or the roof would fall in. I don't think it does the discussion much good. What we need is specifics. What we need is small chunks on which to chew...and not throw up this huge mountain, in effect telling us things are really going to be in bad shape if we move forward.

You mentioned capital flows. My understanding of what you more or less said was we should stop capital flows from crossing international boundaries. Well, capital flows have been taking place, going across international boundaries, for centuries. For someone to come to this committee and say if we would just somehow stop these capital flows our economies would become healthier to me is surreal. I think that business of “stop the world, I want to get off”, just doesn't make any sense. It puts you in an incredible minority position, and it just does not make you credible.

On the specifics, you talk about how, well, there would be unfair...you mentioned that at least part of the MAI implies that it would be unfair competition for banks and that under some circumstances they might be able to claim compensation. I don't see much point in your coming to the agricultural committee and giving us that broad kind of statement. Give us something very, very definitive which we can understand—very definitive. Maybe we will listen to it, Mr. Qualman. But simply to throw out a line that, oh well, the banks might consider that unfair competition and they would sue us for billions of dollars, I don't helps the discussion one bit.

You also mention curbing legislative powers, that somehow or other governments wouldn't be able to tax. Well, show me the very words in the MAI that would say to the federal government, you can't tax; you can't raise the tax, or you can't lower the tax, or you can't change the nature of the tax. Give us something specific.

It's the same thing with the environment. Show me exactly—show me exactly—where we can't protect the soil, we can't protect the water, we can't protect the air, for agricultural purposes. Don't just give us some broad statement.

The Chairman: You had better give him a chance to defend himself.

Mr. John Harvard: I will in a second.

We hear this over and over again. The roof is going to fall in. The roof is going to fall in. It doesn't help the discussion.

You brought out this chart. I think it was Ms. Rutherford who pointed out that one side of the chart speaks to revenue on the trade side and the other side of the chart talks about income. It is apples and oranges. It really is apples and oranges. Revenue and income are not exactly the same thing, Mr. Qualman. They are not exactly the same thing. Besides—

The Chairman: Mr. Qualman, do you want to respond?

Mr. Darrin Qualman: Yes. I just want to reiterate that the point of this graph is very, very simple.

Mr. John Harvard: Yes, it is simple. It is so simple it's deceiving.

Mr. Darrin Qualman: Mr. Chairman, shall I answer?

The Chairman: Please do.

Mr. Darrin Qualman: It's very simple. Trade is supposed to make us richer and farm income is going down. Trade is increasing and farm income is going down.

Mr. John Harvard: One doesn't necessarily follow the other, Mr. Qualman. It does not necessary follow the other.

Mr. Darrin Qualman: We are told time and time again that if trade increases, income and employment will go up. Income is going down and fewer people are employed in farming. Therefore we have an example, quite clearly, where trade is increasing, either because of these agreements or in spite of these agreements, and income and employment are going down.

About the specifics, I would like to ask how long the federal government was negotiating this agreement before Canadians were allowed to have a look at it through a leak. I'm speaking about the specifics of this agreement. If you want specifics, I can sit down and write a very long and dry paralegal piece on where specifically taxation laws are embattled. But—

Mr. John Harvard: That would be better than hyperbole. That would be much better than hyperbole, Mr. Qualman.

Mr. Darrin Qualman: I think if you look at our brief you will see we are being very reserved. We don't say it will prevent us from expanding—

Mr. John Harvard: It would be the first time for the NFU to be reserved.

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Mr. Darrin Qualman: If there's hyperbole here, Mr. Harvard, I think we might both be guilty of it.

The Chairman: We have to go to the next questioner, as time is—

Mr. Chris Axworthy: On a point of order, Mr. Chairman, I don't think our role here is to insult the witnesses. Witnesses have come to present their cases. It's quite improper, it seems to me, to attack a witness for the point of view that is being expressed. I've never seen it before, and I don't know why it would be taking place today. Surely we can have a rational debate about the different points of view without being insulting.

The Chairman: I'm sure we'll be able to have a rational debate here.

Mr. Benoit.

Mr. Leon E. Benoit (Lakeland, Ref.): Thank you, Mr. Chairman.

I have a couple of questions. If there's some time left, Mr. Penson has some other questions.

To the CFA, I was wondering whether there's any particular sector in agriculture that you're most concerned about as a result of this agreement as it is now.

Mr. Bob Friesen: We're concerned specifically about the regulatory structures we have.

Mr. Leon Benoit: Meaning what?

Mr. Bob Friesen: Meaning supply management, single-desk selling, pooling, the Canadian Wheat Board.

Mr. Leon Benoit: On page 3 of your brief, under specific recommendations, you mention, under the definition of investment, concessions, licences, authorizations and permits. Are you looking there at quota and possible impact on supply management quota?

Mr. Bob Friesen: Yes, any kind of economic activity and any kind of licensing or authorization—concessions, delegations, and so on and so forth.

Mr. Leon Benoit: Including quotas. Okay.

I have one other quick question before I turn it over to Mr. Penson.

You said that an investment agreement should be negotiated under the WTO rather than under the OECD umbrella. Someone—I think it was Mr. Penson—pointed out that a more manageable number of countries are involved in negotiations now than would be involved under the WTO. I wonder if you could elaborate on your concern about having the negotiation with this smaller group of countries rather than under the WTO.

You talked a bit about it, I know, but I'd like a bit more on it from you.

Mr. Bob Friesen: Part of the concern, of course, was that there's a negotiation taking place now, and if it's moved up to the WTO, then we might pay twice.

As I said earlier, yes, we think the WTO is the place to negotiate fair and equitable trade rules. We also believe any investment agreement has added to it a certain amount of legitimacy and predictability if it's part of a larger group and a larger forum and a larger negotiation, and it has trade rules around it.

Mr. Leon Benoit: Okay. I'll defer to Mr. Penson for the rest of the questions.

Mr. Charlie Penson: To the members on the panel, it seems to me you're missing a very important element here.

My colleague and I are both farmers in Alberta. We have a 2,000-acre grain farm. I wonder if you recognize that farmers are consumers as well. We have substantial costs in terms of the equipment we buy.

Another element is that there's a domestic industry, such as canola crushing and the malt industry, that could use some significant investment. It seems to me that the negative tone here doesn't recognize that there's another whole side to this. We're concentrating on marketing boards and supply management, but that's only part of the picture.

The beef industry has done very well. There's been big investment in two packing plants in Alberta. Isn't that a missing link here?

Mr. Bob Friesen: If I gave you the impression that we are against investment and trade, I gave you the wrong impression, and I haven't done my job, because we are not. As I said before, we have a few areas of concern. I can't sit here and tell you that they are a problem. I can only tell you that we have not been assured that they aren't.

Mr. Charlie Penson: But why don't you address the other side of the agriculture equation with a positive statement that investment would be good for a significant part of agriculture?

Mr. Bob Friesen: We thought it would be appropriate for us to simply flag the areas in which we have a concern. I want to emphasize, just because I didn't spend time applauding the other parts of that agreement does not mean we are against the agreement as a whole.

The Chairman: Mr. Qualman, do you want to comment?

Mr. Darrin Qualman: Yes. I want to comment on investment, certainly.

I come from a small town in Saskatchewan. I would love to see investment in that town. But when I stand by the highway in that town, I can see where our investment problem is.

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First of all, I see the big Super-Bs taking away all our grain at below the cost of production, so all the money that could have been returned to the farmers—

Mr. Charlie Penson: Where's it going?

Mr. Darrin Qualman: It's largely being exported. I see the grain leaving and the profits not coming to farmers, so the farmers don't have the money to invest. Then the next thing I see leaving on the highway are the people from those small towns.

We could use investment in rural Canada. If you ask people in the third world how they benefit from external investment, they benefit very poorly. We have money and productive capability in the country, and we should be allowed to invest that money. We should have that money to invest.

Mr. Charlie Penson: Can I just point out something, Mr. Qualman? Outward investments—in other words, Canadians investing outside Canada—and foreign investment inside Canada are almost equal these days. There's $180 billion of foreign investment in Canada, but there's been significant growth in Canadians' investments outside our own country. There's $170 billion in Canadian investment outside, so it's a growing area. It doesn't seem to add up with what you're saying.

Mr. Darrin Qualman: No, I think you're just making a different point. My point is you imply some lack of investment funds in rural Canada and that the solution to that problem is foreign investment or external investment or urban investment. What I'm saying is there's every reason to believe that when you look at the incredible productivity and efficiency of farmers in rural communities, if the economy were jigged properly and we got to retain some of that money in our communities and our farms, we'd have all the money we needed to build canola crushing plants or air seeder factories.

Mr. Charlie Penson: If I get a chance in the second round, I'd like to talk about that.

The Chairman: Okay.

Mr. Sauvageau.

[Translation]

Mr. Benoît Sauvageau: I would like to join Mr. Axworthy in presenting our apologies to Mr. Qualman. But I hope you will allow me, Mr. Chairman, to express my surprise and my pleasure to note such sea change in our liberal colleagues who are now prepared to go to such lengths to defend the cause of free trade and free markets.

I am glad, Mr. Harvard, that you and your party have finally understood the advantages and the relevance of those agreements and of opening the markets. I think it is useful to recall that a few years ago your position was quite a bit closer to Mr. Qualman's and ours maybe a little bit closer to yours.

That being said, I would like to ask Mr. Qualman to confirm a certain number of things. The rules of MAI will be somewhat simplified. If I understand correctly the Multilateral Agreement on Investment would no longer allow Canada to treat a foreign investor less favourably than our own; in other words the rules will have to be the same for foreign investors and for domestic investors, is that right?

[English]

Mr. Darrin Qualman: Not quite. It says specifically you can't treat domestic investors better than foreign. It doesn't say you can't treat foreign investors better than domestic.

[Translation]

Mr. Benoît Sauvageau: So if I understand correctly foreign investors will be treated the same as our own investors. There will be no discrimination.

[English]

Mr. Darrin Qualman: I think in effect that may be true.

[Translation]

Mr. Benoît Sauvageau: Very well. Do you have any examples that would lead us to believe that today we are discriminating against certain investors or that we impose barriers to investment coming from other OECD countries?

[English]

Mr. Darrin Qualman: I'm sorry; I don't understand the question.

[Translation]

Mr. Benoît Sauvageau: I will repeated. Do you have any examples that would show that Canada is in fact discriminating against investors from OECD countries?

[English]

Mr. Darrin Qualman: Well, we do when we privatize our crown corporations; we sometimes restrict the share offerings to local citizens. But to be clear, this agreement isn't just to eliminate any impediments to foreign investors. It ratchets down those things we require of all investors.

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[Translation]

Mr. Benoît Sauvageau: We are made to get along. You immediately anticipated my next question.

Concerning the environment, could an OECD member, after signing the Multilateral Agreement on Investment be able to lower its environmental standards in order to attract investments?

[English]

Mr. Darrin Qualman: Yes, a country could reduce its environmental standards to attract investors.

[Translation]

Mr. Benoît Sauvageau: With respect, Mr. Qualman, I totally disagree with what you've just said because in fact it says right in the Multilateral Agreement on Investment that in order to protect countries that are not OECD members, but are members of the WTO, no country will be able to lower its environmental standards in order to attract foreign investment. It is written right in the Multilateral Agreement on Investment.

[English]

Mr. Darrin Qualman: I don't know if you've seen the maquiladoras area of northern Mexico, where many, many U.S. factories are relocating, but the rivers in that area run black with pollution, and one of the drawing cards for Canadian and American companies is the cheap labour and the non-enforcement of environmental standards.

[Translation]

Mr. Benoît Sauvageau: Mr. Qualman, do you mean that environmentally speaking Mexico was a tropical paradise before NAFTA?

[English]

Mr. Darrin Qualman: Mexico had pollution problems, but the pollution problems are greater now, and they're different. There are heavy metals and lead in those rivers—industrial pollution.

[Translation]

Mr. Benoît Sauvageau: Okay. I now come back to my question.

[English]

The Chairman: Excuse me. Your time is up. We'll have to go to Mr. Calder.

[Translation]

Mr. Benoît Sauvageau: Thank you, Mr. Chairman.

[English]

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

I'm going to deal with CFA's presentation here, in particular, Bob, article 1502:3(d). I'll give you a scenario. I'm watching this right now with a lot of interest. Canadian National at the present time is getting ready to purchase Illinois Central, which through the NAFTA agreement is going to give them rail access all the way down through the Mississippi basin right down to the gulf. And if Illinois wanted to cut a deal with Mexico on a railway down there, it would be right down almost to the South American continent.

Obviously CN has to put stock out to raise $2.5 billion to take and buy Illinois Central. Say they were taken over by the U.S. Just reading through this article right here, they could in essence become the parent company of Canadian National and Illinois Central. If it were to their advantage through grain trading, for instance, that they would disrupt our grain transportation out west—and this is an issue we're all dealing with right now, the grain handling—under the current deal, could something like that happen?

Mr. Bob Friesen: Well, I have to say that your question goes a bit beyond my expertise. I would like to emphasize, though, that our concern is that in the current NAFTA investment agreement, it talks about “anti-competitive” as well as “non-discriminatory”. Part of the reason I can't answer that question is that we don't know what the interpretation of “anti-competitiveness” is going to be. That's why we say it shouldn't be included in this deal, because we feel those rules have not been established as yet.

Mr. Murray Calder: So there's definitely a grey area in that scenario, if that ever could happen. I know I'm really reaching with it, but....

Ms. Jennifer Higginson (Policy Analyst, Canadian Federation of Agriculture): Part of our problem is that the competition laws in Canada are different from the competition laws in the United States or the competition laws in European countries. So when you start to include competition law in an international agreement, it gets very fuzzy as to how things are defined. We briefly looked at competition law between Canada and the U.S., and it gets fuzzy as to how things are interpreted by the two countries. If you put it in an international context, it gets just much more fuzzy. So we'd like that to be looked at in the WTO before it's actually included in an agreement.

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Mr. Murray Calder: Given the fact that a lot of these companies right now, because the global community is getting smaller all the time, are looking at merging, amalgamating, or whatever handle you put on it, how would we go about clarifying that discriminatory provision? What suggestion would you give us when we're looking at how we clarify that fuzzy area?

Mr. Bob Friesen: I believe we did submit some suggested wording to the negotiators on how we thought we could get around it. But I couldn't comment on it. I don't have that with me.

Ms. Jennifer Higginson: We're looking for the WTO to be the priority vehicle. We would be looking at competition policy and the definition of the terms related to competition policy.

Mr. Bob Friesen: We've also suggested some wording to the negotiators on how we could possibly get an exemption, or a carve-out together with other countries, such that some of the performance requirements would not apply to agriculture and so would not affect agriculture from that standpoint...as well as monopolies and state trading enterprises.

The Chairman: Mrs. Ur.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): Thank you, Mr. Chairman.

I thank you for your briefing. It's always good to get as much information on the subject as possible. It certainly is of interest.

Do you really feel—and I guess with the mention of the Ethyl Corporation legal battle—MAI would not really reduce international disputes? Is that your feeling—it would not be a positive development? You said under the MAI they would probably be more successful than they would be under NAFTA.

Mr. Darrin Qualman: The MAI might have a very odd way of reducing international disputes. That is, if companies such as Ethyl and Metalclad were to bring cases under the MAI and win them and receive huge compensation awards, legislatures such as yours might just stop making laws that might trigger such compensation, and that would clearly reduce disputes.

Mrs. Rose-Marie Ur: What safeguards do you think we should put in to ensure the agricultural industry remains healthy, should this be signed?

Mr. Darrin Qualman: In our brief we indicate that there should be very clear wording in any trade agreement that Canada reserves the right to designate boards, monopolies, orderly marketing agencies, state trading enterprises, to trade in agricultural products; that those entities can behave in the best interests of producers; and that the other parts of the agreement don't apply to those agencies. That would seem to be the only way you can be sure you have the latitude you need to create, maintain, expand, and protect orderly marketing institutions in Canada.

Mrs. Rose-Marie Ur: Did you want to respond to that, Mr. Friesen?

Mr. Bob Friesen: Yes, I would like to.

In our meeting with the negotiators, I believe they mentioned that currently other countries are also supportive of certain carve-outs and exemptions when it comes to agriculture, so we feel perhaps we can achieve our objective there. Then if the concerns we've listed in the document are addressed, we would certainly feel much more comfortable about it.

Insofar as the deal would secure the investment climate in Canada, we don't have a problem.

Mrs. Rose-Marie Ur: In your statement today you said you had a concern, but as long as you could get assurances from the meetings you are comfortable with the MAI. Would it be more enhancing should there be a first-time start-up review period after six months—I don't know whether that timeframe would be a long enough period to review what has been enacted—rather than waiting the five-year period? I think it's important that we're there listening, but that doesn't necessarily mean we have to sign on the dotted line. I think that part is productive, but I just wonder if that would be another selling point for people to understand that we don't have to be committed for five years.

Mr. Bob Friesen: You bring up a very interesting point. With trade agreements, very often you don't realize what a trade agreement says or is interpreted to say until it's in place and perhaps there's a dispute. Then I believe the outcome of that dispute is very much contingent on the interpretation of perhaps the preparatory work, the circumstances that led to the agreement, as well as a certain amount of interpretation and whether the reservations and exemptions are clear, whether they had any support when the negotiations took place.

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It is a little discomforting, however, to go into an agreement saying let's make the dive and then see what happens. But I know where you're coming from, in that if there were a trial period and a possible provision to opt out.... The five-year thing is new to me. The information we have is that it's six months' notice and that then you're in for fifteen years after the notice.

Mrs. Rose-Marie Ur: May I ask another question?

The Chairman: Yes.

Mrs. Rose-Marie Ur: I guess maybe where I'm coming from on this is the butter-oil-sugar situation with the dairy farmers, with the agreement that was signed. The agreement was signed, and unbeknownst this fell through the cracks.

If there had been a clause or a provision in there that would have solved a situation like this...this is much the same concept as I'm referring to with the MAI, that it's not just blocked, that we have a kind of fall-back. We cannot always see what may happen down the road, and it would give us an opportunity to say that there's this option before us—not to abuse it—so that the whole thing doesn't get thrown out.

Mr. Bob Friesen: I said earlier that we are certainly not advocating opening up the investment agreement in the NAFTA, because it just couldn't be done, and secondly—and I believe our negotiators share this concern—we don't want to flag any areas where we're vulnerable. The approach we're taking is that we're trying, very discreetly, to ensure that some of the wording in the exemptions and carve-outs is a little clearer than it is now.

Mrs. Rose-Marie Ur: Thank you.

The Chairman: Mr. Penson.

Mr. Charlie Penson: My question is for Mr. Qualman.

You've come here today and suggested that Canada should back away and not sign this MAI. Maybe you can appreciate the fact that we have about a $770 billion economy in Canada, a growing economy that's going to need further investment, whether it comes from domestic investors or foreign investors.

Given that we have protection for the areas under the NAFTA, which is what the government is telling us they want to expand to the OECD and take the same kind of exemptions, given that we have protection for the Canadian Wheat Board, which is exempt under NAFTA, given that the supply-managed products are exempt and given that there's a big economy out there...agriculture is a very important one in my own case and in your case and that of your organization, but it doesn't represent the total picture in Canada. Given all of this, do we want to tell the government to back away completely?

It seems to me that the areas you're concerned about are protected already. Why would you advise the government not to go ahead with an agreement that might benefit Canada in so many other areas, including some areas of agricultural investment, when the protection is already there under the NAFTA investment agreement that we've had for ten years and which the government says they want to expand to 29 countries? What's the problem?

Mr. Darrin Qualman: First, as you say, investment is good. I invest on my farm. People invest in the community. Investment is good. Investment is fine.

Second, I think there should be international agreements that regulate investment. For instance, right now trillions of dollars slosh around the world every day in the currency markets, completely unregulated. That makes it very hard to stabilize a currency or to even maintain a fiscal policy. Things like that should be regulated, and that would take the agreement of a lot of countries.

But again, the MAI is not really an investment agreement. It's a rule that says the government shall not make rules here, here, here and here, and if it does, you have to pay compensation. It's an economic integration agreement.

Mr. Charlie Penson: But just—

Mr. Darrin Qualman: But you asked about exemptions, and I want to point out that we are not at all satisfied that we have exemptions under the NAFTA or under the MAI.

For instance, the Ontario Wheat Producers' Marketing Board is thinking of allowing producers outside of the pool, outside of the board. And if they do that, we're not at all clear on what happens if the MAI is signed and they decide that it isn't workable—and we believe it isn't workable. It's a form of dual marketing, and we've always been quite clear about the fact that dual marketing doesn't work. If they decide two years down the road that this isn't working and decide to change their minds and say they're going to pull all those producers back, it's not entirely clear to us whether under the MAI any corporation that had been profiting in the interim from that will not be able to seek and receive compensation.

• 1035

So, no, I don't think we're protected.

Mr. Charlie Penson: Mr. Qualman, have you met with the chief negotiator or any government officials in trade to talk about this concern?

Mr. Darrin Qualman: Members of the National Farmers Union have met with Mike Gifford and others, I believe, yes.

Mr. Charlie Penson: Because it's my understanding that one of the biggest problems with the Canadian position is that we're trying to exempt too much. I think there are 56 pages of exemptions.

If government is convinced that the area you're talking about, the Ontario wheat board, should be exempt...that this is entirely a possibility under the MAI—

Mr. Darrin Qualman: If it takes—

Mr. Charlie Penson: Just a minute. Let me ask the question.

My understanding is that countries like the United States are saying maybe there's not enough in it for them; if they just have an empty shell and everything is off the table, exempted, what do they have?

Mr. Darrin Qualman: Mr. Penson, if it takes 56 pages of exemptions to protect agriculture from this agreement, clearly this agreement is not very favourable to agriculture, is it?

Mr. Charlie Penson: I didn't say agriculture; 56 pages of total exemptions.

Mr. Darrin Qualman: Okay. But again—

Mr. Charlie Penson: My problem is, when we come here and ask for exemptions, without thinking this thing through, we're very much in danger of not getting a total package, because we are taking everything off the table.

The Chairman: If you'll answer that, we'll go to the next questioner.

Mr. Darrin Qualman: Just to reiterate, this agreement is hostile to agriculture. In order to mitigate some of the worst effects, we have sought exemptions. We are not clear that those exemptions, if put to the test, will prove sufficient. As well, in the MAI, there are provisions that any exemptions you do receive will be rolled back over time.

So we don't think it's the way to go, to take agreements that would damage agriculture and then try in the end to patch them so that you don't damage it very much.

The Chairman: Thank you. Maybe I could ask a question now.

Given the list of exemptions that all countries have—the Europeans, the Americans and us—do you see this agreement being signed in the near future? If it is signed, in the case of conflict between the MAI and NAFTA, which takes precedence over the other?

Do you have those answers, Mr. Friesen or Mr. Qualman?

Mr. Bob Friesen: My initial response in terms of which would take precedence is that one would not rely on the other. The NAFTA is strictly between three countries.

The other thing I want to mention is that, to some extent, agriculture has some protection in the NAFTA investment agreement in that chapter 7, the agricultural chapter, also relates to the total package. So however those two relate to the other gives agriculture some stability in the investment part of the NAFTA.

Other than that, as far as precedence is concerned, I don't know. As to when the agreement is going to be signed, the latest word we received is by October, hopefully.

The Chairman: Even given the long lists that all countries seem to have, we're going to be signing on to something by October.

Mr. Bob Friesen: Yes. I believe it may have to do with the country-specific reservations, but it's also our understanding that there is a fair bit of consultation and negotiation left to do between countries in terms of where they want to do a carve-out, which are general carve-outs and which are country-specific reservations or exemptions.

From what I've seen of the MAI reservations, our understanding is that they're simply also the reservations they would have used in the NAFTA, because that's their established starting point.

The Chairman: Mr. Axworthy and then Mr. Sauvageau.

Mr. Chris Axworthy: I have one brief point, then a couple of questions.

There's been a lot of talk about apples and oranges here. We should be very careful, I think, when we talk about the effects of the economic union. That union is based not on a race to the bottom, as most of our trade deals have been, but in fact on a race to the top, with incredible supports to those countries whose environmental and labour standards are not up to the standards of those more developed countries.

We don't have that. The European Union is quite specific in that regard. Of course, there are specific provisions in European Union arrangements with regard to the protection of agriculture that are often very contentious and controversial, but there's not much doubt that the European countries have stood firmly behind their farmers, unlike what we see here, I think, in this arrangement.

The deal and agreements on trade are not, it seems to me, about whether or not there are benefits. There are plainly benefits. The question is, who benefits? I would like to ask the CFA where, in their analysis, they see the benefits in this arrangement coming.

• 1040

They have pointed out some concerns. We have, I think, listened to those. It's very important not just to go holus-bolus into a Pollyannaish deal: it's a good deal, therefore all the restrictions, all the bad parts, should be thrown away. Where in the agrifood chain are the benefits as a result of this deal?

Second is my point about concerns about criticisms. You indicated you weren't all that comfortable or all that satisfied with the way in which you were consulted. You said there had been some consultation, but with consultation presumably somebody has to listen, if it's going to work. What does the government say when you make your various recommendations for changes in definitions, performance requirements, exemptions, competition rules, and so on? Do they say they will never sign anything without those things, or do they just say thank you very much, see you later?

There are two questions there.

Mr. Bob Friesen: I think our relationship with the negotiators is at a comfortable level right now. I don't know that they would ever say no, if we don't get what we want, then we won't sign. We have never had that privilege yet. I would like to say that we have been assured they will work very closely with us and as long as we don't ask for obligations beyond those in the NAFTA investment agreement, then they will try whatever they can to give us a higher sense of comfort.

As for investment, as I said earlier, to the extent that this agreement would secure the investment climate in Canada it is good. I don't know whether this applies to just any MAI agreement, but in Manitoba now there's a very important American company which wants to invest in the pork industry.

Mr. Chris Axworthy: I wasn't concerned about investment; I was concerned about where the benefits are in the agrifood chain. Are they with the farmers? They don't seem to be. Are they with the processors? Are they with Cargill and other international companies? Where would they be? Surely that's an important concern when we're signing deals of this sort. If it doesn't help a whole raft of society which needs some support, then is it a good deal? If it helps those who are already perfectly capable of looking after themselves, is it a good deal?

Mr. Bob Friesen: I believe any time you give an opportunity for investment where it grows the agricultural industry and doesn't threaten the domestic structures and the regulatory system we have, then there's considerable potential for benefits to accrue back to the producers.

Mr. Darrin Qualman: I would like to respond to Mr. Axworthy's question too.

We have done analysis on who benefits, and this idea that if you just make the pot big enough everyone will benefit is Ronald Reagan's theory of trickle-down economics, where you cut taxes for the rich and they create jobs for the poor. We looked at return-on-equity numbers. Shell Canada, a major fuel supplier to farmers, makes a 16% return on equity. Agrium Inc., one of our biggest fertilizer producers, makes 27%. Du Pont makes nearly 20%, John Deere 27%. McDonald's Restaurant makes 20%. It goes on and on. Over the last seven years farmers have made 2% to 3%.

[Translation]

Mr. Benoît Sauvageau: I have two questions for Mr. Friesen or for the lady from the Canadian Federation of Agriculture. Should the deal not be signed within the OECD, do you think that we should continue negotiating within the WTO?

[English]

Mr. Bob Friesen: My comments before were restricted to the fact that the competition policy is being worked on at the WTO, and that's where that work should be done, without interfering in the MAI and without the MAI interfering in that work. But my very capable assistant just pointed out to me that we already have 29 MAI agreements, and of course we have one with the Americans and Mexico. So a considerable amount of those investment rules are around for Canada already.

[Translation]

Mr. Benoît Sauvageau: My second question is of a linguistic nature because I would like to make sure that I understand correctly. Do a reservation and an exception have the same meaning in English and in French? Let me explain why IÂm asking that question. You said earlier that there were 52 pages of exceptions while I think that there are 52 pages of reservations.

• 1045

It seems to me that in French—and I would like you to confirm this—a general exception would mean that there is an agreement between the 28 or 29 members of the OECD, while a reservation would be for a group of five or six countries, such as France, Canada, Australia and others who have an agreement on culture.

In English, do you use "reservation" or "exception" for both or do you make the same distinction?

[English]

Mr. Bob Friesen: I may be on thin ice here—and correct me if I'm wrong, Jennifer—but you're right, and I've been talking about carve-outs as well. Sometimes when you start talking to these negotiators, you're wondering whether you still have the right dictionary at home or not, but when I talk about carve-outs, I mean the 29 countries get together and say this part should be carved out.

Mr. Benoît Sauvageau: It's an exception.

Mr. Bob Friesen: I believe that would be an exception, yes. And if it's country-specific, then it's a country-specific reservation.

[Translation]

Mr. Benoît Sauvageau: Thank you very much. We have just received a good answer.

I now have one last question for Mr. Qualman. If your are right in saying that this agreement is so bad, there can be only two reasons for that: either the negotiators and the Canadian government are totally incompetent, or there is a plot on the part of multinationals to push the government to sign. Which of those two answers will you choose?

[English]

Mr. Darrin Qualman: I don't think we're limited to those two choices, although everyone's free to draw their own conclusions.

There is a mistaken belief that economic integration agreements will increase the size of the total economy. That's the first assumption. The second assumption is that the benefits of that increased size will accrue fairly and equitably to everyone. I fundamentally disagree with—

[Translation]

Mr. Benoît Sauvageau: So, it's a third choice, neither of those two answers.

[English]

Mr. Darrin Qualman: I'm not a conspiracy theorist and I'm not here to insult the government, so no, it's neither of your two answers. I think it's just mistaken assumptions and theory.

The Chairman: Before we get any further into that, I'll go to Mr. Borotsik.

Mr. Rick Borotsik: I have one very quick questions of Mr. Friesen. He answered another question with respect to the one major issue that the Canadian Federation of Agriculture is concerned with; he said it would be to deal with the STEs, the state trading enterprises, the supply side management of this particular agreement. He also talked about going to the WTO to negotiate. Obviously, as we've seen in the past, a lot of the supply management is being opposed right now by the United States, particularly the dairy side.

I've always followed the premise that it's easier and better to manage change than to have change manage you. Even with the MAI and with the WTO agreements that are going to be renegotiated in 1999, do you feel the STEs are going to be the target of that particular set of negotiations?

Mr. Bob Friesen: I believe the Americans will target STEs.

Mr. Rick Borotsik: Simply the Americans? The WTO has 130 nations. Is it only the Americans?

Mr. Bob Friesen: We have friends, though. Internationally, we have friends when it comes to STEs in some countries. But yes, STEs will be targeted. In fact the Americans have said they will.

Mr. Rick Borotsik: In your opinion, is it better now to manage the change by agreement than to simply dig in our heels and say no, we're not going to go along with any of those changes?

Mr. Darrin Qualman: Well, I'd just like to ask Mr. Borotsik if he feels that the MAI gives him a larger range of tools with which to manage change. It appears to me that if you sign it, you will be saying that you give up your rights to use certain tools to manage change.

Managing change is good; that's the job of the government. What we're saying is the MAI does the opposite.

Mr. Rick Borotsik: Well, we disagree on that particular philosophy, but we disagree on a number of philosophies—

Mr. Darrin Qualman: You don't feel it's your job to manage change?

Mr. Rick Borotsik: —particularly corporations, but that's another issue altogether.

Mr. Friesen.

Mr. Bob Friesen: Just back to the STE thing, one of the reasons CFA has supported the change in the Canadian Wheat Board is that we were hoping it would make it more transparent and more friendly on the international front when it came to being challenged. So yes, to a certain extent, CFA does not necessarily fight change.

• 1050

The Chairman: I think we've had enough debate on the Canadian Wheat Board.

Voices: Oh, oh!

The Chairman: Are there any further questions? Thank you very much for coming in. It's been very informative. We'll continue our investigation on the MAI next Tuesday.

We have a motion by Mr. Jay Hill. You all have a copy of the motion. I think Mr. Penson is going to replace Mr. Hill in discussing the motion.

Mr. Charlie Penson: Yes, Mr. Chairman, and we have an amendment to better reflect what's intended here.

The Chairman: Okay. Mr. Benoit, do you have an amendment?

Mr. Leon Benoit: Yes. The amendment would be to strike the words “be preventing” from line 10 and insert instead the words “limit fair and open access to”.

An hon. member: We agree with that.

Mr. Leon Benoit: The rationale is that a lot of the things we are talking about don't actually prevent exports, but they make it difficult because of unfair trade practices.

The Chairman: So it would read “if any, may limit fair and open access to dairy exports from Canada”.

Mr. Leon Benoit: Yes.

The Chairman: Mr. Penson.

Mr. Charlie Penson: Mr. Chairman, I'm just filling in here today in agriculture, as you can see, but I am on the other committee, the foreign affairs and international trade committee, and we've discussed this—my colleague Mr. Benoit has as well—in our committee. I raised it about two months ago with the intent of trying to clarify an area that I think is going to have increased problems in the future, and that's the dairy industry.

We are always hearing the Americans tell us that we have these substantial tariffs, and they want to have access to our market, but what we don't hear and what we don't know a lot about are their substantial state-level subsidies. There are school lunch programs and all kinds of herd reduction things, like buy-backs and that type of thing, that they have in the United States, which have the effect of restricting access to Canadian dairy products in higher measure, or probably higher than our tariffs.

I think we're going to continue to face actions in the future in the next round of the trade talks on agriculture in 1999 and 2000. There will be pressure on our supply management system and on the tariffs, and I think we're going to continue to face problems like the ones in our dairy export program, where we now have two actions against us by the United States and New Zealand at the WTO, that whole problem of the butter-sugar-oil blend, where it's under a certain tariff line in Canada.

Right now it's before the Canadian International Trade Tribunal, but it seems to me that even if we win there, they'll invent some kind of new blend that meets another category. There's going to be pressure for a long time, so in recognition that it's going to be a continuing problem, I believe that it would be in our interests to try to see what is hurting our ability to export dairy products into the United States.

Our dairy industry is largely located between 100 and 200 miles from some major cities in the United States, and I think that if we could identify and try to work down their state-level subsidies and things that are hurting access, it would be in our interests.

The Chairman: What did your committee decide?

Mr. Charlie Penson: We've decided to study it, in a joint committee, if it's your wish here in agriculture to do that. Right now we have a nuclear non-proliferation study going on, so it'll be about two or three weeks before we could get to it. We are going to study it whether agriculture comes with us or not, but I think it would have a big benefit if we could have a joint committee.

• 1055

The Chairman: Mr. McCormick.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Thank you, Mr. Chair.

Certainly it could be a most valuable, very important, and very timely study. Through you, Mr. Chair, to Mr. Penson, with your expertise and views on the MAI, I enjoyed hearing your questions today, and I do look forward to studying the report and your dissenting report from your party, because of what I've heard here today.

What we're asking for here with this motion by Mr. Hill are excellent questions as a start, which we need to hear. But already, from each party around this table, we've started to ask these questions. For example, when Mr. Gifford was here last week, I think each party asked questions for him to report back on. It could have been this week; as for which day, I'd have to check.

So I do question whether it's duplicating to an extent. That's my concern, Mr. Chair.

The Chairman: Mr. Benoit.

Mr. Leon Benoit: In response to that, certainly I don't want to rely just on one expert for information. The committee would call witnesses from a variety of backgrounds, and that's critical. I'm the Reform agriculture critic responsible for supply management, and I am really concerned for what's happening in the dairy industry and what's likely to happen through challenges, but also through the 1999 WTO negotiations.

The greatest service we could perform for dairy farmers in this country would be a very open discussion and a real fact-finding mission on unfair trade practices in the United States in particular, and then try to push the United States to reduce these so that as we move to a more open and more competitive system, Canadian dairy farmers have access to that American market.

It will just be extremely damaging to the industry if that doesn't happen, and I really fear that it won't happen if we don't initiate it.

Mr. Larry McCormick: In response to that, Mr. Benoit, recently we looked at the schedule for our standing committee with all parties here, and we talked about when we could bring in witnesses. There are a lot of openings there, and there can and should be. We can do that within this committee, and we should.

Thank you.

The Chairman: Yes, John.

Mr. John Harvard: I can bring some information to the committee that might be helpful to you, and I will mention that in a moment. I say that because I'm here wearing two hats, one as parliamentary secretary to the minister and another one as just a member of the committee.

As a member of the committee, let me say I don't think that at any given time we can have too much data and too much information. The more we have, the chances are the better off we are. I haven't spoken to every member of the committee on this side, but those I have spoken to indicate that while they would agree perhaps in a general sense with the intent of the motion, they ask themselves whether this is the way to go, whether we really have the time, whether we have the resources, and whether it's a good idea to strike a subcommittee.

The question is, do we have at our fingertips or someplace nearby most of the information that this motion seeks? This is where I get to the information that I referred to at the beginning and this is where I will speak as Parliamentary Secretary to the Minister of Agriculture.

I raised this with the minister because I apprised him of this motion, and he simply put it this way: there is a mountain of information of this kind already existing in the department. He made an offer to have the department put together all the information the department has, make sense out of it, and bring it here to the committee in the form of a report.

To me, that's a pretty good offer. I think everybody around this table is extremely busy, and I don't think we have to be a travelling committee on this issue. We don't have to go to Nevada or Michigan or Washington or New York. Chances are that almost everything we would need to know is right here in the capital.

• 1100

The department has the resources and the minister has made the offer, so why don't we do it that way? If for some reason—and I'm sure there could always be some reason—after the department has done the work and has presented the report here, we find something wanting, some kind of a gap of something, let's cross that bridge when we come to it.

From my point of view as a member of the committee, I would suggest that's a very good way to do it, so I don't think this would really need an amendment. Let's just take up the minister's offer.

The Chairman: Mr. Sauvageau and Mr. Calder.

[Translation]

Mr. Benoît Sauvageau: I more or less share the view that M. Harvard has just expressed. If I recall correctly, when we talked about it in this committee we had asked the researchers to find some documentation and to look into what has already been done on this subject before we start studying it. So, as Mr. Harvard said, we should wait until that work is done. It seems to me that we had all agreed on that. Am I mistaken?

[English]

Mr. Charlie Penson: Yes, I think it's as I said. It's a commitment from the committee to go ahead, but the first step is to gather up any available information so we can see what work has been done.

[Translation]

Mr. Benoît Sauvageau: Okay.

I would also like to make a suggestion, very humbly, because I am a bit of a stranger in your committee. The Standing Committee on Foreign Affairs and International Trade holds its formal meetings every Tuesday and Thursday mornings. We have decided to strike a committee composed of two subcommittees human rights and international trade. The two subcommittees will meet together on Wednesday afternoons.

Should your meetings be held on those days, you could strike a subcommittee on foreign affairs and agriculture and we could then find some other time to sit.

There were no formal objections in our committee insofar as we can get all the information. And if that information is sufficient, there is no point in striking the committee.

[English]

The Chairman: Mr. Calder.

Mr. Murray Calder: Thanks very much, Mr. Chairman. I have just a couple of questions.

We obviously have information on this that is going to come from the minister, but this being a subcommittee, Charlie, when is this subcommittee going to meet if this is passed? Who's going to be on that subcommittee? Maybe you could answer those questions.

Mr. Charlie Penson: My concern is that it seems to me it gives it a little higher profile if you have a committee study with a report that comes out afterwards, even if it's just gathering up information that already exists. But I think there might be a need to ask witnesses to come before the committee.

There's a long history of joint committees to study these things. We've just done one on the Special Import Measures Act with finance over at international trade and it just seems to me that it gives it a little more legitimacy if agriculture and trade are studying this and a report comes out afterwards, as opposed to information being all over and you just gather it up and we still have it. We need to publish a report to that effect. I think the logistics can be worked out.

My concern is that if we do nothing and then we're hit with a substantial action in the next round...the way the first round of agriculture talks worked at the Uruguay Round, agriculture was not under international trade rules until 1992 even though merchandise has been since 1947, and I think there was a recognition that it was only the first step, that there would be substantial movement the next time around.

It seems to me if tariffs on supply-managed products go down to 100% this next round—a substantial reduction—and we haven't tried to pry open access to the American market or talked about all of the problems they have that restrict access, we're doing a disservice to our people who have substantial investments in these areas.

• 1105

Mr. Murray Calder: I'll quit right after this, Mr. Chairman, but the only thing I'm looking at right now out of this committee...and I've talked to the chairmen about this, both the chairman of this standing committee and the chairman of the SCOT committee, the Standing Committee on Transport. We're talking about having another subcommittee right now in order to take a look at the grain transportation system, and now you have another one coming out of here right behind it that's going to take a look at this issue, and there might be another one. I just don't have enough...I need a clone, that's what I need.

Some hon. members: Oh, oh!

The Chairman: I can relieve you of one thing. The SCOT committee decided not to go as a joint committee with us to look at grain transportation.

Mr. Murray Calder: Okay.

The Chairman: I've talked to Ray, who was advised that it wasn't a very good idea, so they've declined the offer.

Mr. Coderre.

[Translation]

Mr. Denis Coderre (Bourassa, Lib.): Mr. Chairman, I think every thing has been said. It is a matter of scheduling. The mandate of the Standing Committee on Agriculture and Agri-Food is precisely to look at this type of issue. So in my view it is a priority but I don't see the need to have a subcommittee. I think we should vote on this motion, Mr. Chairman.

[English]

The Chairman: Mr. Steckle.

Mr. Paul Steckle: While I agree with the general sentiment and the thrust of the motion, like many others around here, I think we're all finding ourselves doubled on committees.

I think we indeed ought to go into the next set of negotiations with all the best information available. I think this is very timely for this very important sector. While your party and my party don't share the same views on supply management, I would hope this wouldn't be an issue as we go into this.

But I'm sure that bringing in people from the United States wouldn't be without cost. I think this thing could get into something. If we don't have the information available, I think it's something we ought to be looking at at some time before we go into it. I know the time is limited and I don't know where we're going to find the time to do it—this is basically what I'm saying—unless we can separate ourselves from our committees and we all agree to take certain members off our committees to do this and nothing else.

Mr. Charlie Penson: On a point of information, Mr. Chairman, I know that the joint committee between finance and foreign affairs and international trade, which reviewed the Special Import Measures Act, was a small committee. There were four of us, I think, something like that, so the whole committee was not involved in the joint committee. In terms of logistics, I think it can be done.

I just want to remind you, though, that 1999 is the beginning of the trade negotiations, and it's not that far away, is it?

The Chairman: Maybe, Mr. Penson, seeing that you're not a regular here, I can point out to you that we have taken on the WTO as a special interest. We'll be doing hearings for all commodity groups across the country in the next year and a half. It's not something that we're ignoring. One of our main priorities is that next round of negotiations on the WTO.

Mr. Charlie Penson: Yes, I'm sorry. I was just here today for this presentation and happen to be filling in. Your committee knows better what work you have to undertake. I don't know anything about it.

The Chairman: Mr. Axworthy and then Mr. Benoit.

Mr. Chris Axworthy: I'm not sure there's any contradiction between what is really being said. Would it be so troublesome to have a joint committee for the purpose of investigating this issue, a committee to which the minister's work would be a contributing factor? And it seems to me that we would always want that. It may be the first issue the joint committee looks at, and then it could consider whether it needed to go very much further.

And I don't think the committee would have to travel. There is enough expertise in this country without our going and asking Americans to tell us why they won't let us sell our dairy products down there. I don't think we'd actually want to go and ask them that. That's one point.

The other point, I suppose, is that I wonder why we would limit ourselves to dairy products, other than for ease of handling. Are we not just as concerned about a whole range of other things as well?

The Chairman: Mr. Benoit.

Mr. Leon Benoit: I agree with Mr. Axworthy. I suspect that the first witness for this joint subcommittee could well be a representative from the department, who would give us a summary and a compilation of the information they've put together. But the parliamentary secretary—and I think someone else—says the information is there in the department. If it is, then I've had a lot of information withheld from me, because I've been asking for that information over the last four years. I haven't received information that's helped me really at all in that area.

Mr. Larry McCormick: On a point of order, Mr. Chair, I'm not, as an individual, nor are we all, saying—I'm not speaking on behalf of anyone—that we want to limit ourselves only to that information. I sure want and need to receive and listen to the information that's available from any and all sources. Again, I just think we can do it within these boundaries.

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Thank you, Mr. Chairman.

Mr. Leon Benoit: My concern is that there doesn't seem to be.... Mr. Steckle said we have different views on this issue, but I think we do share a common concern, or at least I hope we do, although I'm concerned that the parliamentary secretary said he doubts whether we have time to study this in depth. To my way of thinking, these joint committees, both on transport and on this issue, probably will be providing a more useful service than if we study it only in the agriculture committee. I think we'll be providing a more useful service to farmers.

It is absolutely essential, with 1999 and the start of this next round of the WTO, that we do this work now. I don't want to be having to point back across the House three years from now saying, “You guys wouldn't study this”, but that's what I'll do if we don't look at it.

An hon. member:

[Editor's Note: Inaudible] blackmail either.

Mr. Leon Benoit: Excuse me; I wasn't quite finished.

The Chairman: Mr. Harvard and Mrs. Ur.

Mr. Leon Benoit: No, I wasn't finished, Mr. Chair.

The Chairman: Oh, you weren't?

Mr. Leon Benoit: No, I wasn't. I just make the point that it's important that we do look ahead that far. That's the point I'm trying to make there.

The Chairman: Yes.

Mr. Harvard.

Mr. John Harvard: I just think we should be careful and not have too many parallel efforts or parallel inquiries going on at the same time. As the chairman pointed out, the WTO is a focus of this committee's work. Over the next many months all kinds of witnesses will come before this committee, and we will have an opportunity to raise the very concerns that this motion addresses.

At the same time—and I know it's not the committee's work—I think we all know that the department is carrying out massive consultations with every nook and cranny of the industry, not only dairy, but every industry that will be affected by any new WTO agreement. So as I say, we shouldn't be having too many parallel operations going on. The fact that the department is willing to tie all this information together and bring it to us in the form of a report goes a considerable distance.

The Chairman: Mrs. Ur.

Mrs. Rose-Marie Ur: Mr. Chairman, I've listened to all the good interventions, and my opinion is that probably we should wait until we can get this information from the department, if they say it's available. Upon review, if we feel we need more time or a committee set up, at that time I do believe the option would be there to bring this forth and set up the committee.

I was totally supportive of it, but I was a little taken aback with Mr. Benoit's last comment that he doesn't want to have to go back to the House and point at us, saying we didn't want to participate. That's what I don't want to have this fall into.

An hon. member: It sounds like blackmail.

Mrs. Rose-Marie Ur: We're supposed to be here for the good of our farmers.

The Chairman: So you're saying gather the information from the department and bring it back.

Mrs. Rose-Marie Ur: Exactly, because I'm very supportive, but don't use it as a political tool.

Mr. Charlie Penson: I call the question. I think we're at the point, Mr. Chairman, where we should call the question on the motion. It's clear that there's no support over there.

Mrs. Rose-Marie Ur: No, no.

Mr. Leon Benoit: There's no support.

Mrs. Rose-Marie Ur: Yes, there is, sir.

Mr. Leon Benoit:

[Editor's Note: Inaudible]

Mrs. Rose-Marie Ur: No, but I'm saying we should gather the information.

Mr. Charlie Penson: I call the question.

The Chairman: The mover wants the motion moved.

Mr. Leon Benoit: I'd like a recorded vote, please.

The Chairman: Okay.

The Clerk of the Committee: Mr. Benoit?

Mr. Leon Benoit: Yes.

The Clerk: Mr. Penson?

Mr. Charlie Penson: Yes.

The Clerk: Mr. Axworthy?

Mr. Chris Axworthy: Yes.

The Clerk: Mr. Calder?

Mr. Murray Calder: No.

The Clerk: Mr. Coderre?

Mr. Denis Coderre: No.

The Clerk: Mr. Harvard?

Mr. John Harvard: No.

The Clerk: Mr. McCormick?

Mr. Larry McCormick: Well, until somebody turns the mike off, I can speak. I don't like the preamble to the vote, because I—

The Chairman: I think we've—

Mr. Larry McCormick: I'm sorry, Mr. Chair. I will continue until you remove me. I just want to say that I still think we're not against it, but I will say no to the motion because of the way it's presented.

The Clerk: Mr. Steckle?

Mr. Paul Steckle: Conditionally, no.

The Clerk: Mrs. Ur?

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Mrs. Rose-Marie Ur: I support it but I can't support it in the way in which it's presented, so I'd have to say no.

Some hon. members: We're not against it.

(Motion negatived: nays 6; yeas 3)

Mr. John Harvard: Mr. Chairman, how do we take up the offer of the department? Do we need a motion for it?

The Chairman: I don't think we need a motion for it. I think that as parliamentary secretary you could make that request. You've been talking with the minister.

Mr. Calder.

Mr. Murray Calder: Mr. Chairman, because of what this motion was trying to go after, I would like to suggest that we get representatives from the department to appear in front of us to basically lay out the information that this motion was trying to glean.

The Chairman: I think the offer from the minister was that he would instruct his department to gather all the available information and present it to us, not through witnesses but in a report. Then we can take it from there.

Mr. Murray Calder: Okay.

The Chairman: Mrs. Ur.

Mrs. Rose-Marie Ur: Mr. Chairman, I strongly support that. I want to be on the record as supporting this, but let's put it in the proper sequence. I'm supportive of this, but let's get the information first. And then I have no problem if we're not satisfied...I'm not using this as politics one way or the other. It's a good idea, but let's just do it the right way.

The Chairman: Mr. Steckle.

Mr. Paul Steckle: Mr. Chairman, I would also like to put on record that the suggestion to table was denied by the Reform Party, and that there were those of us here who would have supported the idea of tabling, but it wasn't allowed.

Mr. Leon Benoit: We don't want to get politically involved—

Some hon. members: Oh, oh!

Mr. Larry McCormick: My intent—

Mrs. Rose-Marie Ur: You started it, Leon.

The Chairman: We'll leave it at that. The meeting is adjourned.