FAIT Committee Meeting

STANDING COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE

COMITÉ PERMANENT DES AFFAIRES ÉTRANGÈRES ET DU COMMERCE INTERNATIONAL

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, March 25, 1999

• 0905

[English]

The Chairman (Mr. Bill Graham (Toronto Centre—Rosedale, Lib.)): We will get going here.

Mr. Isaacs and members of the Canadian Environment Industry Association, welcome before the committee, and thank you very much for having received some of us yesterday morning for breakfast. I understand the members have accepted to go the association trade show between 11.30 a.m. and 1.30 p.m. today, so we'll have a chance to see you again.

We only have a short time here, because we only have until 9.45 a.m. with your delegation. So perhaps you could begin and then we could open up for some questions.

Mr. Colin Isaacs (Chair, National Policy Committee, and President of Contemporary Information Analysis, Canadian Environment Industry Association): Thank you very much indeed, Mr. Chairman.

We are very delighted that you will be joining us at lunch time today at Americana '99. It's the year's most important international environment industry trade show in Canada, with more than 7,000 visitors, including some 40 international delegations who will be conducting business and concluding deals with Canadian environment firms. It's a very important time for our industry and we're delighted that we're able to meet with you here this morning, and also delighted that you will be joining us at lunchtime to meet some of our member firms and some of the other companies in the environment industry.

We're also pleased that we have this opportunity to welcome you to Montreal during this very important time for our industry.

A submission has been prepared by the Canadian Environment Industry Association to advise you of our considerable interest in the upcoming World Trade Organization discussions.

Our interest was further heightened earlier this month when Susan Esserman, the top attorney for the U.S. trade representative's office and the President's nominee for the position of deputy trade representative, announced that the U.S. will place a high priority on the environment in the upcoming round of trade liberalization talks.

The Canadian Environment Industry Association and its network of members represent about 1,500 Canadian companies providing environmental products, technologies and services. We represent one of the fastest-growing sectors of the Canadian economy, and one largely comprised of small and medium-sized enterprises.

With me this morning to assist in our presentation are Robert Fraser, who is chair of the Environmental Exporters Council, one of the councils of the Canadian Environment Industry Association; and Ms. Rebecca Last, who is director of policy and programs for the Canadian Environment Industry Association.

Canada's environment industry has been and continues to be a major engine for job and wealth creation, both in its own right and because it's an enabling industry. The environment industry helps traditional industries achieve their environmental and economic goals, and as such contributes significantly to Canadian productivity. It's arguably one of the most important sectors of our economy in terms of enabling our nation as a whole to meet its obligations arising from international accords such as the Montreal Protocol, Agenda 21 from the Rio Earth Summit, and most recently the Kyoto accord.

Altogether there are about 4,000 environmental companies in Canada. The industry has annual sales of close to $20 billion a year, contributing 2.2% to Canada's GDP. We export in excess of $1 billion annually. We employ over 123,000 people, more people than are employed in oil and gas, chemicals, logging and forestry, pulp and paper or the textile sectors. Perhaps most importantly, global market growth in the environment sector is projected to remain at about 7% per year through the year 2000, with double-digit growth in some key developing markets.

Canada's environment industry is a knowledge- and technology-based industry that already has significant international advantages, and environmental companies are located in every region of the country. The success of Canada's environment industry is substantially dependent on our ability to export our goods and services, and we're very supportive of trade liberalization to support our export efforts.

• 0910

Canada has certain advantages in the world arena. We're seen as a country with a well-established environmental ethic and many years of experience in ensuring a high level of environmental protection. It's very important that the Canadian government work hard to maintain this reputation. Every time we're accused of environmental misdemeanours our reputation gains a little more tarnish. We urge the committee to remind the Government of Canada at every available opportunity that Canada's environmental reputation is one of our most important assets in marketing Canadian products and services to the world.

Canadians are seen by many countries as honest, trustworthy and having less tendency to be dominating or ambitious than some of our international competitors. Governments and companies in developing countries tend to be comfortable dealing with Canadian environmental suppliers and with Canadian companies in general.

Canada's environment industry has experience in working with clients from many different industrial sectors and in companies both large and small. Our companies recognize the value of training and are prepared to share knowledge and expertise in partnership with our clients in countries around the world. And Canadian companies generally have good access to financing, with which we can help support our international clients in their efforts to reduce pollution and move towards more sustainable forms of development.

We have a number of specific issues we would like to bring to the committee's attention this morning, and first of course is that it's impossible to discuss the WTO today without making reference to the recent ruling regarding the Technology Partnerships Canada program. CEIA strongly supports the TPC program. We argued for its foundation, for its continuation and for its extension to companies in our industry. TPC has provided invaluable assistance in the commercialization of new Canadian environmental technologies, and in our full brief, which we'll be submitting to you next week, we provide you with some examples of the support that has been made available from TPC to companies in the environment industry sector.

We fully support the government in its efforts to defend the TPC against the retaliatory complaint. If Canada's appeal of the current WTO decision is rejected and changes have to be made to the TPC program, the environment industry must be fully consulted prior to a final decision on any changes.

Environmental technology companies from other countries have access to a much wider and more generous range of government support than Canadian environmental companies. Our one major national program, TPC, must not be diminished by international pressure. We would further urge that our government review and seek to match the advantages that governments in other countries provide to their environmental technology and service providers.

Two examples of U.S. support for their domestic environment industry are illustrative. Domestic tax credits in the U.S. support a growing renewable energy and energy efficiency industry. In Canada, capital cost allowances are actually less favourable for renewable and for many energy efficiency technologies than they are for non-renewable technologies. U.S. Department of Defense spending on site remediation has built a strong remediation subsector of the American environment industry. In Canada, the program that provided federal funding for site remediation of crown lands was terminated in 1997.

We fully support the concept of reducing government subsidy to industry, but only where such reductions proceed equitably among our major trade partners. Canada's environment industry deserves a level playing field with environmental companies in the U.S., Europe and Japan. A level playing field allows us to compete effectively and bring economic and environmental benefits to all Canadians.

By contrast, the current absence of a level playing field is causing our industry to lose some of its competitive position. As a result, the environmental and economic well-being of Canadians will suffer accordingly.

• 0915

On the issue of trade and national environmental responsibility, it's our strongly held view that Canada's position in the upcoming WTO must in no way undermine the sovereign ability of nations to manage their own natural resources and impose environmental regulations designed to protect these resources. This is clearly an issue of great concern for the domestic market in Canada, but also for international market opportunities.

The issue is one that requires a delicate balance. On the one hand, environmental concerns should not be used as a protectionist measure to impede or circumvent free trade provisions. On the other hand, harmonization of national objectives through multilateral environment agreements must take place in a manner that is cognizant of and integrated with the international trade regime.

We are concerned by the growing proliferation of so-called environmental measures that are, in effect, and we suggest also by intent, really trade protectionist measures. This is not an issue that appears to be high on the agenda of the Government of Canada in its international dealings.

Too often Canadian companies suffer as a result, falling victim to phony environmental measures introduced by other nations. International trade is a hardball game, and Canadian companies deserve appropriate levels of support from their national government. Without this support, it's hard to see how Canada will retain its reputation as a world environment leader.

CEIA strongly recommends that Canada put forward the following principles to guide international negotiations seeking to address the needs of sovereign nations to control their environmental resources: to stress the importance of sound environmental science as a basis for decision-making, to apply the precautionary principle as the foundation of public policy, and to recognize the need for a high level of environmental protection as a component of sustainable development. These principles are not mutually incompatible.

Canada must resume its position as a leader, not a follower, in negotiations for multilateral environment agreements, and we must show the world that we will not tolerate the abuse of the environment, either in a physical sense or through the misuse of so-called environmental measures that are adopted for short-term protectionist gain.

It's more important now than ever before that Canada lead the world in demonstrating successful integration of its trade and environment policies. One particular area where Canada can demonstrate environmental leadership and help build business opportunities is in the negotiations leading up to the free trade area of the Americas.

As you know, there is an environmental side deal to the NAFTA agreement, the North American Agreement on Environmental Co-operation. Canada was a leader in designing that agreement and has indeed adopted a similar kind of agreement in its bilateral free trade agreement with Chile.

The North American Agreement on Environmental Co-operation has just been subjected to its first five-year review, and it has passed, not with flying colours but with some compliments and some criticism. In five years we've learned a lot about integration of trade and environment, what works, what does not work, and what works to some degree but could be made to work much better.

In the FTAA, some countries support an environmental side deal, and some fairly strongly oppose it. As current chair of the FTAA, Canada is in an excellent position to lead, to encourage those who are reluctant to see the benefits, and to help design the next generation of integration trade and environment agreements. Our environmental trade with our FTAA partners will benefit immensely if Canada takes a leadership position.

I also want to address environmental assessment of the WTO negotiations. In common with some other countries, Canada is committed to undertaking a national environmental assessment of the negotiations. We regard this commitment as an opportunity, not a burden. Members of the standing committee will be aware that many Canadians are concerned that increasing freedom in international trade is incompatible with maintaining a high level of environmental protection. We disagree with that view. Not only are trade and environmental objectives compatible, but international trade is already becoming a powerful force for increased environmental protection and further implementation of sustainable development worldwide.

• 0920

The environmental assessment of WTO negotiations can be a valuable opportunity to educate Canadians on how enhanced trade can benefit both our national and global environments. We pledge our association's strong support for a public education initiative of this kind.

One last issue I wish to address is to improve disciplines on environmental certification and labelling. Canada has been a leader in development of environmental management systems and in environmental certification and in eco-labelling, yet our domestic implementation often falls behind our international objectives.

We must implement ISO 14000 compliant environmental management systems, use the tools of life cycle analysis, eco-labelling, and technology and professional certification, such as Canada's environmental technology verification program, up to international expectations. Such programs are not designed to be mandatory; they are fundamentally voluntary initiatives. Yet unless they are implemented domestically in ways that match international expectations, then our ability to compete in international markets will be hindered.

There's no more deflating experience for the seller of Canadian environmental technology than to have to admit to a prospective foreign buyer that there is little, if any, domestic demand for the wonderful Canadian technology he's marketing overseas. Domestic demand requires government leadership. Like its counterparts in the U.S. and Europe, the Canadian government must show the way by strongly encouraging Canadians to implement or adopt these leading-edge Canadian and international environmental initiatives.

A crucial and timely example is the urgent need for Canada to adopt a program that will assure credit for early action and encourage the Canadian private sector to move strongly to address our national greenhouse gas emission reduction obligations under the Kyoto protocol. Other countries are already building a strong base of international trade in climate change expertise, aided by internationally tradeable economic instruments. Canada has hardly begun to scratch the surface of this enormous opportunity.

CEIA believes the government can and must begin to show strong support for industry leadership by developing the framework necessary to credit those companies that undertake early action on climate change issues. The urgent need for action on this front cannot be overstated.

Our association predicts that if Canada does not have a credit for early action program in place and operational by this time next year, our companies can expect to be almost totally shut out of international climate change business opportunities. In this area in particular, Canada must not wait for the rest of the world. We must lead the rest of the world in this vitally important area of trade and environmental protection.

In conclusion, we have very much welcomed the opportunity to present this brief to the Standing Committee on Foreign Affairs and International Trade. We also look forward to welcoming you at lunch time today at our international trade fair here in Montreal.

The concept of integration of trade and environment may be a new one for members of this committee, but it's becoming vitally important as we move towards a new millennium and a new set of WTO negotiations. Canada's major trading partners recognize the importance of trade and environment; Canada must do the same.

We're particularly pleased that International Trade Minister Sergio Marchi has recently renewed the Environment Sector Advisory Group on International Trade, the SAGIT, on which a number of our members sit. Your committee and the SAGIT are very important forums to explore and steer the evolution of trade and environment policy.

We look forward to ongoing work with you towards the joint objectives of enhanced international trade and environmental protection, goals that we believe are shared by many Canadians.

Thank you, Mr. Chairman.

• 0925

The Chairman: Thank you very much, Mr. Isaacs. It's very encouraging to hear somebody say there's a role for environment and international trade. We keep hearing about the conflict, as if it were a conflict that could never be resolved. So this is quite a positive and encouraging thing.

Members, I suggest we keep our time to five minutes because we only have 20 minutes for Mr. Isaacs. We'll have an opportunity to see him again at lunch. This group is finished at 9.45 p.m.

Mr. Obhrai.

Mr. Deepak Obhrai (Calgary East, Ref.): Thank you.

Thank you for the presentation. Of course we recognize the importance of industry, specifically in exporting Canadian technology overseas. There's a fantastic market out there.

You alluded to some points, and we agree with many of the things you said. I have one question in reference to TPC. In your recommendation asking that TPC be maintained, which would be quite contrary to the WTO, you have stated that your rationale for the existence of TPC is based on other countries supporting it. But the mechanism in WTO to create freer trade puts complaints against other countries' subsidies, which Canada should take a more leading role in, but we are doing that.

I thought your industry would probably recommend creating more of a business environment over here rather than a direct subsidy to TPC—to your industry. So I'm curious as to why you're not taking that route, as opposed to asking for direct subsidy from the government.

Mr. Colin Isaacs: We would be very interested indeed in sitting down with government, perhaps with your committee, to discuss other forms of assistance used in other countries, which may indeed put us on an even more level playing field than TPC does. Our position is simply that we don't want to see TPC eliminated, with nothing in place to replace it, while our competitors have other kinds of programs to support them.

Ms. Last can take just a minute or two to give you an overview of some of the programs other countries are using to support their environment industry sectors.

Ms. Rebecca Last (Director of Programs and Policy, Canadian Environment Industry Association): Thank you, Colin.

Mr. Obhrai, it is a very interesting question you've posed. I believe, if I'm not mistaken, Minister Manley has committed to revising the Technology Partnerships Canada program so it is not in violation of the WTO. As far as I'm aware, it will be maintained as a program.

Obviously our concern is that it continues to be of utility to our environment sector in particular, but also to other Canadian sectors that are attempting to develop, commercialize, and particularly export new technologies. You may or may not be aware that the extension of the Technology Partnerships Canada program to finance international technology demonstration was the result of an initiative our association took in meeting with Mr. Manley.

I would like to talk very briefly about some of the sorts of international assistance our major trading partners offer to the environment industry in other parts of the world. One notable example is the international technology transfer demonstration project in the United States. In 1996 they spent about $14 million on environmental projects alone. That's one of a number of funds at both the federal and state levels that environmental companies in the United States have access to. Companies from Germany, Denmark, the Netherlands and the U.K. all have access to specialized environmental funds.

• 0930

Mr. Deepak Obhrai: Can this not be challenged in the WTO rules?

Ms. Rebecca Last: That's a very interesting question, because it becomes sort of a philosophical question of whether Canada wants to take the high road, as we have tended to do in the past, refrain from providing subsidies for our own companies, be nice guys and not challenge the ones—

Mr. Deepak Obhrai: No, you can't work both ways.

Ms. Rebecca Last: So we tend to lose on that score.

The Chairman: We lost on the challenge one too. It backfired on us.

Ms. Rebecca Last: That's not a question our association has addressed through our consultative process. So I'm not sure I would feel comfortable answering it directly.

Mr. Deepak Obhrai: That's the road to take for your association.

Ms. Rebecca Last: It's certainly part of the ongoing consultations we launched in response to your invitation to speak to the WTO issue. That process is not yet completed. We will be continuing to solicit opinions from our members on that.

Mr. Colin Isaacs: We'll take note of that suggestion, Mr. Obhrai. It's well worth looking at. My immediate reaction would be that the WTO decision-making process is fairly slow. If you go after all these programs one at a time, you get a real patchwork for probably as long as a decade, until it all gets sorted out.

The use of the WTO to negotiate better rules that are clearer for everybody, so we don't have to go through that process, might be a better way to go. We're certainly happy with a ratcheting down of these programs, as long as our competitors and our companies are on a level playing field.

Mr. Deepak Obhrai: Thank you.

The Chairman: Thank you.

[Translation]

Mr. Sauvageau.

Mr. Benoît Sauvageau (Repentigny, BQ): Following up on Mr. Obhrai's comments, I would just point out that if you want to make a complaint against countries who are not living up to their obligations, you should perhaps lobby the opposition parties to get you the documents, as we did here in Canada, for Brazil. However, that is not the subject of my question. I will be sharing my time with Mrs. Debien.

You said at the time of the five-year review of the NAFTA side agreement on the environment, it was found that certain things were working, certain things were not working, and others could be improved. However, you did not go into detail. Could you tell us, for example, what could be improved, what things we should be considering during the negotiations on the Free Trade Area of the Americas? That is my first question.

Here's our second question.

Mrs. Maud Debien (Laval East, BQ): As you know, Mr. Isaacs, developing countries are very reluctant to include environmental issues in the WTO negotiations. I would like you to tell me about steps that the Canadian environmental industry could take to allay the fears of developing countries regarding environmental measures. They think these measures could become protectionist. What is the Canadian industry prepared to do to help developing countries become part of the move towards sustainable development?

I come now to my second question. You dealt with the issue of climate change quite quickly. At the very end of your remarks, you said that Canada should do something, but I lost the thread of your comments at that point. You mentioned the issue of climate change and made a suggestion. I would ask you to repeat it or explain it, please.

[English]

Mr. Colin Isaacs: Do you want to respond to that?

[Translation]

Ms. Rebecca Last: Yes, I can answer that. You are asking, Ms. Debien, what Canada can do to encourage developing countries to implement more environmental protection measures.

Most developing countries are very interested in technology transfers. As a result, that is one of the strength of Canada's environmental industry.

• 0935

Last year, our association was involved with the Organization of American States in a series of round tables on environmental technology transfers. This was a success, both with these countries, which were brought up to date about Canadian methodologies and technologies, and for the Canadian companies that took part in the round tables, because they discovered some export possibilities.

This is a very interesting example regarding one of our major trading partners, the United States. There are many international regulations prohibiting the national funding of technology demonstration projects, unless there are no commercial benefits. In that case, it can be done. A number of countries with which we compete have international technology demonstration programs—Japan, Germany and the United States are among the counties that use this mechanism to their advantage to promote their exports.

This is an indirect way of promoting exports. In the initial stage, companies that take part in the program do not get anything out of it, and there is no problem. As a result, the Government of Canada could promote technology transfer, and this might encourage developing countries to increase their regulations and enhance their environmental protection measures. At the same time, Canadian companies could gain future export possibilities.

I hope that answers your question.

Mrs. Maud Debien: I understand.

The Chairman: You may answer Mr. Sauvageau's question.

[English]

Mr. Colin Issacs: It's a question that shows the breadth of the environment industry sector. We have companies that are involved in what are known in Europe as “green products”, that is, equipment and technology that are not for the environment but are environmentally improved. We also have members in services—management services, finance, etc.

The question of barriers comes up in very different ways in each of the sectors. There are some very interesting international WTO decisions, for example on shrimp-turtle and dolphin-tuna, which are not by themselves environmental decisions, but are reflective of a move toward excluding environmental considerations from the trade regime. And it's those kinds of decisions that we see as having a major problem in the context.

[Translation]

Mr. Benoît Sauvageau: My question was about the Free Trade Area of the Americas.

[English]

Mr. Colin Isaacs: I wanted to add that point as well—

The Chairman: I've a real timing problem this morning. Two more people have the right to ask questions, and I only have five minutes left. So we're trespassing very badly on other people's time.

Mr. Colin Isaacs: I'm sorry, Mr. Chairman.

The Chairman: It's not your fault. It's just a bit of a problem with timing this morning.

Mr. Colin Isaacs: I understand.

The Chairman: It's quite tight. If you could quickly answer that question, it would—

Mr. Colin Isaacs: On the FTA, the NAFTA question?

That particular report that has recently come from the review committee is an extremely long report. It has reviewed every aspect of trade and environment under NAFTA, and I'm reluctant to try to summarize it in one minute. The key areas that work are the concept of having a commission and having an environment trade agreement as a side deal or as a component. The parts that have not worked are a lot of the things the commission has actually done.

• 0940

[Translation]

The Chairman: Thank you. Mr. Bachand.

Mr. André Bachand (Richmond—Arthabaska, PC): I will be very brief, Mr. Chairman. I see you are in top form today for your duties as Chair of this august assembly. I have just one question.

Your third point, Mr. Isaacs, was about countries's ability to legislate on the environment. You spoke about the “sovereign ability for nations to regulate” in the area of the environment. I would like to hear more about that. I would like to mention a case which may not necessarily be the best example—I'm referring to the MMT case, in which there was a confrontation between the environment and a commercial decision. The environmental issue did not take precedence over the trade issue. In other words, trade came before the environment. So I would like to hear what you have to say about the ability to legislate with respect to the environment.

[English]

Mr. Colin Isaacs: I guess one of the things we have learned in the 10 years since environment has become a major international issue is that no environmental issue is simple. Cases such as MMT relate not just to the science of MMT but to the degree of risk that the society, the country, the people in the country are prepared to take, and also to the type of technology that is associated with whatever the product is—in the case of MMT, the car—and to the way the car is used, which is somewhat different in Canada than it is in the United States.

There is a whole range of factors that mean we need to be able to make our own decisions, and MMT is a particularly complex one because of the integration of the petroleum and the automobile industries. But we also need to look at the degree of risk, the degree of environmental protection, and the ambient air quality, the air quality standards, and everything else that members of a society are prepared to accept. Those issues need to be a key component of the decision-making process.

What I'm saying is we must use best science, but science doesn't always answer all of the questions. Often, science provides more questions than answers.

Mr. André Bachand: [Inaudible—Editor]

Mr. Colin Isaacs: Yes, you're not too far off. And in that context, that's where we say the precautionary principle, which Canada subscribes to, should be applied. If there is a risk, let's err slightly on the side of rejecting the risk rather than accepting the risk. If other countries wish to make decisions other ways, they should have the right to do so, and we may on occasion make decisions—

Mr. André Bachand: But the big problem is that a lot of countries will say that things like MMT are non-tariff.

[Translation]

That is the big problem.

[English]

Mr. Colin Isaacs: It's a very good example of the problem I described regarding non-tariff barriers. I do not believe Canada adopted that as a protectionist measure, but there are other countries that are adopting similar measures knowing it's for the protection of their industry.

Mr. André Bachand: Thank you.

The Chairman: Dr. Patry.

Mr. Bernard Patry (Pierrefonds—Dollard, Lib.): Merci, monsieur le président. Thank you very much. I'll be quite short. I have a comment and a question.

My comment is that if we read the recent speeches of the DG of the WTO, they all say that environment and sustainable development are very important; everyone on this planet agrees. Even last week in Geneva there was a symposium regarding commerce and the environment.

Now, if I'm going a little bit as Madam Debien just mentioned, it's considering that mainly most of the members of the WTO now are coming from poor countries and countries in development, and we're really going to need to have a dialogue between the north and the south. This is essential, because we're not going to succeed at anything if we don't do that.

• 0945

You mentioned the ambiguity about the shrimp and turtle and then tuna and dolphin decisions. I have a very simple question. Do you think that a world environment organization parallel to the WTO is a good idea, or should we really go within the WTO? What are the pros and cons?

Mr. Colin Isaacs: As an association, we have not reviewed that so far, so I cannot answer the question on behalf of the association. There is some concern that by integrating more into the WTO, the WTO grows into a bigger and bigger organization. On the other hand, whatever the process is must be capable of integrating trade and environment, rather than having one separate trade organization and one separate environment organization. We may need to create a new way of integrating without building a monster.

Perhaps Robert Fraser would like to add a comment too.

Mr. Robert Fraser (Chair, Environmental Exporters Council, Canadian Environment Industry Association): Maybe I can add to that.

As an association, we believe strongly that the environment is good business. And recognizing and accepting your comments dealing with the third world and developing countries, I think there's somewhat of a paradigm where environmental issues are seen as a burden to industry. That's because they probably are, as part of their development, still dealing with pollution control, creating the waste and then having to deal with the waste, which is an additional burden, whereas here in Canada we've moved much more towards pollution prevention, which means that there are strong economies in doing so. This relates back to the earlier comment by Ms. Last that Canada has a strong role to play to provide leadership and demonstrate to these countries how they can change their view of environmental issues to becoming one of good business.

Mr. Bernard Patry: Thank you.

The Chairman: Thank you all very much. That was very good, and we appreciate very much your coming this morning. We look forward to seeing you at lunchtime today. Thank you for the invitation. We'll view the trade show with great interest.

Mr. Colin Isaacs: Thank you very much, indeed. Thank you, members of the committee.

The Chairman: I understand from what you said that you are going to be filing a longer report.

Mr. Colin Isaacs: We have a brief, Mr. Chairman. I must apologize that we did not have copies this morning, because we made a last-minute addition to it and we wanted to make sure that last-minute addition was incorporated in what we gave you.

The Chairman: I hope it's environmentally friendly and you haven't used up too much paper.

Mr. Colin Isaccs: Thank you for the recognition.

The Chairman: I think this committee might get disbanded on the basis of environment, considering how much paper we use. But anyway, we won't get into that. Thank you very much.

[Translation]

Our next witnesses are from the Pharmaceutical Manufacturers' Association of Canada. We have only 45 minutes for your presentation. If you could keep your statement to 15 minutes, we would have 30 minutes for questions. We would appreciate that.

Mr. Houde.

Mr. Bernard Houde (Vice-President, Corporate Affairs, Merck Frosst Canada, Pharmaceutical Manufacturers' Association of Canada): Thank you, Mr. Chairman and committee members for the opportunity to present to the committee. We have distributed a text. We will not be following it word for word, but you at least have a copy.

My name is Bernard Houde and I am Vice-President, Corporate Affairs for Merck Frosst Canada. With me is Terry McCool, who is Vice-President, Corporate Affairs, Eli Lilly Canada Inc.

We are here representing the Pharmaceutical Manufacturers' Association of Canada, an association of approximately 60 innovative pharmaceutical and biopharmaceutical companies and research institutes that research, develop, manufacture and distribute brand-name medicines for Canadians.

• 0950

The Pharmaceutical Manufacturers' Association of Canada supports the initiative of the federal government and Parliament to undertake public hearings on Canadian interests in the forthcoming World Trade Organization negotiations.

Our brief today is meant to support this process by offering you some initial, preliminary comments on behalf of our industry on those international trading issues most impacting growth, jobs and research and development within Canada's innovative pharmaceutical industry.

The WTO Agreement that most directly affects our industry is the Intellectual Property Agreement, TRIPS (Trade-Related Aspects of Intellectual Property). Further negotiations are called for under TRIPS as part of the next round of WTO negotiations under the so-called "built-in agenda".

This will likely expand into a new “Millennium Round” of broad-based multilateral trade negotiations following the WTO Third Ministerial Conference in November and December of this year. Intellectual property issues will certainly make up part of these discussions.

Specifically, today, we would like to bring to your attention two key intellectual property rights most affecting Canada's innovatine pharmaceutical industry and that are emerging as important multilateral issues for Canada and our key trading partners.

These are: first, effective enforcement and implementation of current patent protection rights pursuant to TRIPS; and second, higher, internationally competitive standards of patent protection.

TRIPS is the most comprehensive multilateral agreement on intellectual property that exists. It covers all areas of intellectual property protection, including copyright, trademarks, industrial designs and, of course, patents. TRIPS covers three main areas of IP protection: standards of IP protection; enforcement of IP rights and dispute settlement mechanisms and procedures.

Canada's position has always been to support strengthened international trading rules that ensure a level competitive playing field. During the Uruguay Round negotiations, Canada made the establishment of high standards of intellectual property protection and their effective enforcement both a national and international priority. Canada was a central player in the international negotiations and welcomed the successful conclusion of TRIPS as one of the major achievements of the round.

Since then, Canada and other countries have made effective implementation and enforcement of the current TRIPS agreement a key objective for the WTO. That should continue. Canada's innovative pharmaceutical industry has always supported that objective and believes that ensuring the implementation of TRIPS through effective enforcement of internationally agreed intellectual property rights should continue to be the first order of business, including through the next round.

On that, Mr. Chairman, I'd like to give the floor to my colleague Terry McCool who will tell you a bit more about our industry and the matters we'd like to raise.

[English]

The Chairman: Mr. McCool.

Mr. Terry McCool (Vice-President, Corporate Affairs, Eli Lilly Canada Inc., Pharmaceutical Manufacturers Association of Canada): Good morning.

What I would like to do is talk a little bit about Canada's innovative pharmaceutical industry, the importance of TRIPS to our industry, and certainly a path forward.

The value of TRIPS and the necessity of ensuring effective enforcement of patents and other intellectual property rights can be seen in the example of our own pharmaceutical industry. Our industry in Canada has been a success story; in fact in many ways it's been a global success story. And it's been a success story because of one critical factor, which is Canada's movement towards higher international standards and rules governing intellectual property for patent protection. That key factor has been essential in creating in Canada a strong and positive environment for new investment in R and D and jobs within the innovative pharmaceutical industry.

• 0955

Since 1988 when drug patent protection was first strengthened, our industry has invested more than $4.6 billion in research and development across Canada. R and D spending by our companies in PMAC has grown by more than 700% during that period, almost twice the growth rate of R and D in the United States. Throughout this period our industry has been the single largest funder of medical research in this country. We employ more than 18,000 Canadians directly and we create almost 25,000 additional jobs indirectly, primarily in the R and D sector. Many of these jobs are in high-tech medical R and D. Our companies fund major new research in clinical trials at hospitals and universities throughout the country, creating jobs and collaborative scientific expertise within Canada.

Strengthened patent protection has allowed our industry to discover and develop new drugs right here in Canada as well as to undertake world product manufacturing and sales mandates. However, it is important for the committee to be aware that there is an intellectual property gap in Canada, which is a subject of concern to a number of our most important trading partners and may well become part of the agendas for the next round of negotiations at TRIPS. The gap relates to the two specific issues that were noted at the beginning of our presentation, which are standards of patent protection and enforcement of those standards.

This gap is due to the unique nature of the pharmaceutical sector, principally because of the exceptional nature of pharmaceutical patents. I might add that one thing you have to remember is that our drugs are extremely expensive to research and develop. They are often very inexpensive to copy. Twenty years of formal patent protection actually translates into only about 10 years of effective patent term. This is because it takes 8 to 12 years on average for a product to complete its development and regulatory approval processes. This is true in Canada and in the rest of the world. This is unlike most other patented inventions. Each of our main competitors in the U.S., the E.U. and Japan all currently offer extended patent terms, or “patent term restoration”, for up to five years in recognition of this unique nature of pharmaceutical patents.

Many of our competitors also offer extended protection of the so-termed “data package” associated with pharmaceutical patents, again in recognition of the special nature of this invention. Patent rights enforcement may be difficult, but it is still an essential issue, not just for our industry but for IP holders of all kinds.

Canada's patent enforcement methods have been developed in response to Canada's industrial situation. Questions about both their effectiveness and congruence with international agreements have been raised, however, by our key trading partners. Resolving these issues to ensure that Canada has the highest possible internationally competitive standards of patent protection for pharmaceuticals is necessary both to allow our industry to expand further while increasing our ability to innovate and invest in R and D and jobs and to avoid disputes and frictions with our trading partners.

R and D in our industry is very much a global pursuit, and it's important that Canada participate in that pursuit of new discovery research. Industry Minister John Manley recognized the importance of internationally competitive standards at a recent plant opening in Mississauga. His comment was: “our action last March to amend the regulatory framework for drug patents helped strengthen the case to further invest in manufacturing in Canada.”

Let me briefly point out what are the challenges ahead. The recent federal budget was the latest, taking important steps to enhance Canada's productivity and improve the well-being of Canadians in a knowledge-based economy. Mr. Manley once again was quoted at a speech very recently. He said: “Innovation is a strong determinant of productivity growth and intellectual property is a measure of innovation.” We believe Canada's innovative pharmaceutical industry is up to the minister's challenge.

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Closing the intellectual property gap is key to closing the innovation gap. To do so, the ultimate goal for Canada and our international trading partners is to meet three key intellectual property challenges: first, to set and enforce high internationally competitive standards of intellectual property protection with effective enforcement mechanisms that protect these legal rights; second, to recognize the special intellectual property needs of those industrial sectors—especially pharmaceuticals—in which effective patent term is significantly reduced through extensive national and international regulatory requirements; and third, to maintain and update intellectual property protection rules in recognition of today's rapidly changing technological world.

The role of this committee in addressing these and other concerns is an important one. Public understanding of and support for such fundamental issues as trade liberalization, international trading rules, investment, intellectual property rights and the role of the WTO is important for the continued economic growth of Canada as a trading nation. The hearings of this committee and its report will make a substantial contribution to determining Canada's priority objectives and our country's ultimate success at future multilateral trade negotiations.

Thank you. We'd be pleased to answer any of your questions.

The Chairman: Thank you very much, Mr. McCool.

Again, colleagues, we have about half an hour. If you can keep your questions between five and seven minutes, we can get everybody in.

Mr. Obhrai.

Mr. Deepak Obhrai: Thank you for coming and giving your presentation.

You have given us three sets of issues that you think are important. To me they are just statements of intent, which is difficult for me to understand. Perhaps you have given it to the industrial committee or whatever.

Quickly, on patent protection, you were saying that 20 years is a 10-year term due to the time needed to bring the product to the market. What is the term in other countries? I understand that they have 17 years in some cases, and you are saying there should be five years' additional protection. Perhaps you can tell us what it is in the U.S.A. and other countries. What is the time from when you start to the time you finish? What's the total? You've just given us extensions. I don't know the full term, but you talk about a full term over here.

The other thing is enforcement. You're talking of high enforcement levels. I would like you to say exactly what you mean by enforcement.

Perhaps you can answer these two questions.

Mr. Terry McCool: Thank you.

We do have a chart that compares international patent terms. I apologize for not bringing it today, but we certainly could submit it to the committee. Canada's major trading partners that are part of the G-7 will look at the development time and the regulatory approval time for pharmaceuticals and will then determine if there's been an inordinate delay. If there has been, then you apply for what is known as patent term restoration. In the United States, it can be up to four additional years. In Europe and Japan, it can be up to five additional years. In effect, your effective time on the market for those major countries is somewhere between 14 and 15 years. Canada doesn't recognize that, but those are the countries that we have to compete against in order to attract investment to this country.

Mr. Deepak Obhrai: You still have 20 years, though.

Mr. Terry McCool: We have 20 years—

Mr. Deepak Obhrai: If they have 15 and they add five, they get 20. You also have 20.

Mr. Terry McCool: Right, we have 20, but we're talking about effective patent life, which is time on the market. If it takes you 10 years to get to the market, you get 10 years as your time on the market in Canada. In the U.S., Europe and Japan, you get 14 or 15 years. There's a four- to five-year gap in Canada because Canada doesn't recognize the long development times. Also, a significant issue for this country is that our regulatory approval body is slower than those in Europe, Japan and the United States. That also has an impact on our ability to attract investment.

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Mr. Deepak Obhrai: And the second one was this—

Mr. Bernard Houde: On the enforcement mechanism, really ensuring an effective enforcement mechanism is a cornerstone of patent protection. In Canada, we have a situation that is somewhat different from that of other G-7 or G-8 countries.

Without the current patent linkage regulations, if a company copies our product, infringes the patent and goes to market, we're stuck in a situation in which we're spending two or three years chasing after that company in the courts to correct the situation, during which time we lose our market share, we lose our sales, and we lose our ability to reinvest. What has therefore developed in the Canadian system is a mechanism whereby, before a generic competitor can get onto the market, that competitor has to demonstrate that it is not infringing on our patent or that our patent is invalid. That is the mechanism that has been worked out by Parliament in the last several years, and it is one that works well when it is properly followed.

I add that because it's important to recognize that the current system has a shared jurisdiction, if you will, between the Department of Health and the Department of Industry. There's a lot of crossover that necessitates a lot of coordination.

At the end of the day, making sure that the patent you receive for a pharmaceutical product is as well respected as the patent you might receive for a new computer is vital to the growth of this industry. The enforcement mechanism that has been put into place—what we call the linkage regulations—is critical to ensuring that growth.

[Translation]

The Acting Chairman (Mr. Bernard Patry): Thank you, Mr. Houde.

Mr. Sauvageau.

Mr. Benoît Sauvageau: I have a very simple question. Maybe I don't understand anything at all in the matter of intellectual property and protection you're seeking. You make three recommendations: the first, the second and the third, but I have difficulty understanding them. If there were one sentence you wished the committee to include in its report on the pharmaceutical industry, what would it be?

If I were a negotiator, I'd look at your three first recommendations as wishes rather than concrete demands. Concretely, are you asking that protection be increased from 20 to 25 years? If that is the case, you would have to write it down and we'd use that as our square one. So, what sentence would you like to see in our report?

Mr. Bernard Houde: Our objective wasn't to show up here with demands but rather to get a discussion process going. We took this opportunity to give you an overview of our industry within the context of the negotiations both of the past and the future ones.

In our mind, the most important thing for Canada is to recognize the pharmaceutical industry is a world industry and that Canada is part of that world industry, but to gain a bigger share of it and attract investment and jobs, it must remain competitive with the other G-7 countries. If the U.S.A. offers a 10 -, 20 - or 25-year patent protection, then Canada must do as much.

In the case of our industry, we don't live in a world where Canada can be different from England, the U.S.A. or Germany. Canada should rather see to maintaining the same level of standards as exist elsewhere.

As you said, on page 9, we went so far as to give more specific examples. Basically, that means that Canada should try to stay at the same level as its partners.

Mr. Benoît Sauvageau: Thank you.

The Acting Chairman (Mr. Bernard Patry): Madam Debien.

Mrs. Maud Debien: I have a supplementary question. You mentioned the TRIPS agreement. Is there an international WTO standard to protect patents? That's what I have problems understanding. Is the period of time for which the patent is protected left up to each country or, at the WTO level, is there an international standard specifying that, in all countries, the patent must be protected for 25 years, for example? Would that be one of your recommendations?

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[English]

Mr. Terry McCool: At the international level, there are what are known as trade-related aspects of intellectual property, which are covered in an agreement signed by members of the WTO. This means they had to change their patent laws in each of the countries in order to bring them up to what the agreement said. The agreement was a minimum standard. What we are arguing today is that some countries, mainly the developed nations, went beyond that minimum standard. There are a number of developed countries that had to change legislation, change regulations, and sometimes change their court processes, to come into alignment with what this agreement said. The developing nations have until the year 2000, and the least developed nations have until 2005.

There are some very large developing nations that are dragging their feet on this intellectual property agreement. That is an issue for the pharmaceutical industry, which operates in Canada, Europe, Japan and the U.S., but there is an agreement that has been signed by all governments. Failure to respond with appropriate legislation, regulations or court processes is likely to bring a WTO dispute against those countries. Some of them are already in progress. Currently there is a dispute against Canada. Canada has been challenged by the European Union, but I think most of you are aware of that. But that is what happens when countries appear to be out of sync with what this agreement says.

The Chairman: Is Brazil one of the developing countries?

Mr. Terry McCool: Brazil is one of the developing countries. Brazil moved quickly to put in intellectual property protection; however, it didn't move very quickly to open patent offices. The Brazilians are starting to address that, and they're also starting to address their court system in Brazil.

[Translation]

The Chairman: Mr. Bachand.

Mr. André Bachand: I was discussing, with Mrs. Debien, the famous agreement on intellectual property signed January 1, 1995. That's quite new. Thank God, Canada had started doing something before that January 1995 agreement which, as you know, is made up of parts of the Bern Convention as well as the Paris one. We put that all together to make a convention out of it.

I'd like to come back to what Mrs. Debien was saying. Intellectual protection doesn't have only to do with the pharmaceutical aspect. There's also culture. It's very vast. Ms. Debien and myself would like to know what the minimum number of years is for patents under this January 1, 1995, agreement.

[English]

Mr. Terry McCool: Twenty.

[Translation]

Mr. André Bachand: Twenty, for all intellectual property. You're saying today that this is a minimum standard. However, in cases such as the pharmaceutical industry, the real commercialization of a product creates distortion where the real duration of commercial protection for the patent is concerned. That's what you were telling us this morning.

By bringing this up to 25 years, for example, would we be going against the different international agreements?

Mr. Bernard Houde: That depends a bit on the product, where it is in the process and the time it took for the product to go through the HPB approval process, at Health Canada, under the Patent Act.

Different countries have taken different approaches to settle the problem, but in those countries there is still a recognition that even though there's a minimum standard of 20 years it doesn't mean that you have 20 years on the market.

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To try to ensure the companies have this 20-year period on the market, different countries have added three years, five years or seven years to the 20-year period depending on their legislative and regulatory environment. I can't tell you today whether our association wishes for 25 years' protection, but I can tell you that it does wish Canada to examine those standards as other countries have done as well as the industry as a whole to see what is going on exactly and find out how long a product is on the market and how many years more it should remain there. That would help us keep our place in this world industry.

As multinational corporations, we're competing with our subsidiaries. When the mother companies have money to invest somewhere in the world, they look at the Canadian standards and compare them to the German ones before making a decision.

Mrs. Maud Debien: And they invest where they can make the most money. Is that it?

Mr. André Bachand: The Paris Convention, which was the modern basis for patent protection, involved 27 or 29 very developed countries and evolved together with other agreements including the 1995 one.

We're going to have to be very careful and differentiate between the different kinds of industries. By granting 25-year protection or putting in place some commercialization standard, you run the risk—pardon the expression—of screwing up the whole patent area.

I think the pharmaceutical and medical questions present some differences that can justify certain amendments to the patent regulations. You have to be careful not to extend that to everything in the area of intellectual property. I think it would be extremely dangerous.

Mr. Bernard Houde: In this respect, Canada can of course not discriminate between one sector and the other in implementing its patent legislation but you're right in saying that we're almost a specific case. If other industries are working under the same conditions and face the same stakes, it's up to them to make their representations. I can see where other industries would need a broadening of protection for their intellectual property.

To my knowledge, for the almost 10 years I've been working in this area, we're probably the only industry with this problem, not only in Canada but everywhere in the world. It is, in effect, a bit special because of the burden of the approval of our products, whether for the patent or the health side.

The Chairman: Does the 20-year period start the moment the request is made or after the patent has been issued?

Mr. Bernard Patry: As soon as the molecule is deposited.

The Chairman: Therefore, it is when the application is made. If, after your application, you need three years to obtain a patent and three or four more years for the approval by the health authorities, that means seven years, and so you could only use your patent on the market for 13 years.

Mr. Bernard Houde: Precisely.

The Chairman: The patent term restoration system is a means used by other countries to allow you to benefit from a certain equity—

Mr. Bernard Houde: With respect to other industries.

The Chairman: Thank you.

Mr. Patry.

Mr. Bernard Patry: Thank you, gentlemen. We have really begun a discussion on matters involving restoring the length of patents and we know that the agreement, as it exists at this time, will be renegotiated during the next round of WTO negotiations.

We know that last year, in Canada, following the adoption of the Act in 1993, C-91 was reexamined. We know that at this time there are holes in our federal laws.

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I would first like to deal with the patent term restoration, and protection beyond the 20 year mark. It was said that after the molecule was deposited, it can take 8 to 12 years before the product hits the market. If it takes 8 years, there are 12 years left to sell the product. If it takes 12 years, there are 8 years left. All of this is easy to calculate, but I would like to know what happens in the other G-8 countries. These are competitors in our pharmaceutical industry. How have the other countries managed to adopt these restoration measures lasting more than 20 years without the WTO forcing them to do so? It isn't a requirement of the WTO, is that not correct? What are the consequences of such a measure for these countries?

There are necessarily consequences for research and development. Research and development is increasing in those countries because it is much more advantageous for the industry to be there, but what are the consequences for the public? The great debate undertaken here, in Canada, deals with the cost to the public. We know what happened when we discussed C-91. Those countries managed to do it without being forced to. Are all countries that are really our competitors implementing this restoration? Do you agree with it? There was talk this morning of extending it to 25 years. Would you prefer that we tell the WTO that we should have a guaranteed 12 years after the countries agree to it, or something similar? How do you see it, but, especially, what would it cost the Canadian public in this case?

[English]

Mr. Terry McCool: Well, let me deal with the first part of the question.

The patent term restoration that Europe, Japan, and the U.S. use is not automatic. You have to apply for that, and in Europe you apply for what is known as a supplementary protection certificate, which is not necessarily a patent; it's a protection of a right that allows you exclusivity on the market for.... If you were inordinately delayed in terms of the length of the clinical trials, plus the regulatory timeframe, you would apply for an extension.

I can give you an example of a product called Prozac that is made by Eli Lilly, which is very famous, sometimes too famous. In Canada the patent expired in 1997, after seven years on the market. It is still protected until 2003 in the U.S. and 2001 or 2002 in Europe. So by expiring in 1997, it prevented us from using the revenue of that product in Canada to fund R and D in some of the other therapeutic areas we were investigating. So we didn't benefit from that revenue, whereas our companies in Europe, the U.S., and Japan benefited from that.

That's just one example. Now if we had patent term restoration, we would have been able to apply, and based on the merits of the case, we may have received a patent term extension.

Now, the whole issue about cost, I guess, is always a double-edged sword, because sometimes we fail to appreciate the value of new innovation and what it can do to help mitigate health care costs, either by keeping people out of the hospitals or helping to reduce other more expensive medical procedures. People look only at the fact that....

I think in my opening comments I mentioned that these drugs are very expensive to research and develop, but they're very inexpensive to copy. And that's why most governments have looked at a period of time and said, we need to protect that economic pursuit, because it is a good economic development for Canada, and it also provides good value for the health care.

Is there a cheaper alternative at times? Of course there is. I think that's why governments have set a certain period of time. I think what we're arguing today is, let's make sure Canada is conscious of what other competitive countries are doing, so we don't fall behind in that pursuit of innovation.

I think a key impact in Canada will be.... Canada has a huge, burgeoning Canadian biotech industry, and if we don't protect their innovation, they won't stay in Canada. I think there's a big contingent in Quebec, and there's a big industry in Ontario, British Columbia, and Alberta these days.

Mr. Bernard Patry: Can you tell me if all the other G-8 countries have a restoration measure, or is it just like in the U.S.A. or Japan? Do they all have restoration measures right now?

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[Translation]

Mr. Bernard Houde: I don't think that each country has them. The larger countries must be wondering if they need them. As Mr. McCool said, it isn't automatic, but it is the case in the United States and in most Asian countries. I couldn't say today, without checking the list, whether each country has these measures.

Mr. Bernard Patry: Thank you, Mr. Chairman.

[English]

The Chairman: How reliable are these comparisons between countries for us? Different countries function very differently, both in their regulatory processes and the way in which their health care is delivered. The delicate nature of this subject is a matter of a political debate within Canada, which relates to health costs Mr. Patry was pointing to.

I come from the province of Ontario. You're more than aware there's been a debate there amongst manufacturers of non-patented drugs, etc. So these issues become very political as well as very important to understand.

You mentioned Europe and European patents. All the members of the European Union have signed on to the patent convention, so you get a centralized patent for Europe. The rule is a European rule; it's not an individual country rule in terms of this extension. Is that right?

Mr. Terry McCool: Yes, it's a European rule.

The Chairman: But within Europe itself different countries would have different approaches and interests in this issue. I know France, for example, has a system of medicine where they purchase their drugs directly—the state intervenes and purchases them—and therefore can purchase them much more cheaply as a vast purchaser than individuals can, going into stores and things like that. So how do we get our minds around that when we're trying to make comparisons for ourselves in understanding what's best?

I understand you're saying what's best for the Canadian public is to have a system where we have research and development in this country. Then there's the balance of the health costs, etc. We're all trying to figure that out. That's why I have some trouble with the comparisons, because I don't know enough about the individual systems. I would think Europe would be a very complicated place to compare it to because the British system would be different from the French, the Italian, etc.

Mr. Bernard Houde: I think your question really gets to the heart of our issue when we bring it before the federal government. As Dr. Patry mentioned, the last review of Bill C-91 was very important in addressing some of these issues. Certainly I think the committee and the government put forward some very good recommendations and some good modifications to the law that started moving Canada forward.

The issue, though, becomes not so much, with respect, whether Europe or Japan has a system we want to emulate. We're urging the committee to look at what Canada wants to do. Currently Canada's position, to all appearances, is that there are minimum standards and we're going to meet those minimum standards. Canada will probably get more than a minimum return on that investment, but it will not get a superior return on that investment.

What's before the government is to look at the way other countries are approaching intellectual property. The signatories to the WTO are all providing a minimum standard of intellectual property protection. In our estimation, some are providing more for different reasons. We believe there is a very good opportunity for Canada to look at being one of the countries that pushes for higher standards, because Canada will benefit.

We come here to you today as representatives of multinationals. We live in a competitive environment within our own companies. We know that one of the first questions is what will the Canadian environment provide to us? Therefore, as a trading nation, Canada should be looking at it and saying, exactly how can we get the most out of these companies; what environment can we provide for them that will get us that investment?

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Patent term restoration is a very good example of that, because it's becoming more prevalent. But I'd be hard pressed to tell you which system to pick. I'd be much more at ease at this time to urge you to recommend that we should start looking at PTR.

The Chairman: Thank you very much. That's very helpful.

This is a first for the committee. We have actually got to the end of something, something as complicated as this. We've been down this road before, Mr. McCool, on Bill C-91 and a few other issues.

Are you going to blow our schedule off? We'll have a five-minute break, but will we make it five minutes, members?

[Translation]

Five minutes, is five minutes.

[English]

Be back here by 10.35 a.m.

[Translation]

I would invite the representatives of the Réseau québécois sur l'intégration continentale to please be seated.

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• 1049

The Chairman: We now welcome the representatives of the Réseau québécois sur l'intégration continentale. Thank you very much for coming. I apologize for the confusion about the time of the meeting.

We have provided one hour for your appearance. If you could make your presentation in 15 or 20 minutes, we would have 40 minutes for questions. That would be ideal, but you have two briefs that are rather impressive, even a little terrifying. We will read them over the weekend. Mr. Bakvis, who was here yesterday, has already had the opportunity to convince us.

Will you be starting, Mr. Lanctôt?

Mr. Yves Lanctôt (Réseau québécois sur l'intégration continentale): Yes.

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If I may, I would first like to introduce my colleagues. They are Catherine Saint-Germain from the Canadian Association of Union Lawyers; Patrice Laquerre from the Centre québécois du droit de l'environnement, who will also speak later on, Peter Bakvis from the CSN, whom you met yesterday; and I am Yves Lanctôt and I represent the Centrale de l'enseignement du Québec.

I will first say a few words about the Réseau québécois sur l'intégration continentale. It is the largest Quebec coalition and the second largest in Canada devoted to continental integration. The network brings together union organizations, including the CSN, the FTQ and the CEQ, popular organizations such as Solidarité populaire Québec, international co-operation organizations such as Alternatives, the AQOCI, l'Association québécoise des organismes de coopération internationale, or the CISO, the Centre international de solidarité ouvrière. There are also environmental groups, such as the Réseau québécois des groupes écologistes, and research centres such as the Groupe de recherche sur l'intégration continentale de l'Université du Québec à Montréal or the Centre d'étude sur les régions en développement de l'université McGill. Therefore, I believe that we can say that the RQIC truly represents all Quebec groups closely interested in free trade agreements signed by Canada.

The network was created in 1991, during the negotiations that led to the signing of NAFTA. Since then, ties and exchanges have been developed with many similar organizations in Canada, Mexico, the United States, Brazil and Chile, to name only a few. The network has also participated in many international conferences and is a member of the coordinating group of the Alliance sociale continentale.

It is important to note that the RQIC has never been opposed to the idea that Canada can negotiate and sign free trade agreements. We can also state that we have always adopted a constructive approach, so that the agreements signed will be the best possible ones for all sectors that are involved, and that these agreements respect the fundamental rights of Canadian citizens.

That is why we believe it is essential that negotiations to create the Free Trade Zone of the Americas respect a certain number of conditions. First of all, we must take into account the variables related to the environment, social rights, and labour rights. On this topic, the parallel agreements under NAFTA that deal with the environment and labour are proof positive that similar trade agreements cannot exclude environmental and social aspects.

The RQIC has developed, along with other groups, what we have agreed to call Alternatives for the Americas, copies of which you have already received. We hope that you will take these into account and that you will pay particular attention to the recommendations included therein. I will ask my colleague Patrice Laquerre to make a brief presentation on this subject.

Mr. Patrice Laquerre (Réseau québécois sur l'intégration continentale): Hello. This document originated from a consultation held during the People's Summit of the Americas in Santiago, in April 1998, the parallel summit that was held at the same time as the official summit. It was a forum to discuss alternatives. People from different countries came together and began to prepare a working paper on which different national coalitions and different interest groups are still working so as to propose constructive alternatives for the Americas.

The document is divided into 11 chapters dealing with various themes: the general principles; human rights; the environment; labour; immigration; the nation-State; foreign investment; international finance; intellectual property rights; sustainable energy development; agriculture; market access and rules of origin; and enforcement mechanisms and dispute resolution.

I won't go into the document in detail, since we've left copies of it with you. I would simply like to go through some of the recommendations and guiding principles to give you an idea of the approach we have taken. I would ask you to turn to the chapter on the environment, to page 24.

Under Guiding Principles, we read:

The precedence of environmental accords signed by the governments of the Americas should be established in the negotiations around, and agreements on, investment and trade.

Thus, one of the main themes of our paper is that international agreements—not just side agreements like those on the environment and labour, but international agreements in various fields—should take precedence over trade agreements.

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Under Guiding Principles we also read:

Quality of development should be a key priority. Governments should establish social and environmental limits to growth on the basis of environmental sustainability and social equity.

I will read another principle:

International trade agreements and nation states should establish plans to gradually internalize environmental and social costs arising from unsustainable production and consumption.

If this leads to higher prices, adjustment mechanisms will have to be provided.

We also talk about an ecological debt, which should be the subject of negotiations leading to international agreements, so that a balance can be established between countries that have paid too dearly from an environmental point of view, and others.

We also recommend adopting the precautionary principle, which holds that, when in doubt, we should take an environmentally cautious course of action. This principle should be incorporated into international agreements.

We also say that social and ecological dumping should be avoided, and we propose concrete measures in the areas of energy, forestry, mining and biodiversity. So it is a fairly comprehensive document.

If you have questions dealing with particular chapters, we will be able to answer them. Thank you.

Mr. Yves Lanctôt: I said that one of the conditions for the negotiations to succeed is that we take into account the points that we have just raised.

Another condition for the negotiations to succeed is the setting up of a rigorous, serious consultation process, both in Canada and in the other countries involved in these negotiations. We feel bound to express some dissatisfaction with this process. It is somewhat unfortunate that we have to express this before a committee that agreed to hear us, which comes down to saying that we are criticizing the people present at a meeting where there are some people absent, but this is the place that is available to us to express this dissatisfaction.

We do not understand why negotiations that affect so many areas of activity, whose impact is not limited to trade, take into account only the views of industry and business as part of their official process. The countries involved in negotiating the Free Trade Area of the Americas have recognized the forum of private enterprise, but have refused to recognize the forum of trade union and social organizations, what we might call the forum of civil society. And yet we have expert knowledge in many fields, including education, health, labour and social rights, fields that are just as important as those in which business people are interested. We therefore ask that we receive the same level of recognition as them.

A consultation process must also ensure that all pertinent information is available, which is not the case now. How can we express an opinion when the results of more or less secret meetings are not made public? How can we participate effectively and productively without knowing the real issues? Civil society must be able to follow the negotiations. It must be able to participate in them and influence them.

Of course, bringing civil society into negotiations means taking a certain risk, the risk that partners will end up making certain compromises. When I say this, I am referring to civil society as well as other partners. It also means running the risk of perhaps alienating civil society, depending on the directions taken or the recommendations proposed. However, ignoring civil society from the outset means alienating it from the outset. And I don't think that would be to anyone's advantage.

Consultation also means that public hearings should be held on a regular basis, hearings like this one or other kinds of hearings. We can therefore applaud this initiative of the Standing Committee on Foreign Affairs and International Trade and, of course, we hope that it will be repeated.

We also hope to know the results of both these consultations and the consultations being held simultaneously by the department and the governments of the other countries involved in the negotiations. We also hope that the viewpoints expressed during these consultations will be passed on in a fair and impartial manner.

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Finally, we thank you for this opportunity to make our views known. Unfortunately, as you can see, we have been able to give you only a very general overview of the interests that we are defending. We hope that, in the near future, we will have an opportunity to make a presentation bearing on specific items that are currently being negotiated. One of the most important points that we would like to point out is that, because we are not part of the process, we are unable to express our views on specific items. For example, we might ask our questions at the meeting of trade ministers, to take place in Toronto in November.

Will we know what Canada tables at this conference? Will we know what Canada defends? Will we be able to react to what is proposed at this conference? Will the reports be made public, and will we have an opportunity to react to them and to provide input for subsequent negotiations? Thank you.

The Chairman: That's all? We will now go on to the question period.

[English]

Mr. Obhrai.

Mr. Deepak Obhrai: Thank you for coming and giving your point of view. I was just quickly glancing through your brief here. I have a couple of observations to make.

I come to this from a background of a third world country. I have had the opportunity to see the impact of policies that many of you are responding to over here. I have seen, regretfully, the living standards going down in many ways. I have seen people become poorer. They have become poorer because the environment never existed in terms of the development of business. Environment never existed because of the free flow of goods. The economies had closed. They put in a lot of restrictions.

I'm not advocating that these things are not important. I'm not advocating that human rights are not important. I think they're very important. I think these countries of the Americas that you are talking about have to develop from what I would probably consider independent institutions. Institutions—the legislative, the judiciary, the executive—need to be independent, so that when political changes do take place, it does not impact the overall economic situation.

In today's market in Canada, I have seen, in travelling with the business people, that more and more small-scale and medium-sized businesses are entering into the global market. What you're talking about here are multinationals. I'm not a very big fan of multinationals. I can understand that the desire for profit at times leads to many of the flags that you have raised. There is another aspect coming along, which is the small-scale and medium-sized business. The people of the developing world and in the Americas need it. They need it to lift them up from poverty.

It's regretful to see that after 25 years, which is when I left these countries, the living standard is going down. You're pointing this out very rightly in here, that the living standard has gone down. That living standard has gone down not because of what you're flagging but because the environment did not exist in business.

I think Canada has a crucial role to play. I would probably venture to say that the featured agreement we are trying to sign is one of the best economic incentives for those countries to uplift their living standards. I'm more interested in lifting the living standards of the poor than talking about the profits of the rich. The flow of business over there definitely benefits the poor and the middle class. So I do have concerns about some of the many things you're bringing here.

I would like you to think on that aspect too, of what is happening in globalization—the small scale, the medium scale, and finally the uplifting of the population. I would like you to also understand that these governments need to be told that unless and until they do create independent institutions, it is not going to work. Even business is not going to work. The moment there is a political change, it impacts the whole society, because there are no safeguards on independent institutions. That should be the route.

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[Translation]

Mr. Peter Bakvis (Réseau québécois sur l'intégration continentale): May I answer?

The Chairman: Yes, you may.

Mr. Peter Bakvis: We share the MP's concern, which is to promote the economic development of Third World countries. I would like to point out that this document, as is mentioned on page 2, is co-published by our network in Quebec, a network in English Canada, a network in the United States, a network in Chile and a network in Mexico which represent more or less the same interests. Mexico contributed very significantly to this paper, which reflects the concerns of developing countries. It's the product of a North-South exercise which I was closely involved in, and which was for me a very worthwhile personal experience. We attempted to find common ground with people from different countries that are at different stages of development.

The people from Mexico maintained that the opening up of borders without any type of guideposts had resulted in more trade, but had also led to a deterioration in living conditions. We have had a free trade agreement with Mexico since January 1, 1994. There was also the peso crisis. Since 1994, people who were already very poor have seen their wages drop by 40% in real terms. Many small and medium-sized companies have been driven out of business by large multinational companies. Consequently, we agree with the MP on the need to create a space for development in which smaller, domestic businesses can grow and generate jobs and wealth.

There is no time to go into details, but this is certainly an issue. What we have here is certainly not a model that we, the people from the developed counties wanted to impose on the people from developing countries; they participated in this exercise with us.

I might also mention that, as we clearly indicate, this is a working document that is part of an ongoing process. We are already in the process of drafting a third edition—you have the second edition in your hands—and there is even more input from developing countries, Brazil in particular, where a network for continental integration was formed in December. Brazil, which is the largest country in Latin America, is currently taking an active part in revising this document to produce a third edition that we hope to have ready in October.

[English]

The Chairman: You have about one minute.

Mr. Deepak Obhrai: I have a minute.

I just wanted you, with the brief you have given us, to understand the importance of free trade for these countries. I would like you, from my perspective and from my experience, to understand that this is the best way of economic achievement—to lift the poor in those countries. When you do make these briefs and all these things, I would caution you to be a little careful about putting in too many barriers that will curtail free trade, because that is the vehicle of prosperity for the poor—and I repeat, the poor—in those countries.

[Translation]

The Chairman: I feel that that is an observation rather than a question.

Mrs. Debien.

Mrs. Maud Debien: Good morning, everyone.

Mr. Lanctôt, during your first intervention, you stated that, within the FTAA, it was absolutely essential that civil society be a full partner in “formulating, implementing and assessing the social and economic policies of the continent”. Right after, you said that civil society had not been allowed to hold a parallel forum, similar to the business forum. You were denied this forum.

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I would like to know what position Canada took with respect to this request to hold a parallel forum and what reasons were given for turning down your request to hold this parallel forum.

Mr. Yves Lanctôt: Mr. Bakvis has more experience with respect to this issue.

Mr. Peter Bakvis: Parallel forums were held, particularly for the ministerial summit which took place in Belo Horizonte in Brazil, in May of 1997, which was in preparation for the heads of State and government summit that took place in April of 1998 in Santiago, where there was also a parallel summit. We were looking for the same type of recognition that was given to the private sector forum. The business forum had access to the agenda discussed at the conferences. Its opinions were received and officially tabled. Ours weren't.

I must say that we did meet with the Canadian delegates. I don't think that Canada was amongst those countries that were most against it. The Canadian delegation was fairly receptive to the idea of receiving the recommendations resulting from our deliberations as well. For example, in Santiago, we met with Mr. Axworthy, and other meetings with different levels took place in Belo Horizonte.

The difficulty lies in the fact that we work on the basis of a consensus. With 34 countries, it is sometimes difficult to reach a consensus. I deplore the fact that, during these two summits, four or five countries were allowed to dictate the policy of 34 countries. I could name these countries, but that wouldn't be helpful. These are not countries that stand out because of their absolutely fantastic performance in the area of human rights, democratic process, etc.

If we always have to base ourselves on the lowest common denominator, we will never make progress. Had Mrs. Thatcher been allowed to dictate policy to Europe, the social building that took place in Europe would never have occurred. Finally, the English were told: “Europe will be built around 14 countries; when you're ready, you'll come.” They joined us 15 years later. This is perhaps a suggestion that we should think about. If we can't reach a consensus amongst 34 countries, but there is an agreement amongst 29 or 27 countries to implement a real process for consulting and recognizing civil society, well then, we should go ahead with these 27 countries. I am convinced that Canada will be the leader of these countries. Up until now, we have not received any signals pointing to the contrary.

Mr. Yves Lanctôt: In dealing with this aspect in my presentation, I had included the other countries so as not to single out Canada, which did not deserve to be singled out as far as this was concerned. It would be important to ensure that Canada play a leadership role.

On the international scene, over the past few years, Canada has demonstrated that it was more open than many other countries, particularly with respect to diversity of opinion. Canada can, therefore, play an important leadership role with the other countries.

Mrs. Maud Debien: Thank you.

The Chairman: Mr. Sauvageau.

Mr. Benoît Sauvageau: Ladies and gentlemen, good morning and welcome to the group.

As for the role that you would like to play as a civil society, you said that Canada did not deserve a bad mark for its involvement in civil society. In Costa Rica, I know that Canada worked very hard to include a task force on civil society. Yesterday, I said that I was not a card-carrying member of the Sergio Marchi fan club, however, we must render unto Caesar what is Caesar's.

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Are you hoping that this task force on the participation of civil society will give you the same privileges and the same consultation process given to the business people, or, given that you do not have the same means—this is a prejudice—do you want a different process? Do you want the same process given to the business people or a different process? What conclusion are you hoping that this task force will reach?

As for the lack of... Was that your question? I apologize.

Ms. Raymonde Folco (Laval West, Lib.): [Editor's Note: Inaudible]

Mr. Benoît Sauvageau: I like you all the same, Ms. Folco.

As for the lack of consultation, I'd like to tell you that parliamentarians very often experience the same frustrations, because it is the negotiators who negotiate. We have this committee here, but sometimes we have to make the same comments as you. Do you think that the parliamentarians of the Conference of Parliamentarians of the Americas could substantially support your efforts? Do you think it is important to maintain a strong Conference of Parliamentarians of the Americas? Those are my two questions. I'm sure that Ms. Folco also wanted to ask this second question.

Ms. Raymonde Folco: That's right.

The Chairman: As you can see, Mr. Bakvis, we operate on the basis of a consensus and we've never had any problems.

Mr. Peter Bakvis: There are not 34 of you.

Mr. Yves Lanctôt: In answer to your first question, we would like to be given the same consideration as the business people. However, in some southern countries the organizations have a much tougher time than their counterparts in Canada in formulating and publicizing their opinions and, consequently, there's probably special effort needed there. We could perhaps provide them with some financial support in this area.

Mr. Benoît Sauvageau: And COPA? The parliamentarians could help you in—

Mr. Peter Bakvis: Yes, quite. I was an observer at the Quebec City Conference and I know that there has been some follow-up since then. I'm not aware of the concrete results, but I do believe that within COPA, feelings such as those that we are feeling were expressed, but by people like you, people who are not part of the executive but who are parliamentarians who, generally speaking, should have access to these things as much as we should, if not more, and they were feeling just as excluded as the members of civil society.

I believe that our proposals are more transparent and more democratic. Obviously, this also concerns national parliaments. In several places in our document we state that parliaments, and not just the executive power, must have their say in the way that these negotiations unfold.

The Chairman: Thank you.

Mr. Bachand.

Mr. André Bachand: I would like to say that the document is very, very comprehensive and covers a range of very important issues. It contains, in particular, some suggestions regarding this infamous sterile wheat which we have been talking about since the beginning of the week.

Mrs. Maud Debien: On page 44.

Mr. André Bachand: Raymonde, on pages 44 and 45, you will find all or nearly all the answers to your questions, or some solutions.

I didn't have time to read the entire document and I have two questions. Based on what I did read, I saw no mention made of the cultural exemption currently being debated in both Canada and Quebec. I glanced through the document very quickly. Could you tell me whether or not it refers to the cultural exemption? I looked at the chapter on intellectual property rights. There is no reference made to this infamous cultural exemption.

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As for intellectual property rights, this morning our witnesses from the pharmaceutical industry talked about the intellectual property protection legislation currently in force in Canada. Are you experiencing a lot of difficulties because of the agreement signed in January 1995, which established minimum intellectual property standards, the TRIPS Agreement which was further to the Paris Convention, the Berne Convention, etc.? Has this agreement caused you any particular problems?

Furthermore, if I understand correctly, you have serious reservations about C-91, which is the legislation on pharmaceutical patents in Canada. That's a question I would ask you.

Pages 70 and 71 are very interesting. You make some very good points. I don't necessarily agree with all of them, but many of the issues raised there are ones that parliamentarians have been dealing with in the last couple of days. It's very well prepared.

On page 70, for example, we read:

Require the owners of pharmaceutical patents to grant compulsory licences to producers of generic medicines.

It is said that we could keep C-91, but provide for a licence in it. Producers of generic medicines would not be able to gain free access to the market; they would need a licence. Generic medicines are sold at lower prices. It depends on the pharmacies and physicians, Mr. Patry.

The Chairman: That's what the debate is about.

Who wishes to begin? Mr. Bakvis.

Mr. Peter Bakvis: It's true that the cultural exemption, as such, is not mentioned. I take your comments as a suggestion for revising the document, which is currently under way. We deal with this in a somewhat general manner in the chapter on the role of the State, Chapter 6.

In this chapter, it is stated in fairly general terms that, on matters related to identity, countries should have the right to set aside certain sectors of national property or to put in place some obstacles to foreign protection. This is the closest thing to a cultural exemption. Although the cultural exemption is a keen concern of Canada, it is not dealt with in at all the same way by Mexicans or others.

Mr. André Bachand: I raised this question because it was the subject of a great deal of discussion in our previous meetings. Yesterday, people from SOCAN and ADISQ told us that Canada needed allies. Here, with regard to discussions on the Free Trade of the Americas Zone, with clauses like that, we could have enemies in America, but it would definitely help Canada protect its industry, its services and its cultural identity, especially in Quebec, of course.

Mr. Peter Bakvis: Once again, I'd like to emphasize what you've already been told, namely that this is a document prepared jointly by several networks, but it's obviously something we could deal with more explicitly when we revise the document.

As for the whole issue of intellectual property and patents, there has in fact been some fairly specific criticism of what was set up for pharmaceutical patents, which presently applies in Mexico and in Canada and which, in our view, has had some rather negative results. One has only to think of drug prices, for example. It is feared that this could create a precedent in other fields. One of the major concerns, particularly in developing countries, is the issue of patenting life forms.

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Mr. Patrice Laquerre: There are some companies holding patents on human or plant genes. We're not necessarily talking about forms that have been created. We're talking about forms that are found in nature, and companies take out patents on these life forms.

Mr. Bernard Patry: Thank you.

Mrs. Maud Debien: [Editor's Note: Inaudible]

Mr. Patrice Laquerre: No, we're talking about products that are found in a natural state. For example, when a company doing research in the Amazon forest discovers a plant with an interesting medicinal property, this company can take out property rights on this plant.

The Chairman: Ms. Folco.

Ms. Raymonde Folco: I have several questions to ask. The first has to do with civil society, but this question has already been partially answered. There's also the matter of NGOs working in the countries. I would perhaps approach this differently.

With regard to the importance of NGOs, certainly there are NGOs that come from Western countries—and I intentionally said Western and not developed countries—that are strong, organized, structured and so on. There are also a number of NGOs that come from developing countries and are weak and poorly organized. You said a few minutes ago that it would be a good idea to assist them financially. I wonder whether there's something else we could do, given the fact that, since the NGOs of developed countries are more visible, this tends to give the Western nations a disproportionate influence on the negotiations. That's my first question.

Second, I finally see that, for the first time, someone is paying attention to population movements, or immigration. Since immigration happens to be a subject in which I am keenly interested, I would like to hear you say something about immigration from the Canadian point of view. The eight points that you have set out on pages 42, 43 and 44 appear to me to reflect the point of view of Latin American countries, which are looking to the United States, but I find that Canada's role, its presence and its approach to immigration are really not mentioned in these eight points. I'd like you to elaborate a bit on this. Thank you.

Mr. Yves Lanctôt: As far as NGOs are concerned, I must point out that the groups with the least means spend an absolutely unbelievable amount of energy just to try to make themselves heard. The fact that an NGO has a place where it can be heard will straightaway give it a certain amount of energy to work on certain issues. This is a role that must be played by all parties. For example, it's a role that our network can play to assist certain Quebec groups who are having a harder time. It's also a role that similar networks in other countries can play in order to help their less well-off associates. It's a role that governments too should play, so as to make it easier for them to participate. Governments should also provide them with financial assistance.

I will ask Peter to continue.

Mr. Peter Bakvis: NGOs vary a great deal from one country to another. Our different organizations work in co-operation with Latin American countries. My organization, moreover, receives grants from CIDA for this purpose, and I believe it's also the case for Patrice's network of environmentalists.

In some countries, the NGO community, including trade unions if you want to go that far, is very strong. In a country like Brazil, which is strong and structured, there are financial needs but we are able to make ourselves heard at the national level. In other countries, the community is strong and very active and perhaps needs financial support, but it is not considered as a legitimate participant. The classic example that I could give you is Mexico, where they refuse to consult with groups that don't belong to the party organization. As you know, until a few years ago, there was a single party.

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There is a third category of countries, especially the smallest countries, where all these elements are missing. It is in these countries that co-operation is important with regard to financial assistance, but also with regard to advice and technical co-operation of all kinds. This is the situation with the entire Central American region, for example. As far as trade unions, women's organizations and NGOs of all types are concerned, we see that they are truly lacking. In this region, we have to help people build NGOs before they can become involved in the process of formulating a document like this one, for example.

With regard to immigration, you are quite right in saying that the concerns expressed here are above all the concerns of other countries. This chapter was worked on by Mexico and was written from the viewpoint of Latin American immigrants to the United States, who are increasingly experiencing various sorts of discrimination. The specifically Canadian viewpoint is perhaps not as clear as it should be. Nevertheless, I believe that all the principles can be endorsed. In some cases, they are already applied in Canada.

Ms. Raymonde Folco: Point 5 in particular. What is the situation regarding NGO participation in policy-making?

Mr. Peter Bakvis: We are already responding very well to this issue. In some cases, there are certain problems with regard to... In point 2, for example, I think that there is some room for Canada to act. This is the problem of obtaining a visa in order to be able to move about. For people in developing countries, it is currently very difficult to travel to the United States and Canada, for all kinds of reasons. They have to meet very strict selection criteria. Naturally, people from developing countries would like these criteria to be relaxed somewhat. This is targeted at Canada, just as much as to the United States.

Ms. Raymonde Folco: I would like to add a sentence, if I may, Mr. Chairman.

The Chairman: One sentence only.

Ms. Raymonde Folco: In light of the observations that you have just made, would it not be appropriate to give a Canadian perspective in this chapter on immigration? Thank you.

The Chairman: Mr. Patry.

Mr. Bernard Patry: Thank you, ladies and gentlemen.

I'd like to make a simple comment. I don't know whether you will want to respond to this comment, which has to do with intellectual property as it relates to pharmaceutical patents, which are discussed on page 70.

In the second paragraph under the heading “Specific Objectives,” we read:

Compulsory licensing does not abolish patent rights...

This means that you subscribe to the intellectual property provisions for pharmaceutical patents as they currently exist. The rights are granted for 20 years from the time the molecule is registered. You agree with that.

The document reads:

Require the owners of the pharmaceutical patents to grant compulsory licences to producers of generic medicines.

My opinion on this is quite straightforward. Given the provisions of Bill C-91 that are now in effect in Canada, generic drug companies are entitled to be begin their research well before the end of the patent's twenty-year period and to stockpile the product so it can be put on the market six months before expiry. Therefore, the day on which the patent expires, they go onto the market. That's the situation currently.

If the brand-name company was required to grant a licence and collect royalties, the people who would be opposed would not be the brand-name companies, but rather the generic companies, because it's much cheaper for a generic company to conduct its own research and to start marketing the project on the same date than to pay royalties to the brand-name company.

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I feel that this is wishful thinking. In reality, it is the generic companies that will oppose this, and not the brand-name companies.

I'd also like to tell you that we have a serious situation here, in this country. The generic companies sell drugs in Quebec and in all the provinces of Canada at prices that are two or three times higher than the prices outside the country. It's something that we're trying to fight against, because there's no competition between generic companies. The only province in which there is a little competition is Ontario, in the sense that the first producer of generic drugs that gets to market after the expiry of a twenty-year patent is allowed to sell the product at 75%, the second at 65%, and so on. The percentage drops by 10% per company.

In my opinion, therefore, you are dreaming if you think that generic companies will agree to this. I fully realize what you are trying to achieve: less expensive drugs for the people. Everyone agrees on that, but the way it's worded, it would not be possible to achieve this goal. That's my comment.

The Chairman: You could perhaps take that into consideration when you revise the document.

Mr. Peter Bakvis: [Editor's Note: Inaudible]

The Chairman: I would like to ask you a few questions before we finish.

You spoke of civil society. We were told that many governments of Latin American nations were opposed to including civil society. Mexico is one of these countries, and is strongly opposed to it. Canada is the country that is advocating it. In your consultations with NGOs, have you received any indication that the NGOs in these countries are going to push their governments to adopt more affirmative positions with regard to civil society?

Mr. Patrice Laquerre: Yes, absolutely. We did not mention it, but there is presently an initiative to organize civil society. We are in the process of putting together what we call a continental social alliance. Last week, there was a meeting in Costa Rica on this matter, to follow up on the Santiago Summit, where this idea was launched. We are in the process of putting together a continent-wide civil society movement with a tried and tested organisational structure.

There is a consensus to move ahead with consultation, transparency and information in all countries. All groups, both nation-wide networks and interest groups from different sectors, will be trying to push these things.

The Chairman: In talking about civil society, Mr. Bakvis, you answered a question from Mr. Sauvageau about the COPA. Do you think that a parliamentary association representing all of the Americas, that might be associated with the OAS, for example, would be a good thing for civil society? It would be a bit like the parliamentary association in connection with the WTO that we were talking about earlier. The OAS is the organization that has a certain degree of responsibility for the Americas. Should Canadians insist that there be a parliamentary association associated with the OAS?

Mr. Peter Bakvis: Such a structure exists already, at least at certain levels. After the Quebec parliamentary conference in September 1997, there was a follow-up committee.

In principle, another conference should be held somewhere in Brazil. I think that the Brazilians are organizing that, but I could not tell you at what level. I know that there are ongoing contacts with the Speaker of the Quebec National Assembly, who hosted the Quebec conference in September 1997.

I do not know at what level the official contacts have taken place with the OAS, but I believe that the important thing is to build the network. I know that it exists and that there is at least a bare-bones secretariat still.

In our view, that is an integral part of civil society. Furthermore, at the parallel summit that our organizations helped organize in Santiago, nearly a year ago, there were 12 sectoral or thematic forums. One of those was for parliamentarians. There were not many parliamentarians, but there were about 30 from various countries who expressed demands that were very much in line with those that came out of the COPA in September 1997. We feel that that is part of civil society.

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The Chairman: We find that it is very difficult to engage the Americans in parliamentary associations. Is it important to have the Americans involved? I would like to try to encourage that through our Canada-US parliamentary association. We need to find a way to get the Americans involved in an association, do we not?

Mr. Peter Bakvis: Yes, American participation is important. In Quebec, one or two parliamentarians from a few American States took part. There were no representatives of the two Houses of the American federal government.

Yes, their involvement is important, but does that mean that we should not go ahead because they are not there? I think that would be a mistake. It would be giving them a veto. As I said earlier, the Europeans were wise in not giving Mrs. Thatcher a veto. They went ahead, there was a change of government and—

The Chairman: We have to find a way to correct that.

Mr. Peter Bakvis: Between you and me, the United States is still the largest country of the Americas in terms of population. We have involved the Americans in our work. Our contacts with our environmental and union counterparts in the United States have been very fruitful for us.

The Chairman: I want to ask you one last question, and Mr. Sauvageau will then have the last word.

Mr. Benoît Sauvageau: That's fine.

The Chairman: My question is somewhat technical. In the chapter on the environment, I was able to grasp only a few points, for example, 9, 10 and 11:

9. Social and ecological dumping practices must be prohibited.

Every State must have the possibility of promoting sustainable development, etc.

Is what you are calling for, especially in your chapter on dispute settlement and sanctions, a sort of international system to control the application of these complex and difficult concepts?

If you are saying that all States must carry out a number of obligations related to the environment and sustainable development, this leads to the question that was discussed in our debates, namely, does this result in the creation of a whole series of new types of obstacles to trade, disguised protectionism, etc.?

In order for the system to function, it must be neutral, international and practical. It must not be too cumbersome. How can this be reconciled with such socially loaded concepts as sustainable development? We know there is no consensus on what this concept means. As I see it, that is the problem of the system you are proposing.

Mr. Patrice Laquerre: There certainly must be significant efforts to bring about harmonization among countries. If there are not international environmental standards applicable in each country, there must at least be a harmonization effort taking into account the differences. Certain standards or concepts must be applicable. There will be a need for definitions.

We are doing this work in the environmental groups with our partners in other countries and we are able to come to an agreement on sustainable development. For example, we have some suggestions here about sustainable practices in mining. These practices can be applied at the international level.

The Chairman: Do you have something to add?

Mr. Peter Bakvis: I'd like to make a short comment. Whether we are dealing with the chapter on the environment or other chapters, there are two main thrusts in this document.

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On the one hand, we attempt to identify sectors where we believe it is legitimate for the State to define national standards and establish a limit to avoid such standards becoming protectionist measures. Whether we are discussing culture or protective measures against toxic products, it is perfectly legitimate for a State to set up national standards but such standards must be developed in such a way as to avoid becoming protectionist measures. That is a concern to us. When we got involved in the exercise, people from the south often told us that what the United States describes as measures to protect their welfare amounted to a disguised form of protectionism as far as they were concerned. That is the first point.

The second point, as Patrice said, is the development of international standards in a certain number of fields. It is thought that sovereignty is limited and increasingly restricted. To repeat yesterday's discussion, if it is considered important to have certain international rules with respect to labour, they must be defined at the international level rather than the level of each individual country. Countries will be increasingly unable to apply their own rules if borders are opened to the flow of goods, capital and services.

The Chairman: You've raised an excellent point. The Americans will be taking advantage of every opportunity to erect a new type of protectionism against imports from those countries we would like to trade with to bring about an increase in their standard of living. It is very important to keep that in mind.

Thank you very much for your brief. We've taken note of your comments on consultation. We intend to read your brief. If we have any questions, we will be getting in touch with you. I hope we'll have a chance to meet again because you have done a tremendous amount of work.

I think I can speak for all the committee members in saying that we very much appreciate your work. Thank you.

The committee will adjourn until 1:40 p.m.

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The Chairman: We shall be hearing from four witnesses. If you each take 10 minutes, we'll have 20 minutes for our question period. And if you can make your presentation in less than 10 minutes, we would have even more time for our questions.

Ms. Campbell's brief is rather long but I'm sure she will not read it in its entirety. If you could summarize it for us, we would have more time for questions.

Ms. Campbell.

Ms. Bonnie Campbell (Professor, Université du Québec à Montréal; Individual Presentation): Good afternoon. First of all, I'd like to thank the Standing Committee on Foreign Affairs and International Trade for taking this initiative to hold hearings on the WTO and I particularly wish to thank the committee for inviting me to appear.

I'd like to discuss the challenges facing the WTO, namely reconciling trade liberalization and investments, the respect for human rights and objectives for social and economic development, referred to by some as development rights which, in my opinion, are a prerequisite for the respect of human rights. These various aspects will be considered as part of an answer to the question set out in the terms of reference for the committee's hearings, that is, how to preserve Canada's interests and those of smaller and poorer countries while at the same time allowing for trade liberalization and the promotion of important aims relating to values, culture, environment and rights.

My argumentation is as follows. The trade liberalization and investment policies proposed and supported by Canada in the framework of the WTO have a strong and decisive impact on smaller countries, on weaker countries, countries often referred to as developing countries. More specifically, the liberalization process underway leading in many countries to privatization, deregulation and the selective withdrawal of the State may well result in depriving these so-called developing countries of political and economic instruments, thus compromising their objectives of social and economic development. In the absence of minimum standards and public instruments to enforce labour and environmental standards on non-renewable resources, there is a danger that this process may contribute to the failure to respect human rights and a growing marginalization of certain regions of the world.

Historically, Canada created its place on the world market through the use of public policy measures: customs rates, the Canadian Wheat Commission, subsidized electricity rates, protection of cultural industries, etc.

This is exactly the type of strategic incentives that are being taken away from so-called developing countries by introducing measures for the liberalization of trade and investments, deregulation, etc., particularly with respect to protecting non-renewable resources. This dissymmetry is not something of the past but something that is taking place here and now.

On the one hand, developing countries are being denied the opportunity to make use of policy instruments. On the other hand, Canada is continuing to actively promote its own economic and trade interests in these same regions of the world.

More specifically, here is the paradox. On the one hand, African countries—I shall be discussing African countries in particular and indebted countries more generally—are being urged by multilateral funding institutions, that is the World Bank and the MIF, a policy supported by Canada, to open up their economies to foreign investments and trade. On the other hand, it is precisely through the support of public institutions—Canadian development assistance, ODA, to private Canadian investments and interests, a favourable regulatory framework, CIDA policies, policies of the Department of Foreign Affairs and the Export Development Association—that Canadian companies in key sectors of our economy find themselves in a favourable position at the international level.

I attempted to illustrate this situation based on Canadian mining activities in Africa in the paper I submitted to you: Canadian Mining Interests and Human Rights in Africa in the Context of Globalization. As I see it, this situation is likely to contribute to an increasingly asymmetrical integration of certain regions of the world and hence to their growing marginalization, their impoverishment and, potentially, their political and social destabilization.

What I'm attempting to set out does not apply to the protection of rights. If we keep on opening up economies—

The Chairman: Excuse me, but you are speaking a bit too fast for our interpreter. Imagine you are speaking to your students.

Ms. Bonnie Campbell: But I only have 10 minutes.

The Chairman: I know that students have to learn quickly.

Ms. Bonnie Campbell: Very well.

As I was saying, this does not just relate to the essential issues of the application of human rights and trade liberalization but also to the important implications this will have for social and economic destabilization and the resulting loss of trade partners for Canada. This leads me to make two recommendations at the end of my presentation but first of all I will sum up the main thrust of my argument.

First, in examining the strategies of the main vectors of globalization, whether it be firms, bilateral agencies or multilateral funding organizations, one can observe that the globalization process is built and institutionalized by precise and identifiable agents who are responsible for what is taking place. Globalization implies negotiations and a relationship of influence and power. It is therefore an eminently political process as well as being an economic one. The agents are responsible for the phenomena, hence the importance of the work done by this committee and its hearings, because the impact of the WTO is not predetermined. The impact that this organization will have on developing countries will be a construction.

In Africa, economic liberalization is accompanied by a programmed redefinition of the State, which has withdrawn from certain sectors, notably from the planning of the social reforms and reoriented its interventions to other areas. More specifically, it is encouraging a precise type of growth strategy based on the promotion of private interests, particularly those that focus on exports.

This process has resulted in a delegitimization and fragilization of the State, which is also facing a financial crisis. The phenomena of the withdrawal of the State is not peculiar to Africa but it has taken a particular significant form in that continent with respect to the possibility of implementing development strategies aimed at protecting rights and achieving objectives for social and economic development.

The various forms taken by globalization have a varying impact on rights depending of a whole series of factors, but what strikes me as important and not sufficiently emphasized is the nature of the political regimes. At the present time there is a whole continuum of situations where the State is being fragilized and dismantled with specific impacts on human rights and possibilities for economic and social recovery. Deregulation is the order of the day. Mining codes deregulate protection in this non-renewable resource sector. We also see situations where the State is delegitimized or short-circuited, situations where entire sections are expropriated—I'm thinking of Zaire—or situations resembling a kind of guardianship or supervision where the State seems to draw its legitimacy not from its own population but rather from the financial, political and military support of large multinational corporations.

The greater the natural resources of a country in its mining and petroleum sectors, the greater its need for investments, the more likely it is to find a fragilized State in situations where it is under supervision, and this creates very serious problems for the protection of rights.

The WTO is thus faced with a very serious challenge, namely reconciling the rules of trade and the development rights. This challenge exists at the multilateral level but it also concerns Canada at the national level. This can be illustrated with reference to the tensions existing between the various objectives set out for our foreign policy. I'll illustrate this point with an example from Canadian mining interests in Africa.

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At the present time there is a mining boom in Africa. Canada is in the forefront of this boom. I'll spare you the figures that can be found in the report on the increased funding for exploration and development activities. It is interesting to note that the documents of the Department of Natural Resources explain the situation by noting that Canada provides a regulatory framework, tax regulations, a whole series of public incentives as part of the trade missions of Team Canada, trade agreements, CIDA, the Department of Foreign Affairs, EDC, etc., all of these initiatives indicating our government's desire to promote and facilitate the expansion of our companies abroad.

The countries that receive these investments are open to them following the structural adjustments. It is interesting to see the impact of the situation on Ghana, the country with the most Canadian mining properties, with over 100 Canadian gold mines at the moment.

It goes without saying that there are many impacts, and I will draw your attention to some of the negative consequences of gold exploration. The mining areas generally lie within the main agricultural and forest regions and have resulted in disturbances and expropriations. The Canadian NGO, Inter Pares, of Ottawa, says that in 1996, in western Ghana, the local population expressed its opposition to expanding mining activities by positioning themselves on the rocks that were to be exploded. Police was called in, shots were fired, and some of the demonstrators were killed. Research shows that both Canadian and South-African companies are active in this location.

I'm trying to illustrate the fact that the current manifestations of globalization, through trade and investment liberalization, are in the process of redefining the boundaries between social rights and private rights. We are witnessing this process.

Let us look once again at what is happening in Ghana in the mining sector. Threats to health, the environment, ground water, and so on, are extremely important, as is shown in the Australian studies we quoted in an article that was just published on this matter in Sweden.

Some 20 mining communities got together to try to let the world opinion know what is going on in mining. The title of their publication speaks for itself: "Gold is Killing Us". We must be aware of the social impact of liberalization policies of this type, and we must react accordingly. We are aware of what is happening. We must not turn a blind eye to it.

The WTO is facing certain challenges—reconciling trade and human rights and development imperatives. Canada is facing the same challenges.

I would like to close with two recommendations.

First, we recommend that the government of Canada do an in-depth review of its trade, investment and aid policies with special attention to the following three points: first, the impact of our trade and investment policies internationally, not only as regards their effects on fundamental labour standards and social, political and economic rights, but particularly—and this is something we do not mention very often—with respect to the ability of developing countries to adopt measures and programs in areas such as the management of renewable resources, and social and environmental protection.

The second point the review should focus on is the current standards governing the practices of Canadian companies so as to require guidelines for Canadian economic and commercial interests to make them at least compatible with the minimum labour standards established by the ILO. In this regard, there has been much discussion about codes of conduct and I would like to table with the committee a copy of the report adopted by the European Parliament in December 1998. It is entitled: Report on EU Standards for European Enterprises Operating in the Developing Countries: Towards a European Code of Conduct.

The third aspect of the review for Canada should be to include current aid programs so as to determine under what conditions promoting Canadian economic and commercial interests may have harmful consequences on economic, social and political rights, and determine the aid and trade policies that foster respect for these rights.

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The second recommendation has to do with Canada's role at the WTO and is in four parts:

- That Canada suggest the creation of a WTO working group to study the impact of the agreements of this body on human rights and the right of the smallest and weakest countries to develop, as well as the compliance of these agreements with various charters of rights, particularly the International Covenant on Economic, Social and Cultural Rights of 1976;

- That this working group pay particular attention to the implications of liberalization measures (deregulation, privatization, and so on) on the respect and protection of human rights and the right to develop;

-That this group study the possibility of introducing escape and safeguard clauses with respect to the generalized liberalization movement in order to ensure that these rights are respected;

-Finally, that the group be given a mandate to study as well the impact of changes in the price of exported raw materials for specific commodities on the issue of human rights and the right to development of the export country or countries concerned.

Thank you.

The Chairman: Thank you, Ms. Campbell.

Professor Gagné.

Mr. Gilbert Gagné (Professor, Political Science Lecturer, Concordia University and University of Ottawa; Individual Presentation): I would like to target my comments at a specific issue—namely, how to best guarantee Canada's interests in the international trading system, and, to a lesser extent in the creation of the Free Trade Area of the Americas, in light of what is described as the United States' unilateralism as regards subsidies and trade remedies and culture.

The language of Shakespeare seems more appropriate for discussions of subsidies and countervailing duties. In addition, I will be referring to American trade law most of the time.

[English]

Looking at the agreement on subsidies and countervailing duties that resulted from the Uruguay Round, Canada should concentrate its efforts within the WTO on improving and clarifying existing provisions regarding the definition of the subsidy concept and the conditions for imposing trade sanctions.

The WTO subsidies agreement defines a subsidy as a financial contribution that confers a benefit. Of course that contribution can take different forms, such as grants, loans or tax concessions, but I'll come back to these points in a few seconds. To be countervailable or subject to trade sanctions, a subsidy must be specific. That is, it must be limited to certain enterprises or industries within the jurisdiction of the granting authority. This is particularly important, because we should be seeing it as being against the territory of a whole country.

At the end of the Uruguay Round, the formulation would have implied that general subsidies applied by Canadian provinces would have been countervailable because they would have been considered to be specific. This is why the wording “within the jurisdiction of the granting authority” implied that Quebec or Ontario could apply general subsidies without fear of trade retaliation. Needless to say, this provision should be maintained.

During the Uruguay Round, this provision was the result of pressure from the European Union to curtail U.S. subsidies granted at the state level, but we'll be talking about an exception here. The United States being a federal country, at least Canada could rely on the United States to support its views on the matter that federal states should not be discouraged in their ability for provinces to use subsidies.

When we want to determine whether or not a subsidy is specific—this is an issue that has arisen in the infamous softwood lumber dispute between Canada and the United States—the subsidies agreement mentions four factors that “may be taken into account”—and this is the wording of the provision. We know whether or not a subsidy is limited to a certain number of enterprises or industries, if an industry or group is the predominant user of the subsidy, if disproportionately large amounts of subsidy are bestowed on certain groups or enterprises, or if the government exercises discretion in awarding the subsidy.

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It's interesting to note that the U.S. implementing legislation for the Uruguay Round now specifies that only one factor among those four factors is sufficient to determine the specific character of a subsidy. Within the WTO, Canada should therefore make sure to strengthen the wording of the provision to make sure all four factors should be considered to determine specificity. This is an issue that arose during the softwood lumber panel. In fact this new interpretation and this new implementation of U.S. trade law was meant to overturn the decision of the subsidy panel in the softwood lumber dispute.

Another problematic question arises with regard to the effect of the subsidy. The effect of the subsidy is not considered in the WTO subsidies agreement, with the so-called effects test. Not surprisingly, U.S. trade law now specifies that the effect of the subsidy doesn't need to be considered to consider the subsidy countervailable. The WTO subsidies agreement mentions that a subsidy must confer a benefit on the recipient, but the United States uses a methodology whereby it simply assumes that a subsidy confers a benefit, without really investigating whether a benefit is actually conferred. That may remind some members of the committee of certain issues that arose during the softwood lumber dispute.

You must be reminded, though, that this issue, the single-factor approach to determine specificity, and the effects test were meant to overturn decisions of NAFTA panels in the softwood lumber dispute. My question is the extent to which such provisions could have led Canada to sign the 1996 lumber agreement with the United States, a lumber agreement that we know involves export restraints. It is essential for Canada to clarify those provisions, to involve less scope for unilateral interpretation and implementation on the part of the United States.

Also, as a precondition for imposing trade remedies, the WTO agreement specifies that there should be a closer link between the subsidy and injury to a domestic industry. The United States has never correctly applied the so-called causation standards. The WTO subsidies agreement specifies that the injury must be through the effects of the subsidy. This does not figure in U.S. trade law.

Within the NAFTA working group on trade remedies, the United States accepted that there should be a sufficient causal link between the subsidy and the injury. This has not been translated into U.S. law. On this front again, Canada should make sure that when the United States determines injury, the injury must be through the effects of the subsidy and not because a U.S. industry is simply not competitive enough.

A particularly troublesome element under the present WTO subsidies agreement is that there is the possibility for the United States to resort to both fora, the WTO and NAFTA, to challenge Canadian subsidies. We should make sure this is not possible anymore, because this could be highly detrimental to Canada's interests. First, the United States could proceed to a WTO challenge or to a NAFTA challenge, either simultaneously or successively. We have to make sure this possibility of harassment of our exports is not possible anymore.

Finally, on the subsidy front, there should be stronger evidence before the United States launches a countervailing duty investigation. More importantly, we should make sure that if there is no new evidence, another investigation should not be launched. This is the source of the harassment of our exports. An investigation could lead to a finding that there is no subsidy or injury, but the same U.S. competing interests may ask for another inquiry shortly afterwards, and the whole process is likely to start all over again despite the fact that there is no new evidence. More often than not, what happens is that Canadian interests have to make compromises with U.S. interests.

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These recommendations are all meant to guarantee that Canadian trade interests, despite NAFTA, are not going to be harmed by U.S. protectionist pressures. We haven't heard much about countervailing duties in the past few years, but this could change, especially if the U.S. economic situation deteriorates. We should therefore obtain further guarantees on the WTO trade laws.

[Translation]

I will now speak briefly about culture. We hear a great deal about it in the context of our dispute with the United States about magazines. Within the WTO, it has still not been determined whether culture is a good or a service. In the course of the upcoming multilateral negotiations, we are going to have to come up with a clearer definition of culture.

As you know, the General Agreement on Trade and Services is up for review this year, including its exemptions. It would not be surprising to see the United States call for greater liberalization.

Canada must demand that culture, like non-renewable natural resources or national treasures, be covered under a general exception. There's already provision for general exceptions in article XX of the GATT and in article XIV of the General Agreement on Trade in Services.

If this were not possible—because this is not the first time we've tried to get a general exemption for culture at the multilateral level, Canada should at least get recognition of the specific nature of culture. That is what was missing in the dispute on periodicals.

We might wonder about a complete exemption for cultural industries as in the case of NAFTA. This so-called complete exemption did not protect Canada's interests in culture, because the United States can impose trade sanctions when it wishes, and under whatever conditions it wishes. Most of the time, Canada has had to back down when the United States did not like one of our cultural programs.

Consequently, I think recognition of the specific nature of culture—in exchange for concessions from Canada in culture, which could include communications, telecommunications and the Internet—could at the very least allow us to reach some agreements that would mean, for example, that measures to ensure the survival—and that is a strong word—of certain cultural industries could not be subject to trade sanctions from the US. The reason is that there would be acknowledgment of the specific nature of culture, which is absolutely crucial.

Naturally, to make such a result possible in light of the American position, Canada must make sure there is a consensus on this. I have read that you, Mr. Graham had already mentioned the importance of developing a consensus with Europe on this matter, particularly with France. It definitely can be done. All we need do is ensure that the majority of countries are not subjected to pressure from the US. The situation is even more difficult to understand, given that most WTO countries are reluctant about trade concessions that could jeopardize the survival of their cultural industries.

Finally, since Canada is chairing the negotiations regarding the creation of a Free Trade Area of the Americas, the recommendations I just made about subsidies and culture could also apply to the regional context if a Free Trade Area of the Americas were established.

I would like to end there, Mr. Chairman.

The Chairman: Thank you very much, Professor Gagné.

Professor Gendreau.

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Ms. Ysolde Gendreau (Professor, Faculty of Law, University of Montreal; Individual Presentation): Thank you, Mr. Chairman, and I would like to thank the committee for inviting me to express my views about the upcoming WTO negotiations.

I informed Mr. Dupuis, when we spoke on the telephone, that my comments would not be about the negotiations as a whole, but rather would focus on intellectual property. So I have a few ideas for you about two specific aspects of intellectual property—copyright and patents.

First and foremost, I would like to talk about the context of intellectual property in negotiations of this type. As we know, intellectual property is, after all, a newcomer to international trade negotiations. Intellectual property was discussed for the first time during the Uruguay Round negotiations. Before that, it was not even mentioned. However, we are seeing that, increasingly, discussions about intellectual property are always an integral part of trade agreements. Countries have woken up, so to speak, to the importance of intellectual property rights. As a result, the TRIPS agreement was included in the WTO agreement. In addition, there are provisions about intellectual property in the trade agreements signed at the same time, such as the NAFTA.

Moreover, it could be said that the European community is increasingly active in the harmonization of intellectual property rights, specifically because these rights are considered extremely important to trade in goods and services between countries. It is also understood that harmonizing these rights promotes trade.

One of the reasons intellectual property is a newcomer to international trade agreements, is that there are a significant number of international agreements on intellectual property—which include the essence of intellectual property rights—and that these traditional agreements, if we can describe them in this way, are extremely difficult to implement. It is extremely difficult to force countries to implement the provisions of these agreements, and the sanctions regarding reprisals and arbitrations in the WTO give greater strength to the rules found in international treaties.

It has also been found that the rules regarding intellectual property contained in the WTO agreement work through a sort of process of integration, so to speak. Rather than starting at square one, the WTO agreement attempts to say: we are asking countries to comply with a particular international agreement, and we are doing more. The difficulty stems from the fact that unanimity is required to amend international agreements, and this is getting more and more difficult to obtain, because there are more and more countries involved.

So, the intellectual property component of the WTO agreement is really a minimum, and it cannot go much beyond other international treaties, because there is a sort of diplomatic game involving the various international bodies—I'm thinking of the World Intellectual Property Organization, or WIPO—and we must allow these bodies to play their role internationally.

Consequently, the great achievement of the WTO is to be able to add sanctions to the minimal rules set out in international agreements and to push them to go a little further.

• 1415

Of course, that does not stop the WTO from controlling things somewhat, because it has an opportunity to put forward some rules that are difficult to get through in a different context, but which become more attractive when there is the threat of WTO sanctions.

So we see that intellectual property remains important in international agreements. When we read the documents, we realize that this will be another topic for the upcoming round of negotiations. It is one of the subjects identified for the FTAA agreements. Since the signing of the WTO agreements, some developments have occurred that will have to be incorporated into the new agreements. I'm thinking particularly of copyright, but there are also issues regarding patents.

I would like to start by talking about copyright issues. Since the signing of the WTO agreement, the World Intellectual Property Organization has passed two treaties that increase the level of copyright protection. One is really about copyright protection, and the other is about protection for artist-performers and producers of phonograms. These treaties were completed in 1996. Canada is reviewing how to implement them, as are other countries.

There was also a draft treaty on databases submitted at the time of these negotiations. It is clear what is behind all of this: digitization and the Internet. It is therefore quite reasonable to expect that in the next round of negotiations, there will be a discussion about intellectual property problems, copyright as regards the Internet rules and the whole Internet issue. From this standpoint, Canada has always been seen to be in the avant-garde. We have a very well-developed telecommunications industry, and I think many participants will be extremely interested in the position we put forward.

In addition, a certain dichotomy exists here. We are talking about the Internet—that is, something very technical. We know that there are major economic interests behind copyright protection and the protection of all the people involved in the Internet, but one thing that is extremely important and that bears out the concerns raised by the two preceding witnesses is protection for culture and individuals.

If we do not stress protection for authors, creative artists and performing artists, we could put forward a system based solely on industrial interests. These interests vary from year to year, and from country to country. It is much harder to get across the message about protection for intellectual property, if the only underlying message is one about protecting our economic and industrial interests. By targeting the importance of creative artists—whether they are authors or performing artists, we emphasize the importance of people and culture in all of these discussions. As far as acceptance by the general public goes, it is definitely much easier to make people understand that these rules are necessary because, ultimately, they protect our creative artists, than it is to maintain that they protect some huge, anonymous economic interests.

It is true that the creative artists need economic interests to promote their work, but we must not forget their place here. It is essential to these industries and it is also important for the legitimacy of intellectual property protection.

• 1420

Another aspect of Internet would definitely be raised in these negotiations. If you read the newspapers, you know that there is a great deal of talk about MP3, about the dissemination of music, films, and so on, but there is also talk about hate propaganda, child pornography and so on. We know that all of this goes through the same channels. So people who get involved in disseminating works of art are also those called upon to disseminate hate propaganda and other unsavoury things.

So, from this point of view, we need to harmonize responsibilities in such a way that we take into account not only the concerns about intellectual property, but also the more general rules regarding civil or criminal liability. That is why we need to take time at the moment to arrive at a position, even a national one, on this matter. We must realize that the same exercise will have to be carried out at the international level. As a result, our national efforts in this regard could be useful as well.

As regards patent law, this morning you heard from a representative of the Pharmaceutical Manufacturers Association of Canada. We know that there's currently a complaint against Canada at the WTO because of its special rules regarding exceptions for drug patents. We don't know what the outcome will be. I know that in the departments, people are working very hard to put forward Canada's viewpoint. The outcome is really quite uncertain. It could happen that at the next round, there could be a discussion about what is called patent term restoration, to give a somewhat more realistic length of time for pharmaceutical patent protection. I think that in the area of patents, this would be the hot topic.

Internationally, in the area of patents, there is also a great deal of talk about both pharmaceuticals and living materials. I think that in the context of the FTAA, from the documents that I have seen, this is a particularly hot topic because of the importance of Native peoples in Latin America. Once again, I don't know whether the WTO will get into the same level of detail about these issues of protecting living materials, protecting biological resources, in return for royalties to Native peoples for the use of their DNA or the plant material in their environment. There may be a more specific agreement on this issue in the FTAA, as was the case in the NAFTA, to allow something more general at the international level with the WTO.

So we could see rules being developed in parallel by the WTO, at its upcoming round of negotiations, and by the FTAA, as we saw in the case of the WTO rules in 1993 and the NAFTA rules. There will be the same type of meshing of the systems, and we will probably be examining issues on which it is somewhat easier to get consensus within the FTAA, and keep the more general rules within the WTO.

This completes my remarks. I thank you.

The Chairman: Thank you, Professor Gendreau.

It is now Professor Loungnarath's turn.

Mr. Vilaysoun Loungnarath (Professor of Law and Lawyer, Faculty of Law, University of Montreal; Individual Presentation): Thank you, Mr. Chairman.

Ladies and gentlemen, members of the Standing Committee on Foreign Affairs and International Trade, let me start by thanking the committee for giving me an opportunity to talk about Canada's interests in the upcoming negotiations of the World Trade Organization and in the negotiations regarding a Free Trade Area of the Americas.

In this brief presentation, I would like to discuss four themes: first, the WTO dispute settlement system; second, the NAFTA cultural exemption; third, the implementation of a multilateral agreement on foreign investment; and, finally, harmonizing the anti-dumping provisions with domestic legislation on competition.

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With respect to the WTO dispute settlement system, at the outset, I would like to emphasize the significant improvements made to the multilateral dispute settlement mechanism by the Marrakech Agreements. Compared to the GATT system of 1947, the current dispute settlement mechanism is much quicker, more reliable and more effective. Above all, it is more rules-based and less sensitive to political power struggles.

Having said that, there is still a weakness with respect to the outcomes of the WTO dispute settlement procedure. Generally, the special panels and the permanent appellate body are quite effective in determining that a national measure contravenes a standard of the GATT-WTO system. However, the reports of these agencies provide very little information on the scope of the leeway of the State that succumbs to adopt alternative measures to achieve the desired results of programs that are struck down, results that may, indeed, be quite legitimate and desirable public policy goals.

In my humble opinion, one of the objectives of the next WTO round of negotiations should be to correct this weakness, which was strikingly evident in two recent cases, namely, the United States-European Union banana dispute and the Canada-United States periodicals dispute. In both these cases, the Americans won at the WTO. Rightly or wrongly, they believe that attempts are being made to avoid the recommendations of the panels and appellate body by implementing measures that, in their opinion, are contrary to the spirit of these reports.

I certainly don't wish to comment on the substance of these two cases and of the public policy issues that they raise. However, I can now see that there are weaknesses with the outcomes of the dispute settlement mechanism, and that the Americans have suffered the consequences at least twice, and they are not pleased, and that these manoeuvres will certainly engender skepticism in an important segment of their political leadership and public opinion with respect to the multilateral system and will also provide ammunition and justification for a unilateral approach. This should worry us all, because, as my colleague said earlier, if there is one thing that threatens development of international trade at the present time, it is clearly the unilateral inclinations of the world's largest political and economic power.

With respect to the cultural exemption under NAFTA Article 2106 and Annex 2106, I would simply like to say that, in my opinion, the recent defeat at the WTO in the periodicals case highlights the fact that Canada was royally duped with the NAFTA cultural exemption. The cultural exemption is a little bit like the NAFTA Maginot Line: all you have to do is go to the WTO to get around it.

I sincerely believe that if the negotiations are started concerning an FTAA, Canada should use the opportunity to request that the NAFTA cultural exemption be reformulated so that it cannot be evaded through the WTO. This might take the form, for cultural matters, of a mechanism similar to those in paragraphs 2005(3) and 2005(4) of NAFTA, which deals with measures that can be justified for considerations linked to the environment, conservation, sanitary and phytosanitary measures and even to standards.

The failure of the multilateral investment agreement, the MAI, under the au auspices of the OECD suggests caution in integrating such negotiations into the next WTO round. I believe that if negotiations on foreign investments are included in the next round of negotiations, they should have modest goals and be better balanced, ideologically, than those initiated under the OECD.

• 1430

I also feel that we should be careful about suggesting, as a multilateral model, the investment rules found in Chapter 11 of NAFTA. Aside from the European supranational framework, the rules contained in Chapter 11 of NAFTA are currently the most restrictive international investment standards with respect to the exercise of national sovereignty and no doubt are based, more than any other standards, on the ideology of liberalism.

We must be very weary about Chapter 11 of the NAFTA, primarily because it enables a foreign investor to sue the State and to seek compensation for legislative and regulatory measures taken by the State. The State is sued because it legislates, something which is excessive and which has never been seen before. Canadian domestic law does not recognize, in principle, such a possibility for private enterprise; the WTO dispute resolution mechanism does not compel the State that has yielded to pay compensation to the complainant State. However, under Chapter 11 of NAFTA, an American multinational can compel the Canadian State to pay damages because the Canadian State has exercised its authority to legislate or to regulate. This is excessive and is indicative of having travelled too far down the road of legal absurdity.

As for harmonization of the anti-dumping regime and competition legislation, I would first of all like to point out that the antidumping rules and the competition provisions adopted by national legislative assemblies on unfair pricing practices are all pursuing a common objective, namely, maintaining the conditions for fair competition. This leads us to question the logic and pertinence of pursuing a public policy of maintaining two distinct legal systems, one which applies to foreign producers and which is based on the administration of anti-dumping duties, the other which polices the operators in the domestic market and which is designed to prevent predatory pricing policies.

I feel that this dual system is artificial; I find it difficult to explain the logic behind it. Consequently, during the next round of WTO negotiations, I think that Canada should, on the one hand, make an effort to promote the convergence of the anti-dumping system and, on the other hand, advocate competition rules with respect to unreasonably low pricing practices.

These are my comments. I would like to thank the members of the committee for their attention.

The Chairman: Thank you, Professor. I thank you for limiting your comments to 15 minutes. Consequently, we have an hour for questions.

I will now turn the floor over to Mr. Obhrai.

[English]

Mr. Deepak Obhrai: Thank you for coming. All of you touched on different subjects here. I would like to talk to all of you, and I think I could go on until 6 o'clock, but the chairman would miss his siesta. My colleagues will ask you questions, and hopefully I'll have a chance later on to dwell on many of the things you have said—and you have raised valid questions.

I will restrict my comments to Bonnie Campbell, because of what Bonnie has said in her presentation.

Bonnie, I have just recently returned from a state visit to Africa with the Governor General, so I'm absolutely familiar with what you're talking about, and I have some questions and some observations for you as well.

My background is that I'm from Tanzania. I grew up in that country at the time when the country was going on a path.

On this state visit we went to West Africa, to many of the countries you've talked about and to Tanzania. We had the mining company executives on those flights, and many of the deals that were signed were signed by mining executives, exactly what you're talking about in your brief. So I'm quite surprised that we just happened to hit at the right time.

Let me tell you one thing. In my discussions with President Nyerere—and you were talking about privatization and the change of political structure in Africa, which you think is not a good thing—his comment, and it was a direct comment, was, “I took power away from the private enterprises that were existing in the country and put in state control.” Literally, his own words were, “I grabbed the power away from them.”

• 1435

Today all of them are bankrupt. Why? Because state intervention does not work; and I've seen it. In your brief you are talking about state intervention. Yes, he admitted the states have become weak economically. They don't have the power. But they destroyed that power by grabbing it away, killing it instantly.

I agree with you on one aspect, which he stated: there is no entrepreneurial class left in that country. Why? Because they were kicked out. They left when he grabbed the economy. Today, he himself admits that to create that entrepreneurial class it will take 30 to 40 years. Who has the time to do that? I have seen the economic conditions of the poor deteriorate, go down, from the time I was living there. Yes, you're right in a way, the only salvation left now, and which they are paying the price for, is the coming of foreign companies in there and taking it away. Yes, you're right, but that's the only thing left.

When you talk about the Congo and everything, this political thing, there's an evolution happening in certain countries in Africa, but in other African countries the political evolution is dying. What you are saying...where it is happening, where there is hope, where I saw it, in my questioning, was in Senegal, in the Ivory Coast, in Tanzania and in Morocco. Morocco, as you know, is a monarchy, but still the prime minister today over there was in jail for the last 20 years.

I do see some hope coming in those countries, provided they can separate themselves and create independent institutions. But they need it. You may have identified a point over there, but there is no other way for those countries to get out. They've gone down that path and it has created more poverty.

In retrospect, to trust currency in those countries with the elite is a different issue. The elite over there, yes, and some multinationals in collaboration with the elite, are doing many of the things you have mentioned. But Canada's responsibility should be asking for accountability and transparency, not saying no investment. We would have the power, in actual fact—and I'm glad to say it because I was sitting on the other side—economically inside that country, through these things, to create the change and create the human rights conditions that you are demanding. So it's our strength to go in.

Ms. Bonnie Campbell: Might I respond?

The Chairman: Go ahead, yes. You can take it as a question or a comment.

Ms. Bonnie Campbell: They could go on a long time.

Mr. Deepak Obhrai: Exactly.

Ms. Bonnie Campbell: These are very important issues, they're not simple issues.

The question of the state and power in Africa, I won't pretend to even raise. What I am trying to suggest is the need to distinguish between the types of authoritarian, corrupt regimes, on the one hand, and what is happening now, which is a redefining of the role of the prerogatives of the state, which is in counter-distinction to any historical experience of Asia or North America.

The state has been the agent of development. There would be no industrialization in Asia if there had not been state intervention. States are important in terms of protecting resources. I studied the difference between two Guinean mining codes. The more recent one of June 1995 systematically cuts out reference to the protection of the environment. My concern is that in the opening up of these countries, we are not leaving the possibilities of having the conditions for the type of development strategies that these countries need. I don't dispute that in the very short term there are real political problems, but the answer is certainly not to open up the countries so that there's an international dispersion of power.

• 1440

You speak of the Ivory Coast as an example of what should be going on. The Ivory Coast has just privatized the whole cotton sector. The same company that bought the cotton controls the roads out to the coast and controls the maritime shipping. It sounds to me like the game of Monopoly. How can the country precisely negotiate the prices of its raw materials if there is one buyer, there's one road out, and there's absolutely no competition? We're in a false delusion that there's somehow a competitive system of the market.

If one takes the time and looks at the actual actors of this liberalization process, it is not an equilibrium-competitive process at all. The concern is to have systems of checks. I think where Canada has a responsibility is in monitoring the types of activities our companies are conducting in countries such as Ghana, Tanzania, and Zambia, and to be in a position to work with local actors who monitor, so that we don't bring in our own opinions also.

Mr. Deepak Obhrai: I do understand that, but in the context of negotiations with the WTO, we have a global picture to look at. We have global rules to set. What you are doing here right now is picking up this little problem area over there that requires specific attention, specifically over there. But you're not going to take WTO as a whole global liberalization, global trade thing and narrow it down to this issue, which may, as we have stated in both of our observations, require specific local protection or local initiative there. You cannot take that into WTO. In reference to this cotton issue, as I said, they have no choice—they have to get over there in the long term.

I think we'll differ on this, but in our view of things, on the WTO we take a global view. That's fine, you have given us your paper and I do understand, so that's okay.

Prof. Bonnie Campbell: I would like to intervene on this last point.... The African continent is presented as extremely pauvre. We have images of poverty. The African continent produces 30% of the world's gold and has 54% of the reserves. It's a chief mining source of diamonds. If one looks at the amount of minerals, the United States has been dependent...48% of its bauxite has come from Guinea. These are figures.... Africa is extremely rich in raw materials. Where are the conflicts right now? Angola, financed by diamonds; Sierra Leone, financed by diamonds; Angola, Zaire.... Look at what is happening.

What I am saying is that there are direct relations between respect for the right of people to have control over their own development strategies and the negotiations of trade agreements. These are absolutely intimately related. It's not down there. It's a way of segmenting.... Trade and human rights are very much linked—

Mr. Deepak Obhrai: Madam, I was born and grew up in Tanzania. I studied in Tanzania and I worked in Tanzania. I spent half of my life in Tanzania. Over there is also my homeland.

[Translation]

The Chairman: Mrs. Debien.

Mrs. Maud Debien: Good afternoon, ladies and gentlemen.

My first question is for Mr. Gagné. However, I would first of all like to tell Ms. Campbell that I share her concerns and that I do not at all agree with the comments made by my colleague, Mr. Obhrai.

Mr. Gagné, you talked about culture, the cultural exemption or the cultural exception. Some witnesses have talked about creating a new WTO instrument to protect culture, whereas others have emphasized the need to maintain the cultural exception that currently exists.

In your case, you have not talked about a cultural exception per se, but you have talked about recognizing the specific character of culture. Does this term that you used mean that there should be a new instrument created or does it really fit into the general cultural exemption or exception that currently exists? This question is for Mr. Gagné.

• 1445

I now have a question for Vilaysoun. Good afternoon. In the last part of your document, you talked about harmonizing the anti-dumping regime and competition laws. We know that, for the first time at the WTO, competition is on the agenda. Do you feel that the entire question of anti-dumping measures should be examined in the context of competition?

These are my two questions for the time being.

Mr. Gilbert Gagné: Ms. Debien, you are right. The terms “exemption” and “exception” are often used as synonyms. I fully share my colleague's point of view, when he spoke of the cultural exemption in NAFTA. This does not work because the United States has power to retaliate.

More than 80% of Canada's exports go to the United States. Regarding periodicals, which are creating a very serious dispute with the United States, Americans are threatening us with sanctions that are much heavier than the prejudice that would be caused to them by our protection of our cultural industries. They are threatening us in sensitive sectors, such as lumber and steel, to put pressure on Canada. Thus, this is not truly an exemption because each time you try to protect your culture, the United States can retaliate. In other words, if culture had been part of the Free Trade Agreement, we would probably have been in a better position to protect our interests. That is what I meant by an exception, an exception that presupposes the recognition of a specific character. If you agree to recognize that a given sector should be treated in a specific way, you recognize that it has an exceptional character and it must be subject to some exceptions.

Normally, culture should be an exception to the extent that a State could, in an ideal world, take measures to preserve its culture without incurring trade sanctions. I do not think that this is realistic, given the United States and also given the fact that in the globalization process, it might be in Canada's interest to export some of its culture without having restrictions on it.

Strange to say, but PolyGram, the second largest recording and record distribution company in the world, belongs to Seagram, based in Montreal. Thus, perhaps Canada might find some advantage in globalization.

I do not think that a new instrument for the WTO would really be of any use. I think that we must recognize the specific characteristics of a culture. In the dispute over periodicals, not long ago, the problem was that culture was recognized as being just another kind of merchandise. This is what the United States want, but most other countries do not.

Recognizing the specific character of culture would allow countries like Canada to preserve their culture, especially where cultural survival is at stake. We know that 83% of the periodicals distributed in Canada come from abroad. We're not talking about preserving a monopoly over the Canadian periodical industry. We merely want to keep some space available for it to ensure a typically Canadian cultural environment. I believe that recognizing the specific character of culture in the agreements would be enough to ensure that countries have some leeway for preserving their culture.

I am not an institutionalist and I have never heard anything about a new instrument, but I think that we should recognize the specific character of culture. To do this, there will have to be a consensus and a common front among industrialized nations, and many other nations in the world facing the United States.

What I find appalling in the cultural sector, is the fact that most industrialized nations and developing nations are against cultural concessions, which leaves only Canada and France to face the United States. The other nations are passive. Either they do not really care about their culture, or I fail to understand why they remain passive if they really want to preserve it. Apparently, they are against any concessions in the cultural sector.

• 1450

Perhaps Canada and France were not able to truly join their interests and take a common stand. If Canada and France were able to create a very strong alliance and take a common stand with respect to the United States during the next round of WTO negotiations, perhaps then we could finally have this specific character recognized, even if that meant, during later negotiations, improving certain areas that were not working, for example dispute settlement within the WTO. In my opinion, we could proceed step by step, but what is most fundamental is to recognize the specific nature of culture. Culture is not a product. As long as that is not recognized, then cultural interests within the world trade regime will clearly be threatened.

Mrs. Maud Debien: Thank you.

Mr. Vilaysoun Loungnarath: With your permission, Madam, and Mr. Chairman, I would like to follow up on what my colleague was saying before answering your second question.

I'm at least partly in agreement with what you have said. I think we need to start with an observation. The NAFTA cultural exception clause—there isn't one in the multilateral system—does not work. It does not work for at least two good reasons.

The first is that it has been found that this clause can easily be bypassed with the WTO. The second is that which my colleague raised, that is the use of this famous sanction mechanism that the Americans can use unilaterally. The Americans' practice of compensating themselves through sanctions is hardly controlled. We saw this with magazines, when they wanted to play with Ms. Copps' steel. These are two rather fundamental weaknesses, structural weaknesses, and one can only conclude that it is not working.

Where I disagree with my colleague is that I believe Quebeckers and Canadians have a much better chance of winning points at a multilateral level. Why? Because we have support. We can count on significant potential support at the multilateral level, for example France and the European Union. Mexico is in NAFTA, of course, but Mexico has no cultural exception. Mexico did not fight for cultural exceptions. Cultural exceptions do not apply to Mexican-American relations. Therefore, in my opinion, we'd have a much better chance of winning points at the multilateral level.

What shape could this take? If you aim too far or too high, on the one hand, you risk coming up against the Americans' refusal and you will have to make concessions. It would be perhaps in our interest to have something that can be applied less broadly than the current clause, but that is more foolproof. What really bothers me is this possibility of unilateral sanctions. I think we're going to have to be imaginative. Our negotiators are going to have to be imaginative but from my point of view, simply copying the NAFTA clause would be a mistake.

In terms of your second question, yes it could be that. If we were to develop a sophisticated regime in terms of competition, which I think is not realistic in the medium term, I should point out, then we could consider the issue of the relevance of maintaining anti-dumping regimes. Anti-dumping clauses and competition clauses regarding predatory pricing policies have the same goals. The logic is different. What we have is a two-tiered regime, with two sets of rules based on different reasoning, and that often leads to absurd and sometimes unfair results.

In an ideal world where there would only be ideas and ideals, we would have one system that would be based on competition laws rather than on anti-dumping regimes, but we have to take into account reality and interests at stake. I think that in the medium term, it will be difficult to simply set aside anti-dumping regimes.

Mrs. Maud Debien: Thank you.

The Chairman: Mr. Bachand.

• 1455

Mr. André Bachand: It's very interesting to hear what you have to say. You have all given us special insight into questions we have read about or heard about for some time, but it has become clear that different groups advocate the primacy or preponderance of different considerations. For example, some have spoken of the right to legislate, of the preponderance or primacy of the environment, of the preponderance or the primacy of the person. Professor Gagné told us about a certain exceptional primacy with regard to culture. When several elements have primacy, we can no longer talk of real primacy or preponderance.

I simply wanted to make that comment. I am far from being a specialist in international agreements, but we will have to present the government with a report in which we attempt to channel the desires of the Canadian people on the eve of an important negotiating round. And so, we have the problem of determining the prime or predominant elements. I'd like to hear your views on this.

Second, the WTO has been a very important organization for some years. When conflicts arise within the framework of international agreements, for example, under the Agreement on TRIPs, if I'm not mistaken, it's the WTO that settles them. Disputes that arise within the framework of the Agreement on TRIPs are referred to the WTO for settlement. There are hundreds, and perhaps thousands, of international agreements, and there is a kind of acknowledgement that they are not working. I'm asking you this question because I'm not an expert. We seem to be hearing that it is difficult to enforce most of the agreements that we have signed because of this superstructure called the WTO. It's similar to the way the UN is now being replaced by NATO. People say that the UN has no teeth and that NATO does, and therefore we will settle our differences with NATO. The Agreement on TRIPs, culture, the ILO, and so on—none of them are working. There is also a move to include labour as one of the WTO's priorities, because the WTO has teeth.

I would like to hear what you have to say on this. There seems to be a desire to give huge powers to a new international organization, because this organization no longer bears any resemblance to what existed in 1947. We never talk about GATT anymore. All that has changed. We are coming to realize that the WTO is going to become the NATO of international trade. Compared with what existed before, this is a completely different starting point for negotiations.

I'd like you to clarify these matters for us, or at least for me.

Ms. Ysolde Gendreau: Mr. Chairman, may I make a comment? This was in fact one of the problems with intellectual property and copyright. Consequently, the World Intellectual Property Organization, which administers the treaties, more or less woke up to the problem. I don't mean to say that it was asleep, because it has a great deal of work to do and it is very active, but it became keenly aware of the problems associated with dispute settlement. I think that this prompted it to become more active in putting in place the two other treaties. It also set up an arbitration centre, and a treaty on arbitration of disputes over intellectual property.

Other organizations are reacting to this trend that you have pointed out. While it is realized that the WTO cannot be asked to do everything, it is perhaps always within the power of countries and the sector in question, for example the labour sector if we're talking about the ILO, to say: you are letting power slip through your fingers because everything is being handed over to the WTO; your organization is losing its relevance, its credibility, its status, its importance, and you should do something.

• 1500

I think that we can live with a pool of resources for dispute settlement, but it is up to the stakeholders to say: "It is true that the WTO has some advantages, and we could use it, but let's not forget that there are other solutions." If it was done with intellectual property—I'm using that as an example because it is one that I know well—perhaps it could be done elsewhere, but that movement must be stakeholder-driven.

The Chairman: Mr. Loungnarath.

Mr. Vilaysoun Loungnarath: I think that there is in fact a potential danger of hegemony of the WTO. Potential? It has happened with intellectual property, as my colleague pointed out, and the same could also occur with the environment, if environmental standards are integrated into the WTO. It has not yet occurred, but it could unfold in the medium term in the area of labour if significant labour standards were integrated into the WTO, but we have not yet succeeded in doing so in a convincing way to date. It could also occur in competition if competition standards are included.

Now, is that desirable? I think your question is twofold. On one hand, we must note the existence of a reality, in the case of intellectual property, as well as the existence of the potential reality in the areas I just mentioned. Now we must ask ourselves if that is what we want.

In my opinion, we must focus on the two strengths of the WTO mechanism, which is flawed, I will agree with you on that, but which also has some strengths. The first is the number of member countries: there are 130. Not all international organizations have 130 members. Countries are competing to become members of the WTO; they are queuing up. The second strength of the WTO is its dispute settlement mechanism. I think that we presently have the most advanced international multilateral mechanism with respect to its jurisdictionality, for lack of a better term.

Professor Graham taught international law before becoming a member of Parliament. International law includes as much politics as it does law, which makes the field very interesting for some, but completely Kafkaesque for others. So dispute settlement covers both political and legal issues, which is not necessarily advantageous for small countries.

When the political or diplomatic power relationship determines the outcome, what counts are the teeth, the political power, the economic power, the influence of diplomats or a country's army. When you are involved in legal proceedings before a judge, what counts is the weight of your legal arguments. I think that of all the multilateral treaties, the WTO's dispute settlement mechanism is the most advanced in terms of jurisdiction, the most sophisticated and the most effective, despite its flaws. If we can use it for intellectual property, for competition, the environment and for labour law, it will a step for the rule of law and for small countries, including developing countries and a country like Canada, which is perhaps very large in terms of its territory but which is nevertheless relatively small in terms of its political and economic influence.

Mr. André Bachand: I'm going to stop you there, Professor, because I only have a certain amount of time.

The problem is knowing whether it is desirable. We will have to examine that. If we give everything to the WTO and it becomes the NATO of trade, investment and everything else, its structure will have to be changed. And if that is not what we want and we set up other organizations, there again, the issue of primacy or preponderance will arise.

You made some very good comments about NAFTA. A tribunal has not been chosen. Why? Because we are better off going to the WTO. We get right to the Supreme Court. Before going to the superior court and the provincial court, we go directly to the Supreme Court. The danger is that if we keep the structure of the ILO, the TRIPS Agreement and all similar structures, the WTO agreement will have to contain provisions directing the WTO not to touch some specific areas.

• 1505

Imagine the problems that that might cause. Look at intellectual property. There's a lot of talk about intellectual property, but it is very vague. There is also a lot of talk about pharmacology. Pharmacology is at the level of development that affects the environment, labour standards, sanitary and phytosanitary measures, in short everything that I have trouble understanding.

There is an issue, and it is not a legal one, but one that concerns primacy or preponderance of international organizations.

Mr. Vilaysoun Loungnarath: I do not disagree with you. I do not think that a monopoly is ever good. I will start by saying that a monopolistic WTO that takes over everything, that cannibalizes all international organizations is not a good thing, even if it is a subject matter that I teach and the way I earn my living.

Jurisprudence or the decisions made by panels will have to be examined. Panels tend to be very concerned about the limits of their jurisdiction. They are not like domestic legal tribunals, that tend to say: “Yes, of course, we are competent, we have jurisdiction.” They display great restraint and are very circumspect in this regard.

I'm going to make a third point and then give the floor to someone else, because I am aware that I talk a lot. One of the weaknesses of the interest groups that make decisions is that they are unidimensional. People are concerned with trade liberalization, and that is perhaps because of their training or where they come from. That is what interests them.

When you talk about environmental concerns, like the tuna case and the shrimp case, they tend to say that this is not the right forum and that what interests them is trade. I do not know to what extent we are on the same wavelength here, but I think that one of the weaknesses of these interest groups is that they adopt unidimensional approaches that are always based on freer trade, and do not consider or marginalize other values that, in my opinion, are part of the overall picture. I think that is one of the weaknesses of the GATT-WTO system.

Mr. André Bachand: Thank you for your comments, sir. That was extremely interesting. We could have ended up, not discussing phytosanitary issues—you did not do so, and I will not go there—but instead discussing non-tariff barriers. It gets absolutely—

The Chairman: It is very interesting. I fully agree.

Ms. Ysolde Gendreau: I would like to comment. With respect to intellectual property, the GATT negotiations were not a positive experience from the outset in the copyright community. They were perceived as a conflict between two international institutions, including one that would be fully supported by the United States and that would swallow up the WIPO. There was to be nothing left of the WIPO in the end, because it did not really have any power. That was not well received at all. At the start of the TRIPS Agreement, under the WTO, the American representatives came in with their big boots on, and it was highly insulting. I remember having heard some people. It was terrible. But slowly, they calmed down and gave the WIPO some leeway, and the WIPO also reacted, to try to reach some kind of balance.

What you are describing must take place in a number of areas, but I'm under the impression that the WIPO succeeded in carving out a place for itself very quickly because the threat was apparent as soon as the negotiations started.

The Chairman: That is a very interesting example. It is the only one we have heard to date in our deliberations that attempts to resolve the issue of entanglement and overlapping international institutions as well as primacy. Witnesses appearing before us have their own interests. They want one thing or another to take precedence, etc. It is very difficult to know where we are at.

Dr. Patry.

Mr. Bernard Patry: I'm going back to school with university professors, and it's wonderful. Thank you, ladies and gentlemen. I have some comments for each of our guests, and then I have a question.

• 1510

I'm going to start with Ms. Campbell. You talked about trade rules in conjunction with development, social and private rights. My question is very simple and precise. In your opinion, what impact will the impending adhesion of China or Russia to the WTO have on human rights, not only for Russia and China, but also for human rights throughout the world? That is my first question.

I will now go to Mr. Gagné. Mr. Gagné, in your presentation, you went to great lengths so we could understand you. I was a bit lost with respect to subsidies, so I'm going to go back to culture.

Mr. Gilbert Gagné: I know, but I was unable to make 30 copies, as requested.

Mr. Bernard Patry: Well, please give me a copy, because it is somewhat difficult to digest.

Mr. Gilbert Gagné: I agree.

Mr. Bernard Patry: I'm going to go back to culture and goods and services. You put your finger right on the problem we are facing here in Canada. Mr. Loungnarath also raised the issue. During a round table in Ottawa, some witnesses told us that any attempt at securing exemptions was bound to fail. They clearly told us that it was bound to fail. So we will have to take a much more proactive stand.

A committee reported on cultural industries as part of a study on trade policy in the cultural sector. As Ms. Debien stated, they want to create a new instrument. Mr. Pilon from ADISQ, who cosigned the report, appeared before us yesterday and told us that that was the way we should proceed. We have to move forward. I would like to know if you agree with that.

Ms. Gendreau, you talked about pharmaceutical patents, which is kind of my hobby horse, and you stated that the European Union had lodged a complaint at the WTO against Canada because of two exemptions set out in Bill C-91, that enable generic companies to start studying drugs and manufacturing them prior to the patent expiry date, as well as storing them for six months prior to that date. No one knows what the outcome will be. The panel has not yet been set up, and we should expect a decision within nine months, I assume.

You mentioned measures for patent term restoration beyond 20 years. Do you agree with patent term restoration beyond 20 years?

Then, you tweaked my curiosity with respect to living matter. We have learned a lot. We have discussed among other things genetically modified organisms, and we have learned a lot this week. I would like to know a little bit more about that. I would like to know whether or not it would be a good idea to have rules similar to those of the WTO in the FTAA.

Our last witness, Mr. Loungnarath, concluded by saying that one of the strengths of the WTO was its dispute settlement mechanism, but on page 2 of his brief, he said that the dispute settlement procedure was flawed and that the United States had been a victim of that. Mr. Loungnarath, what do you propose to make up for those flaws? I agree with you that the dispute settlement mechanism is nevertheless excellent.

That is all, Mr. Chairman.

Mrs. Maud Debien: You asked five questions.

Mr. Bernard Patry: Yes, but there is no one else on my side.

Mr. André Bachand: You made five comments and asked one question.

Mr. Bernard Patry: I'm learning.

The Chairman: There are five questions and we have seven minutes for the answers. You want to solve all the world's problems, if I've understood you correctly, but you only have two minutes.

Ms. Campbell.

Ms. Bonnie Campbell: I am not paid to speculate, but with respect to the potential impact, I would like to share an anecdote with you.

In 1996, if I'm not mistaken, the International Centre for Human Rights and Democratic Development, in conjunction with the Business Council on National Issues, organized a meeting attended by representatives of the business community and of rights organizations, including a very well-known human rights advocate from China who said that China should be allowed to join the WTO provided that it makes a commitment to comply with the ILO's basic labour rights. The ILO has an excellent convention, but does not have the means to enforce it.

Why are we talking about NATO which has replaced the UN? It is because there are power relationships. Power relationships will come into play at the WTO, and it will be extremely interesting. We can imagine what will happen. The die is not cast. I think this will be an extremely interesting test with respect to the fundamental issues. I hope that Canada will take a stand that is in keeping with the Chinese advocate's position.

Mr. Bernard Patry: Thank you.

Mr. Gilbert Gagné: Mr. Patry, to answer your question about culture, I'm going to respond indirectly to Mr. Bachand's remark about the preponderance of institutions.

• 1515

Some people in cultural industries are convinced that it will no longer be possible to recognize the specific nature of culture at the WTO. These people predict failure at the WTO and are advocating the creation of a new institution. The problem that will arise is which institution will prevail. We will be creating another primacy problem.

If Canada, France and other countries could present a common front against the United States to have the specific nature of culture recognized, I think it could work. The main problem to date is that there is no common front. We need to create one. That will not be an easy task, but we need to create a common front. I do not think that we can solve the problem by withdrawing from the WTO and by creating another parallel organization. I am absolutely positive that that would not be a very viable solution.

Mrs. Maud Debien: That is not what they mean by creating a new instrument. I invite you to read the report of the Advisory Group on the cultural sector, which clearly explains the nature of this new international instrument. I can even give you a copy.

Mr. Gilbert Gagné: Are you talking about a new instrument within the WTO?

Mrs. Maud Debien: Within it.

Mr. Gilbert Gagné: Yes, if it is part of the WTO, it is worth looking into.

Mrs. Maud Debien: They are not talking about an independent structure.

Mr. Gilbert Gagné: Of course, if it's not an independent structure, then I agree. We agree without realizing it. I fully agree, as long as a structure that is independent of the WTO is not being set up to deal with cultural issues.

The Chairman: Ms. Gendreau.

Ms. Ysolde Gendreau: In my opinion, the answer to the first question should be quite brief. I am a member of the Patented Medicine Prices Review Board, and in that capacity, I do not feel that I am able to offer a personal opinion on patent term restoration. I have an opinion, but given my status at the Board, I prefer not revealing it.

The Chairman: Would you be willing to share it with the doctor after the meeting?

Ms. Ysolde Gendreau: [Editor's note: Inaudible]

The issue of living material is new in the context of patents. The most concerned countries are those in Latin America. India and Australia are also concerned because of their Aboriginal populations.

The FTAA will be the real hotbed of discussions. There will be a minimum of polite discussion at the international level at the WTO. I think that the real exchange of opinions will take place at the FTAA, given the presence of the Latin American countries. There will obviously be a lot of diplomatic wrangling because the United States is involved. Will the presence of India facilitate the discussions in this regard at the WTO by providing substantial international counterweight? These diplomatic questions are very difficult to assess.

Therefore, I think that the critical mass in searching for solutions will be found at the FTAA.

Mr. Vilaysoun Loungnarath: First of all, I did not say that the mechanism was perfect. It is probably the least offensive at the present time, and the most rules-based.

Now, to answer your excellent question, I'm tempted to say that I haven't a clue. On the other hand, I recognize the weakness with respect to outcomes, and I'm not alone in saying this. I believe that the specialized literature and international press have discussed this at length. We could say that it's simply a matter of the special panel or the appellate body being more specific and providing a more detailed framework, somewhat like the Supreme Court does in the area of human rights when there is a Charter-based challenge to federal or provincial legislation. The problem is that the Supreme Court is criticized for assuming the role of the legislator. I think that the legislators are first to be worried and offended by this.

• 1520

In this respect, if the special panels and the appellate body are given greater leverage, national sovereignty will be affected and limited. Therefore, it is not a simple question and will require some thought. I believe that we have the time. We could consider procedural solutions, without necessarily developing a whole new procedure. There could be an associated procedure to review the response of the losing State or States. I think that we could envisage procedural solutions, but the issue is clearly complex and we will have to think about it.

Mr. Bernard Patry: Thank you.

The Chairman: May I make an observation on your observation, Mr. Gagné? It is difficult to build a common front against the United States. I travel in many countries, and I state the Canadian problem as I see it. By the way, I am somewhat surprised by the solidarity of our Quebec friends on these issues, because English Canada is much more threatened by the invasion of American television and films. We do not have the prophylactic of language against this invasion, as I say from time to time in Toronto.

Mr. Benoît Sauvageau: Prophylactic?

The Chairman: I am using that word in the dialectic sense, and no other way.

An hon. member: It's time we adjourn.

The Chairman: The Spanish-speaking countries don't see the same threat, which surprises me. When we ask people if they support a single world culture, they'll say no. When we tell them there is a problem, most people say there isn't one. At the moment, in many countries, for example, in Argentina, which I recently visited, although there are many translated American television programs, people do not feel that they are being invaded on all fronts. Things will have to go a little bit further before others perceive the danger. This is the worst danger for us, because the war will be lost before we have had a chance to fight. This is the big problem, I think. In any case, we will have to mobilize on this issue.

My question is rather for—

Mr. Benoît Sauvageau: Will you give Maud some time?

The Chairman: I will always give Maud the floor if she has something to say about the French language, about the language of Molière vis-à-vis the language of Shakespeare.

Mrs. Maud Debien: As I explained to you, Bill, these countries do not fear American culture because they have a very strong national identity. They have existed for centuries. Therefore, they feel far less threatened. It's a bit the same for Quebeckers, but it is not the same for English Canadians, because their sense of identity is not yet strong enough.

The Chairman: Good.

Mrs. Maud Debien: You are close to the United States, and you feel more threatened.

The Chairman: You could always say that to Margaret Atwood, to John Ralston Saul and to some other English Canadian authors. They would answer that this country does have quite a thriving anglophone culture, but with respect to television, it's—

Mrs. Maud Debien: We could discuss this for a long time.

The Chairman: In any case, I would like to ask a question about the WTO. You have said that the WTO dispute settlement mechanism is probably the best of all the existing international systems. I entirely agree, but you mentioned two recent cases, involving bananas and periodicals, that raise some problems, perhaps not with respect to the dispute settlement process as such, but with the penalties imposed at the end of the process.

• 1525

Can we continue to have a system of sanctions that is so deleterious and unfair to the innocents? Take the case of bananas. The United States starts a procedure against Europe. Neither the United States nor Europe produces bananas. This is somewhat bizarre. Who will pay the price of this war? It will be people producing shirts in Scotland and cheese in Italy, who have nothing to do with—

Mr. Bernard Patry: With bananas.

The Chairman: You mentioned the periodicals issue between the United States and Canada. Who will pay the cost? It will be people producing steel in Hamilton, or others. They are targeted for very specific reasons by those who want to win the war.

Would it be possible for legal specialists to develop a better system, even a system of compensation? If there were an amount to be paid, it would be shared by the taxpayers of the State responsible for the damages. I don't think that an industry should be selected for somewhat surrealistic reasons. In my opinion, this is a weakness in the system. If there were ten such cases, there would be a revolt throughout the world, especially in the sectors that are going to pay the cost. These sectors will say that they reject this GATT system which is so unfair and irrational.

Mr. Gagné, do you agree?

Mr. Gilbert Gagné: I would like to say that in both these cases, involving periodicals and bananas, the United States applied unilateral sanctions. They ignored the WTO rules. They fiercely supported the WTO rules when it was in their interest. It's true that there is a problem with the outcome, but if they were as respectful of the WTO rules as they claim, they would have waited for certain consultations to develop mechanisms that would have made it possible to find a solution within the WTO. In the bananas case, they are still trying to determine whether this should be a subject of a new procedure or if they are entitled to an accelerated procedure. Since Europe refused to participate, the United States refused to wait. They said: "Since you refuse to comply with the WTO rules, we have no choice but to adopt unilateral sanctions." Therefore, the problem lies not with the WTO, but is rather a specific problem with the outcome of the dispute settlement mechanism. It is quite true that there is a problem with the outcome.

As a Canadian and a Quebecker, I am outraged by the WTO decision in the case of the periodicals squabble, but on the other hand, I would have preferred to see this special group that is studying the issue examine the new Canadian policy, announced in July, in order to immediately determine if it is justified according to international rules rather than adopt the present Canadian government position, which is to let things drag on.

The Chairman: Mr. Loungnarath.

Mr. Vilaysoun Loungnarath: I find your line of thinking extremely interesting. An important aspect of the resulting problems relates to the fact that a country can, unilaterally but also multilaterally, adopt sanctions in sectors that have nothing to do with the dispute. So this is indeed an interesting line of thinking. We should look into that. Could we not try to find an alternative to the sanctions mechanism which, incidentally, I must say, has been used very little in the history of the GATT? I believe it was used once, for a dispute between the United States and Holland in a case involving eggs, I think. It wasn't the United States that invoked it, but Holland.

Mr. Gilbert Gagné: It involved wheat and milk quotas.

Mr. Vilaysoun Loungnarath: It was milk then.

Let's talk about culture. It troubles me greatly that we are the only ones, along with the French, who are concerned by this. These are two visions that are confronting each other. Beyond determining whether or not we are threatened, these two visions go head to head at two levels. On the one hand, does culture go further than cultural products? Does culture go further than entertainment?

• 1530

In this debate there are two positions, two sincere positions, I might add. I believe that the Americans have a hard time imagining or conceiving culture as something that would go beyond cultural products, the recording or film or television industries. That isn't how I see it. I think that culture means more than cultural products. You are better acquainted with English Canada than I am, but I think that English Canada sometimes tends to adopt this American approach. I don't read magazines. Between you and me, is Sports Illustrated part of the culture? Is advertising for boats, textiles, or clothing part of culture? Maybe so, but to my mind, there are two opposing visions here. In Europe, it's clear. In Europe, cultural industries or products represent a tiny fraction of the culture, and people are convinced of that. They aren't being snobbish when they say that. They are truly convinced of it, and I don't only mean the President of the Republic. Have a chat with the corner shopkeeper, and that is what he will tell you.

Therefore, I believe that there are these opposing visions. We will have to settle that at the multilateral level and this will have to be reflected in the instruments. We discussed a specific multilateral instrument. I think that is something that must absolutely be explored. If I understand correctly, there is now a specific agreement on agriculture. Why not have one on culture? I think that is what you were getting at, that we should have a specific sector. We have to do something, because, as you say, we could lose the battle before it even begins.

The Chairman: I believe that Mr. Sauvageau was in Geneva for the meeting.

Mr. Bernard Patry: In Singapore.

The Chairman: In Geneva for the WTO, the last time. The chair of the External Affairs Commission of the European Parliament, an Italian woman, told us that cheese production was part of the culture in her country and that this way of life had to be preserved, etc. Obviously, that is a much broader definition.

Mr. Bernard Patry: A way of life.

The Chairman: Yes, a way of life. It's another way of seeing things.

Dear colleagues, we are waiting the arrival of our final witness. I am told that he will be arriving any minute now. We will have a 5-minute health break, but no more, because we must finish by 4 o'clock.

I would like to thank the witnesses who have come to share their opinions. It was most interesting, notwithstanding the interventions made by Mr. Bachand on the subject of primacy.

• 1533

• 1542

The Chairman: Welcome, Mr. Lavier. Thank you for coming to share your opinions on the WTO. You may proceed.

Mr. Thomas Lavier (Political Science Student, McGill University; Individual Presentation): Mr. Chairman, honourable members, I would first of all like to apologize for being late. I hope you were not too inconvenienced. I know that the chairman will be leaving shortly, to my great disappointment. I hope that I can finish before he leaves.

I have entitled my presentation in “Can one be both judge and operator at the same time?” In a deliberate satirisation of, what will be, I feel, Canada's greatest challenge within the WTO.

In my presentation, I will not deal with how Canada could use the WTO to maximize its situation on the international scene. That point of view has already been explored and you have no doubt already heard it. I will deal instead with the way in which Canada will have to try to harmonize many aspects of this foreign policy, particularly, on one hand, its humanitarian commitment and its willingness to promote democratic principles and principles of international aid, and on the other hand, its dominant position within a world economic system.

In my presentation, I will unfortunately not have an opportunity to delve into the details of Canada's humanitarian commitments. I feel that they are quite obvious. If you wish, I would be available after my presentation to expand upon these principles and give you some explanations.

This is how my presentation is structured. Firstly, I will examine two fundamental principles, namely basic political theories on which my presentation is based, after which I will deal with some suggestions that I would like to put forward, some initiatives that I would like to see Canada adopt within the WTO. I will of course be available at the end of my presentation to answer your questions and expand upon a few points.

• 1545

I will begin by discussing the interest of the Canadian population. I believe that this committee is measuring and exploring the interest of the Canadian people on the international scene and within an organization such as the WTO.

I have a very simple definition to suggest. The interest of the Canadian people is fundamentally indivisible. What does that mean? It means that in Canada, there is a common interest, shared by all of its citizens. This common interest is different from interests that we could call private, interests that private individuals, organizations, or groups of individuals might have.

This common interest is served by international policies for trade and development, but also by domestic policies, when these policies serve and benefit all citizens or a majority of citizens, while respecting minorities and the Charter of Rights and Freedoms.

The application of this principle means, in terms of policy creation, that we will have to harmonize the various interests in Canada, the interests that I would call private, so as to create a consensus and define the common interest. I realize that this will not be easy to do.

Since you are a joint parliamentary committee, you represent different political interests on the federal scene. The harmonization of these different interests is a principle that we can also find in the title of the Department of Foreign Affairs and International Trade. It's a way of recognizing the interest of harmonizing departmental objectives. We recognize today that foreign affairs and trade must have a common thrust. That is an illustration of my harmonization concept.

The second principle, and you might have a number of questions to ask about this one after my presentation, is that the expansion of international trade, for Canada, is not an absolute objective, but rather a secondary or subordinate objective. I will explain.

I feel that Canada's wealth is not well enough distributed for us to be able to say that the money brought in by exporters benefits the entire population. I believe that in Canada, we do not have a domino effect which would ensure that, when a particular economic group amasses a great deal of revenue and becomes wealthy, this revenue is passed along to the entire population. In fact, the gap between rich and poor is becoming wider, which serves to illustrate the principle that I am stating.

With respect to the definition that I gave on the necessity of finding a common interest, if we consider that the individual or private interests of exporters has nothing to do with the common interest, we must find something other than simply defending the interests of exporters to create a common interest and defend the common interest of Canada.

Still with respect to trade as a principle that is relative rather than absolute, even though no one will deny the importance of external trade in a national economy, everyone agrees—this was debated during NAFTA and the Free Trade Agreement—that we cannot sacrifice the principles that we hold dear, we, as Canadians, in the name of increased competitiveness on the international scene and in the name of better returns on our exports.

To make things simpler, I found an example. If, in order to be more successful in international trade, we must become South Korean or American and adopt the economic characteristics of those countries, then I believe there would be a problem and we would have to undertake the intellectual exercise of opposing the expansion of international trade and find alternatives.

In other words, international trade, yes, but not at any price, especially not at the price of our international reputation, the role that we must play on the international scene and our Canadian uniqueness.

• 1550

Based on these two principles, I have arrived at certain principles that I would like Canada to adopt within the WTO.

The first two principles are rather immediate and represent a logical extension of NAFTA and the Free Trade Agreement.

We must first of all maintain certain sectoral exemptions, a principle that I feel is fundamental. Therefore, Canada must both continue to protect certain sectors domestically and promote, within the WTO, the legitimacy for a country to demand the right to have sectoral exemptions. We must therefore resist agreements such as the MAI to the extent that these seek to reduce the exemptions. The Canadian government and the Department of Foreign Affairs intended, when the MAI was negotiated, to oppose some of its principles. I would like this struggle to continue.

The second principle is also a point that was raised during the Free Trade Agreement and NAFTA. It involves finding a fair conflict solving method, in particular for the smaller economic nations. We would have to find a multilateral structure, perhaps with both parties involved and an arbitrator, so as to resolve conflicts that could emerge between two trade stakeholders.

I would add a condition to this principle. I believe that, when there is a conflict between two countries involving a trade sector or a trade problem, the right of the citizen should always come first. I will explain.

Let's take the example of the dispute underway at this time between the European Union and the United States over cattle injected with bovine growth hormone. On the one hand, the United States believes it is entitled to export these products to Europe and maintains that the banning of American beef is a clear form of protectionism. On the other hand, the Europeans feel that this is a fundamental issue of public health. The justification for the banning of American beef is based on the concerns surrounding health. We could also say, in order to be a little fairer in the analysis, that of course Europe is protecting its commercial interests. Therefore, it is definitely at the same time a type of protectionism, because Europe is protecting its beef industry.

To come back to my principle of systematically favouring the right of the citizen, I feel that in a case such as the beef dispute between Europe and the United States, we can oppose, on the one hand, the claim that the consumer or the citizen has a right to protect himself from a product that can be harmful or about which the harmful effects have not been ruled out, and on the other hand, the right of the exporter to be exempt from protectionist measures. I think that in a case such as this one, in which it's the producer and the exporter against the consumer, the consumer's right should come first.

• 1555

Here is another measure, to move on to something else. Let's say an international system were devised to tax stock market transactions. This is an idea which, in some parliamentary circles, is becoming more and more popular. I know that a number of Italian members of the Socialist Party had suggested it recently. There's even an Italian member of Parliament who was assassinated by the mafia for having promoted such an idea.

On the one hand, any money made on the stock market would be taxed, that is any money arising out of a stock transaction, and, on the other hand, the taxes for different stock markets would be harmonized, not only to generate more revenue for national economies but also to generate revenue so as to create a source of funding in order to forgive the debts of developing countries. Incidentally, the Chrétien government is about to announce measures allowing developing countries to cancel their foreign debt to certain countries such as Canada. This source of additional revenue would also allow for more generous international aid. In other words, Canada could promote, within the WTO, a mandate for international aid, international co-operation.

This general tax on stock market profits would also allow for the coordination of the stock markets themselves. If we allow different tax systems to operate in different ways for different stock markets, this may allow, in times of stock market crises, for a type of stock speculation. I'm not an economist, but I think that if speculation were possible in Tokyo, and if, temporarily, speculation were taxed to a higher degree in Montreal, there would be better coordination amongst the stock markets as well as a better management in times of crisis.

I will now come to the point that I am most interested in. Let's go back to the problem that I stated at the outset, that is that Canada should harmonize its international commitments. I would like Canada, both for itself, at the beginning, and for others, to promote what we could call international trade, Canadian-style. I would like Canada to define an international trade ethic with a Canadian flavour.

How could we accomplish that? For example, we need simply respect our own political and legal culture. That would be a good start. We have a rather rich tradition in matters involving pluralism, respect for minorities, respect for individual rights. We have documents that are the envy of many countries, such as the Charter of Rights and Freedoms, and I would like these principles to be transposed on the international scene. This would mean that a Canadian business or the Canadian government, in its dealings with international partners, would behave as if it were a transaction between Canadians.

I will give you the example of a measure that might be possible for Canadian businesses or for foreign branches of Canadian corporations. It involves complying with environmental standards as well as occupational safety and wage parity standards that would be Canadian instead of standards that apply in the other countries.

Let me make an aside. Concerning environmental standards, up until not too long ago, Canadian businesses were required to carry out impact studies before undertaking industrial projects in foreign countries. At the time, these impact studies were to be carried out as if the project was being built in Canada.

• 1600

This Act was revised by the Chrétien government. It is the opposite of what I'd like to see. I'd rather see a reinforcement of standards, principles and regulations governing the trade activity of Canadian businesses abroad.

Let me give you another example. I'd like to promote a system in which an employee of a foreign subsidiary of a Canadian corporation could sue her boss for sexual harassment, for example, in the same way she could do so in Canada where this right is guaranteed. I know that it may be utopic but it is the ideal. I mention this because I'd like you to ask a question in Parliament about this principle when you make your recommendations related to preferred policies. With our present-day, practical and imperfect political arrangements, how far are we from this ideal of international co-operation, an exchange of values, the dissemination of Canadian values and high standards with respect to human rights?

In conclusion, I would say that basically there are three ways of interpreting the WTO. A number of citizens and interveners could see the WTO as a private club of exploiters. They would view the multinationals expressing themselves through their government and institutionalizing the domination they hold within the international division of labour. That is a possible interpretation.

To defend this point of view, a view that I do not endorse but that I can defend, I must say that I observe that workers are still kept at a subsistence level in several countries and that there is a significant degree of exploitation, that is the discrepancy between the corporations' profits and their employees' purchasing power.

The second view is that the WTO constitutes and will constitute in the future a grouping of exporters. That implies that the WTO policies would only defend the rights, privileges and interests of exporting companies.

In the third view, ideally the WTO could constitute a sort of United Nations Organization of international trade. By that I mean a supranational body in which the national governments represent the collective interest, as I previously defined it, that is a consensus within the population, would consult each other to harmonize the interests of citizens and those of exporters. In other words, they would establish a harmonization between the need to export and engage in international trade with minimal requirements relating to quality of life and basic rights.

I'd like to say in conclusion that as far as these three possibilities are concerned, these three possible choices for the WTO, I would like to challenge the government of Canada to prove that it does not hold the first two views of the WTO, to prove that it has a moral objection to the World Trade Organization being used to exploit foreign populations and to representing only the interests of exporting companies. I would much prefer to see Canada show that it adheres to my third view of the WTO and encourage the World Trade Organization to democratize as far as possible international trade and defend both the interests of Canada and partner countries.

Thank you.

The Acting Chairman (Mr. Bernard Patry): Thank you, Mr. Lavier. Thank you for your presentation and your comments. This week we have heard a number of different views from various witnesses. We have heard associations defending the point of view of industry and others defending the point of view of chambers of commerce or professions. We also heard from the International Centre of Human Rights and Democratic Development. We heard from representatives of agriculture. It is refreshing for us to hear today from a student in political science.

• 1605

We'll now start our questions. Mr. Obhrai.

[English]

Mr. Deepak Obhrai: Thank you for your presentation and taking the time to come and give your point of view.

You have alluded to a Utopian society where you have requested many things that basically I don't think anybody in this world would have an objection to. If it can be achieved, very well, there's nothing with wrong with that. In the complex world that is business, political and everything, whatever can be achieved in terms of protecting basic human rights and protecting transparency in business, as well as international business, is definitely the ultimate goal of every negotiation.

So when one does go into these negotiations, one tries to keep in mind the basic human rights and balances and what can be achieved. I think in general what you are saying is a long-term goal; I don't think it's a short-term goal. I don't think you go down to the next negotiations and say that whatever is an aid for workers across the world and for society is worth while.

All I want you to recognize is the fact that trade globally is beneficial to all the countries in the world and to all the people, and therefore, that being the objective, that's where we try to bring in all the other human rights and laws and issues. So it's a long struggle. But you're right, so thank you for bringing your point of view.

[Translation]

Mr. André Bachand: Mr. Chairman, may I make a remark?

The Acting Chairman (Mr. Bernard Patry): Yes.

Mr. André Bachand: I'd like to present my excuses to Mr. Lavier that unfortunately, I must leave. I am very sorry.

I had several questions including one about your conclusion and your preference to see the WTO as a sort of United Nations. Someone remarked that the WTO would be closer to NATO than the United Nations. I'm very sorry, Mr. Lavier, but I must leave to catch a plane.

Happy Easter week.

The Acting Chairman (Mr. Bernard Patry): It is a holiday for you tomorrow, Mr. Bachand. The House has adjourned.

Mr. André Bachand: Did it? I would not have gone anyway.

The Acting Chairman (Mr. Bernard Patry): Mr. Sauvageau.

Mr. Benoît Sauvageau: Mr. Lavier, it's like university, students start leaving in the last five minutes. It's your turn.

The Acting Chairman (Mr. Bernard Patry): The Chairman has left.

Mr. Thomas Lavier: It's like the professors leaving before the end of their course with the students remaining. Things are topsy-turvy.

Mr. Benoît Sauvageau: I'd like to make two short comments. Your stock market tax is not the Tobin tax, is it? Is it something different from the Tobin tax?

Mr. Thomas Lavier: I wanted to make a comment before I made my presentation. I wanted to say that this presentation was prepared in 48 hours and sometimes I refer to rather general principles. In this instance, I'm not able to recognize the reference. It may possibly be the case. I made a general reference to certain thinking that exists in a number of European countries, particularly Italy, in certain political circles.

Mr. Benoît Sauvageau: I see.

Mr. Thomas Lavier: The idea may possibly have been expressed elsewhere but I'm not aware of it.

Mr. Benoît Sauvageau: I'd like to make another short comment on a subject you raised, international trade ethics. Would you be in favour of having the Canadian government adopt a code of international trade ethics?

Mr. Thomas Lavier: I'll answer with an example. I see this ethics has been implemented through legislation. The contrary, the absence of ethics, is demonstrated through the revocation of certain laws. The other reference I was unable to research is the famous piece of legislation that not so long ago was binding on Canadian corporations and required them to undertake environmental impact studies on any industrial project outside Canada. This law is no longer in existence. If we take this example and apply it in reverse, it would give an idea of my ideal regime of international trade ethics.

• 1610

Mr. Benoît Sauvageau: My last words would be to congratulate you and to thank you for your participation here as a student, as was noted by Mr. Patry.

Mr. Thomas Lavier: Thank you.

Mr. Benoît Sauvageau: Our testimony can be read on Internet and I encourage you to keep on following this committee until the end of our study. We will be issuing our report around the middle of June. We'll be open to any comments until then. Thank you again.

The Acting Chairman (Mr. Bernard Patry): Ms. Debien.

Mrs. Maud Debien: Thank you, I don't have any questions.

The Acting Chairman (Mr. Bernard Patry): I'd like to make a few comments on Mr. Sauvageau's remarks.

Concerning the creation of a tax system for stock market earnings, this week, in our absence, since we were sitting outside Ottawa, Parliament adopted a motion for the study of what is commonly referred to as the Tobin tax.

You referred to an amnesty that will soon be announced by the Chrétien government. It is true that this matter is being discussed a great deal. This amnesty will be linked to the progress achieved by such countries concerning human rights. It is something important. It will perhaps be made this afternoon.

Mr. Benoît Sauvageau: I heard the Prime Minister was in Winnipeg this afternoon to make a speech and make this announcement.

The Acting Chairman (Mr. Bernard Patry): There is a link with progress achieved in the field of human rights.

Mr. Benoît Sauvageau: Yes.

The Acting Chairman (Mr. Bernard Patry): You talked about consumer rights as opposed to exporter rights and the problem of the beef industry involving United States and the European Union. We have to be careful. The European Union may perhaps have used consumer rights to protect its domestic markets. The matter has still not been settled. However, it is a good point. The committee members are pleased to have heard your views. Do you have any comment?

Mr. Thomas Lavier: Yes, if I may. I would see this as the perverse effect of the convergence of two problems. Since national governments tend to represent the interests of producers, it can be said that the European Union represents only the interests of producers and it can be attacked for that reason. At the same time, consumer interests in Europe are poorly served. It would be adding insult to injury to say that these demands are not legitimate or do not represent the position of Europe since they are inadequately presented by the governments. What you are saying is perhaps the combination of two problems, the under-representation of the community interests, the population's interests, within national governments, and the problem of American imperialism, and its attempt to reduce all protectionist barriers.

The Acting Chairman (Mr. Bernard Patry): Thank you, Mr. Lavier.

Before closing our debates, I would like to thank the support staff that has accompanied us throughout the week for their excellent work. I think it's important to note this. We want to thank you and wish you a good week-end. Thank you.

Mr. Thomas Lavier: Thank you.

The Acting Chairman (Mr. Bernard Patry): The committee is adjourned.