SINT Committee Meeting

SUB-COMMITTEE ON INTERNATIONAL TRADE, TRADE DISPUTES AND INVESTMENT OF THE STANDING COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE

SOUS-COMITÉ DU COMMERCE, DES DIFFÉRENDS COMMERCIAUX ET DES INVESTISSEMENTS INTERNATIONAUX DU COMITÉ PERMANENT DES AFFAIRES ÉTRANGÈRES ET DU COMMERCE INTERNATIONAL

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, October 17, 2001

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[English]

The Chair (Mr. Mac Harb (Ottawa Centre, Lib.)): Good afternoon, ladies and gentlemen. This is the meeting of the subcommittee on trade, trade disputes, and investment.

We have with us Mr. Juan Somavia, director general of the International Labour Organization. The ILO is a specialized agency of the United Nations, based in Geneva. You probably already know that Mr. Somavia is on an official visit to Canada. He will participate as keynote speaker for the 12th Inter-American Conference of Ministers of Labour.

Mr. Director General, I am pleased you have agreed to appear before our committee to give us a better understanding of the ILO—its mandate, its relation with Canada, and especially the role it intends to play in building a better life for workers around the world in the context of globalization. The ILO has an important contribution to make in helping to build the basis for a broad sharing of the benefits of trade and economic liberalization. It is a significant challenge, but one that we believe you, and the ILO, are well placed to address.

Mr. Somavia, during your visit to Canada you have met with Canadian ministers, and you'll probably meet with more. You will have, or perhaps have had, an opportunity to meet with representatives of the private sector, with management, labourers, academics, and non-governmental organizations. It's now our privilege to exchange views with you. I understand you will be discussing the social dimension of the liberalization of trade in the context of globalization and the ILO's visions for decent work.

I want to thank you for being with us. On this committee we have members from all sides of the House of Commons, opposition as well as government. After your opening comments there will be an opportunity for my colleagues to ask you a few questions. At the end you will have an opportunity for a wrap-up. The room is booked for this particular session until 4:30, and it is being televised.

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I now want to welcome you, Mr. Somavia, and ask you to give your opening remarks.

Mr. Juan Somavia (Director General, International Labour Organization): Thank you so much for this invitation. I'm very happy to have the opportunity to exchange some views with you, and to receive your comments on the manner in which you see some of the issues the ILO has to deal with.

Let me begin with a little bit of background on the ILO. The International Labour Organization was created in 1919. It is part of the Treaty of Versailles. It was born in the context of the very critical social situation at the end of the 19th century and the beginning of the 20th century. It was an effort at an international level to respond to the problems of the workplace at that time.

The ILO is a tripartite organization, which means you have sitting in the International Labour Organization government, representatives of workers organizations, and representatives of employers organizations. It is the only institution, at the international level, that is part public and part private. As you well know, all of the other international organizations of the UN system are governmental ones. Here the decision-making process also involves the private actors.

The governing body of the ILO has 28 governments, 14 representatives of employers organizations, and 14 representatives of workers organizations. This, of course, gives the ILO a breadth of knowledge, particularly of what happens in the life of enterprise and what happens in the life at work, which gives a lot of weight to its opinion.

We can look at the daily events and the daily occurrences, not only from the perspective of the governing ministry sitting in that particular body, but from the perspective of real life at work. I want to refer a little bit more to that.

The basic objective is to deal with all of the conditions of work and all that happens, precisely, in the workplace. Because it was created in 1919, it obviously has a focus on trying to promote quality of work, the standards of work, and bettering the conditions of work. This has been done historically through a process of defining conventions on different areas. Once they have been negotiated in this tripartite structure of the ILO and ratified by governments and congress, they then become national obligations. We have what is called legislative capacity, in international terms, subject to the ratification of governments.

Most labour legislations in the world today have been influenced by the ILO convention system. Of course, it's a convention system that needs to be modernized, as every labour law evolves through time. But the basic concepts have been developed in the context of the ILO.

The institution won the Nobel Prize in 1969, precisely because of its contribution in this particular field. There is a specific linkage to Canada in that during the Second World War the secretariat of the ILO was moved to Canada because of the conditions there, and was lodged at McGill University in Montreal. It was there that a lot of the thinking about the manner in which to proceed, after the end of the war, took place.

The institution has a budget of $230 million, voluntary contributions of around $100 million, and around 2,500 people working in it. We have presence, through offices or representatives, in about 45 countries.

That is the perspective of the ILO, in terms of the way it has evolved. What is the ILO today? I would like to concentrate on what we have been doing in the last two years to focus the ILO on its core and basic mandates. This has been the result of a very extensive process of consultation with the constituents, themselves. I had to synthesize it, formalize it, and say, “Look, we have to be able to explain what the ILO is about in a 30-second spot on television, so let's make sure we get it clear”.

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The product of that was four strategic objectives: promoting workers' rights and social protection, which is the historical agenda of the ILO; work, because if you don't have work you don't have workers' rights; creating enterprises and an enabling environment for investment; and finally, social dialogue.

We synthesize those objectives by saying we are the decent-work agency of the multilateral system. We stand for research for decent work. We want to promote the conditions that permit people to have access to decent work.

If you take each one of these strategic objectives and ask yourself where we are, in terms of being able to reach these four objectives, the fact is we have serious deficits in all of them.

So together with being the decent-work agency and promoting that as a goal, we have to acknowledge that we have very serious decent-work deficits in the world, in each one of these four categories. If you take employment, before the economic downturn 160 million people were unemployed worldwide—that is an official figure, with all that we know about the limitations of official figures—and we calculate that about one billion people are under-employed.

The latest analysis we made, in terms of the economic downturn and before the terrible events of September 11, shows that over the next year about 24 million jobs worldwide are not going to be created. Consequently, we have an employment deficit, not to mention all of the people who work in the informal economy in the world who are simply not computed. They are out there in the hinterland of statistics, but they are there in real life. That is one of the areas in which the ILO is very active.

If you take a look at social protection, around 80% of the active working population in the world does not have real forms of social protection, particularly in the developing world. In the developing world, a job is both the income and the social protection. The moment you lose your job, you don't have a safety net to fall back on. So the significance of work becomes much more important.

In terms of workers' rights—and this committee has certainly taken up the issue of trade and labour standards as something that is being discussed internationally, in terms of rights—there is evidently also a deficit.

In terms of the possibility of organizing and the anti-worker attitude when they want to organize, the essence of the ILO's approach is that every citizen has a right to organize, and workers have a right to organize in the workplace. If you're not capable of exercising your freedom of association, there is something fundamentally wrong in the way the industrial system is set up.

Finally is social dialogue, in which we have an enormous deficit worldwide in many places, and I won't go into the details.

You as Canadians can well understand that none of these things are achieved easily. You have been able to address the problems in these four areas. You have social dialogue and structures of social protection. Workers can organize and negotiate collectively. They can sit down at the table and are respected in that function. You have been able to deal with the unemployment issues. You have employment, or you have some sort of safety net if you don't have employment. But this is not the situation in many parts of the world.

I would like to talk a little bit about the downturn. There are incredible changes swirling around us, from globalization, other events, and technological change. This globe is coming together or exploding, if we look at the horrible terrorism that has hit us. But with all of the swirling changes around us, there is one thing that is unchanged and indispensable in the present circumstances, and that is the relationship between human beings and work—what work means for people. That means the same thing today that it meant in the past. It means the source of personal dignity, a possibility of self-fulfilment, the very fundamental individual need as a human being to prove, through work, what you can achieve as a person.

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Work is a basic foundation of stable family life, and we often do not make enough of a connection between an unemployed family and a very unhappy family. Then we ask ourselves what's happening with family values, with children in the streets, kids on drugs, and children being the object of violence in the house, etc., as if it had no relationship with the fact the family lacks income and access to security. We all know a community at work is a community at peace, and a community without work is a community in which you don't dare go out on the street after six o'clock at night.

Finally, you're all politicians, you know well it is very difficult to get elected today unless you have a plank that talks about jobs and conditions of jobs, because this is what people care for. So the basic effort we're trying to make at the ILO is to replace work at the heart of international governments. Funnily enough, it is not. As politicians, you are in contact with your constituents and you know well that this is uppermost in the minds of the people who voted for you. But if you take a look at some of the policies being proposed in the multilateral system—I'm now referring to proposals coming from the International Monetary Fund of the World Bank, with which the ILO cooperates—the poverty reduction policies are not putting employment uppermost in the agenda.

Everybody knows that to get out of poverty, you need a job. There are no five ways about it. That's the way people codify whether they're moving into security or not, into the possibility of getting out of poverty and into more social inclusion. So we're trying to work with them and to explain that from our perspective, the international system as a whole has to put the creation of work and the conditions of work as one of the fundamental elements in terms of global governance. This applies to the whole of the system, because it's basically a people's issue.

If you look with that perspective at what is happening today, we have a confluence of factors that put in danger most of the things I have been talking about. Some of these come from the limitations of the present model of globalization to deliver its benefits to sufficient people. That's the reason you've had people on the streets in Seattle, Washington, Prague, and other places—people protesting against something they don't like without being very clear what it is we would put in instead. But there is very clearly a sense of uneasiness with a process that people feel has gotten out of hand.

Obviously, the benefits are there, in terms of incredibly new technological processes, the capacity for wealth creation, and the closeness that open societies produce in the world. Even the protests themselves wouldn't be possible unless you're using the e-mail to organize them. So the technology itself is part of the capacity and new democratic spaces that are open. There's no doubt about the list of positive aspects one can ascribe to globalization.

But at the same time, if one takes a decent work agenda and interrogates the global economy, asking how it is helping to solve these problems, the answer is, well, it's not helping that much, because these problems are accumulating. So we need to find a model of globalization that keeps the economies and societies open, but at the same time, responds to peoples' needs.

We believe the decent work agenda is not a bad way of trying to go about it, because the problem is, on what do we concentrate? What is the product we would like to see the global economy generate? From the ILO, the answer is more jobs, better-quality jobs, more social protection, more social dialogue in the world. Why don't we try to make the global economy generate that in the way we organize it?

This is one of the things that are coming. The next one that is upon us is that we began around eight or ten months ago a downturn in the business cycle. Now, downturns in business cycles are part of the economy. They're nothing new, and there are ways in which you can deal with them. And initial measures have begun to be taken. But, of course, you have the tragedy of September 11 that adds a complication. It's something that has affected all of us in ways nobody would have imagined before. We're all processing the implications of all of this, not only in terms of our personal feelings, our personal sensations, what happens in our midst and our own families when you address this issue, but also in terms of the wider implications. And I think this is putting the questions of human security very much on the table—human security against such barbarous acts as the one we saw, human security against other forms of barbarous acts.

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I happen to be Chilean, and it is an irony, from my point of view, that September 11 is the same date on which a coup d'état in Chile thwarted democracy in my country. We also learned there what state terrorism is about.

I think the potential we have with the tragedy is to take a look at the issue of human security, from the horrible things that terrorism can do, to the horrible things that might happen to you when somebody comes and knocks on your door and tells you you're going to jail, to the issues we're talking about here—unemployment and poverty.

Why not take this opportunity to look at human security in all its dimensions and try to see how we can actually put a level of security under people that responds to the way they perceive the reasons for their insecurity? And we have obviously added a new one, very strongly. I think this is the main issue we now have in front of us.

I think if we see all of these issues coming together, we shouldn't be caught flat-footed by it. Let me just give the example of the Asian crisis. The Asian crisis sort of evolved. Suddenly, you had this incredible crisis developing in Asia that had enormous impacts on a number of other places, particularly in the emerging economies, and we were obviously running behind the curve in many ways.

We more or less know what is going to happen next year, in terms of the economy. Why don't we begin worrying now about what we have to do—what we have to do globally, particularly in terms of expansionary economic policies? Because if we try to deal with the crises that are coming up with the traditional medicines of containing the economy and purely monetary solutions, it's going to be damned difficult to deal with the social consequences of this whole process.

In a certain way the United States is now giving the lead in that sense. Again, in irony, we seem to be coming back a bit to Keynesian policies, when we were told that those were dead ideas. But here we are: suddenly injections coming from the state are important in order to generate the consumption that is not there and get the cycle going again.

I would like that to become the policy proposal for the developing countries. It would be a tragic situation if we found ourselves in the developed countries doing Keynesian policies while the developing countries were being told to do contractionary policies to make sure the accounts are balanced. We have to have a global response to it, and we have to be able to find the mechanisms that will permit everybody to deal with the recessionary processes in front of us in ways that we can minimize their cost.

Of course, from our point of view, all of this is at the heart of the decent work agenda of the ILO, because the four components of it are a good way of responding to the crisis. Let's try to make sure we lose as few jobs as possible; let's make sure we have policies that create jobs through different ways.

I had a meeting today with the ministers of labour of the Americas, which is one of the reasons I am here today. They're meeting tomorrow and they've asked me to participate in the meetings. They all have different ways of dealing with this question. So let's make sure we create jobs and give the right incentive to capital, which is, please invest; create enterprise and make sure we have jobs rather than just putting the money in the bank because you're going to get a good return on it.

Why am I saying this? Two months ago, one country in Latin America, in order to sit down and deal internationally with their problems, in the same day reduced the salaries of public workers and pensioners by 13% and increased the spot interest for capital to 37%. Now, there's something fundamentally wrong if that is the way to get out of this crisis.

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What I will be pleading here today is that outlook cannot be the way we get out of the looming crisis we have in front of us. It has to be in a way in which you create enterprise, you reduce the impact on people, you generate more consumption, and consequently you're able to get out of it through a growth process and not through a contraction process.

I think that is basically, Mr. Chairman, what I wanted to mention.

There are just two additional elements. One is that one of the key elements of the ILO is social dialogue, the idea that employers and workers together, with the participation of government where that is necessary, can address many of these issues, and they have the experience, the knowledge, in order to deal with the practical implications of the ways these issues affect the life of people and the life of enterprise.

I think that as never before we're going to have to put social dialogue as a method, as an instrument, as a way of going about solving the types of questions that are going to be in front of us in all of the agenda that I've presented to you.

The other thing is I think we have to be conscious that, as I said, in the developing world a job is both the income and the social protection if the jobs are lost. We have to think internationally as to how you support these countries in order to put some minimum safety nets in place so that people simply don't fall through the cracks. These will have to be emergency measures. Later on we can see what other things are more stable or more productive. But we cannot simply say “Tough luck. This is the way the world is going, so you see how you manage.”

I think we've reached a moment in this 21st century when at least when we know these things are going to happen we can have some sort of a common approach internationally that deals with the implications in the case of developing countries being able to put some sort of a safety net in place.

Thank you so much, Mr. Chairman. I'm very happy to have this opportunity of addressing you and of thinking together about these problems, which of course—and this is probably my last word—we all know nobody has the solution to. Nobody can say, look, it's so easy, we have to do this, this, and that and these problems are going to be solved.

We're facing complex issues that require a much more integrated thinking than we have done in the past, and that is not easy. I see it in the multilateral system, where there's one organization looking at monetary and financial things, another at trade, another at labour, another at health, another at education, when the phenomenon is an integrated one. We need to put much more coherence in the global policies and in particular we have to move in the same direction. What we have today is sometimes conflicting policy recommendations being given to a country coming from different international organizations.

I now propose, and this is what is coming out of the ILO, to say why don't we agree that the issues around work and life at work is a pretty good place to try to come together, because that's where people are and that's what people are asking for.

Thank you so much.

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

We have approximately 23 minutes. We are going to have questions. If you don't mind, the Q and A should be limited to four minutes each. This way more of us will have a chance to ask questions.

Mr. Duncan, Mr. Valeri, Mr. Paquette, and then Mr. O'Brien.

Mr. John Duncan (Vancouver Island North, Canadian Alliance): Good afternoon. Thank you for your presentation. I concur with many of your final statements there. The world is indeed a very complicated place.

Yesterday we listened to some non-government organizations making recommendations specific to what Canada should be doing in the way of advice and aid and assistance to lesser developed countries in terms of agriculture and other areas that would help those jurisdictions in terms of employment and in terms of exports. What's become clear to all of us is exactly what you made reference to, which is that some of the advice may in fact be counterproductive, or at least contradictory.

I wanted to get a feel from you as to how large a problem you think non-tariff barriers are becoming in the new economy that we're seeing. Certainly it seems to becoming a major factor in the agricultural sector, and the agricultural sector is certainly a very large player in the development of work and exports for many of the lesser developed countries.

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Mr. Juan Somavia: Thank you.

Do I take them all, or do I go one by one?

The Chair: Maybe what we should do is go around the table and then you can comment on the questions.

Did you ask a question, Mr. Duncan?

Mr. John Duncan: I asked a question that I believe you understood.

I'm talking about non-tariff barriers applied particularly in the agricultural sector. One of the things that became very apparent yesterday is a lot of the GMO labelling requirements that look like they're going to be implemented in Europe soon are going to have major implications for exporters into Europe. Of course, that will be very difficult for some of the lesser developed countries, particularly since the labelling is onerous, but also they're going to require traceability right back to source.

The Chair: What we can do probably for the sake of time is we'll go with the questions and maybe Mr. Somavia will answer them at the end. Would that be all right with everyone?

Some hon. members: Agreed.

The Chair: Mr. Valeri.

Mr. Tony Valeri (Stoney Creek, Lib.): Thank you, Mr. Chair.

Thank you for your presentation. It was very helpful in understanding what the ILO is all about.

I'm interested in the enterprise creation aspect of your mission statement. You talked about a couple of things. I'd be interested in understanding a little better the modelling around I believe it was 24 million jobs, and the fact that they would not be created because of the economic downturn. I'm interested in understanding a bit more about that modelling aspect.

Also, I must say that I was smiling when you drew to our attention the contradiction we have here today, in that the United States is actually putting forward a growth package to stimulate an economy, and in fact international institutions are out there telling developing countries what to do and trying to implement contractionary types of policies. That very much came home when you actually made the statement, because I am not a proponent of Keynesian policy. When you said it, I sat back and said, you're absolutely right.

The other question I have has to do with what are the right incentives for capital, speaking to the enterprise creation and enterprise development. I wonder if you could speak to that.

And could you also comment on what was a Canadian initiative, the G-20, who would look at the financial sector of countries but go the additional step and include developing countries and make sure they're at the table so that we avert the Asian crisis going forward and attempt to be more inclusive. Could you comment on that sort of modelling and perhaps comment on whether we should be expanding that sort of G-20 type of model?

[Translation]

The Chair: Mr. Paquette, the floor is yours.

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

Thank you for coming, and for your presentation.

I would like to hear your opinion and find out the status of the work done by the International Labour Organization in this regard. For many years, the International Confederation of Free Trade Unions has, like some other organizations, been advocating the idea of including social clauses in trade agreements, such as those, for example, that pertain to labour. Consequently, the opportunity to derive economic advantages from an agreement would be dependent upon the respect of fundamental rights as stipulated in the basic conventions of the International Labour Organizations. These clauses could pertain, for example, to the prohibition of child labour or forced labour, to freedom of association, to the prohibition of different types of discrimination.

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The Confederation also promoted the idea of establishing a mechanism for developing a relationship between the WTO and the International Labour Organization. As a result of this relationship, it would be possible to implement this idea of tying the expected trade benefits to the respect of fundamental rights.

Here in Canada we are also debating the Free Trade Area of the Americas, a debate which follows along the same lines. I would like to know whether the ILO has examined this issue and, if so, how advanced the work is.

The Chair: Thank you, Mr. Paquette.

Mr. O'Brien, go ahead.

[English]

Mr. Pat O'Brien (London—Fanshawe, Lib.): Thank you, Mr. Chairman.

This may be a similar question to my colleague, but just in case I want to be clear. I want to know if the ILO supports inclusion of labour standards within trade agreements. Canada—this government—does not think it's the way to go.

Some of the opposition parties cite the EU and how wonderful the EU is. But then they don't cite the fact that the EU ministers are also opposed to including labour standards in trade agreements. I attended a conference on trade in the less-developed countries, chaired by Secretary of State Clare Short of the U.K., and she was fierce that this was a stupid thing to want to do and it would be back to our protectionism.

So we have a difference of view in our Parliament. I just wonder what the view of the ILO is on that question.

Thank you, Mr. Chairman.

[Translation]

The Chair: Thank you very much.

Mr. Martin.

[English]

Mr. Pat Martin (Winnipeg Centre, NDP): Thank you, Mr. Chairman.

Thank you, Director General, for taking the time to be here. It's a great honour to have you here. Your reputation certainly precedes you, and we're aware that you are a person who has dedicated your life to elevating the standards of wages and working conditions of the people you represent. In my mind, there's nothing more noble.

I've had the privilege of visiting the ILO twice. As a trade unionist, it's like a Catholic going to the Vatican for me. I'm very honoured for the chances I've had to be there.

The question I was going to raise had to do with various trade agreements. If we are to have the globalization of capital, is it not also possible to have the globalization of human rights, labour standards, environmental rights, etc.? Should our trade agreements be an instrument to bring about that change? I think that question has been asked.

What I would ask you to comment on, if you have an opportunity, is to share with the members here the incredible situation that was spoken about last night at the forum we attended of the situation in Colombia, where six to ten trade unionists and social activists per week are being assassinated—an absolute epidemic of murder of social activists, people who share the vision that you've articulated here. If you do have a moment to comment on that, people here would benefit from it.

Thank you.

The Chair: Thank you, Mr. Martin.

I have a question you might be kind enough to comment on. That is the age issue. We hear quite often in the west about child labour in third and developed countries. I do know first-hand that in many of those countries it's fundamentally important for a father to have his child or children working in order to support the family, or to work with them on the farm. I would be very much interested in your perspective on that, as well as this whole notion and push for international labour standards in terms of working conditions. I would be interested in your reaction to this push by many major industrialized countries of the west in terms of the effect on developed countries if they were really to have exactly the same or similar standards of the countries, for example, in the G-7 or in some other industrialized countries.

Mr. Juan Somavia: Let me begin with the first one.

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I think that the question of market access for a developing country—and I would like to generalize your question, because it's a dimension of a much wider problem—is going to be a key issue in the future. The question of the fairness of the rules of the game is at the heart of whether we can have a global governance that is perceived to be legitimate or one that is perceived to be the product of power politics—let's put it in political terms—a system that protects or assists certain interests or that is open so that different sectors of society and different regions can actually use it.

The question is fairness in the rules of the game and fairness in trade rules. One of the things that affects fairness is that you can eliminate tariffs, but you have an enormous array of non-tariff barriers that can be invented unilaterally. You decide on the standards—on the technical and on the scientific standards—and you decide this is the national law. Your question can be multiplied by as many times as somebody decides to set a non-tariff barrier that can have perfectly legitimate technical or medical or other reasoning behind it, or at the same time have no relation to that and become an object of protectionism. I think this is the key thing. Obviously it can be real in the example that you're giving. It is real in a number of other examples.

My answer would be that if we're looking at trade issues, let's make sure that the rules of the game are fair for everybody. This means listening to developing countries in terms of their preoccupation with the difficulty they will have in entering into some of the markets of the developed world and also into some of the markets between developing countries, because you are beginning to have a lot of differentiations between them.

The issue of enterprise creation is something that is key in the design of the ILO, because we're putting work creation at the heart of our approach, and you create work today through enterprise. Consequently, the conditions for enterprise creation have to be there.

We are thinking of this in a very wide spectrum—from large, highly technologized industries to small, highly technologized industries that you do have in the new economy, to self-employment, and see what you can do about people who are working in the informal economy who I say disappear from the statistics. Except for the population statistics, they move into a grey world that nobody knows about. In some societies it's up to 90% of the people working there. How do you reach all of that?

What we're doing in the ILO is to concentrate on where we believe the greatest amount of work is being created in the world, which is the small enterprise, and truly be advocates of the creation of small enterprise or the creation of self-employment, if that is possible. The fact is that in the world today it is very often much more complicated to create a small enterprise than a big one, because big enterprises have structures, lawyers, and a number of things that decentralize the process. But if you want to create a small enterprise, it's normally the small entrepreneur who has to go around and do the whole thing so that there is an embedded discrimination against the small, because the small cannot count on the infrastructure that permits the creation of the enterprise. That's where you have to begin thinking about what the supports, the services, and the systems are that can eliminate those forms of discrimination that exist simply because you're small or simply because you're beginning and don't have a credit record.

I would say let's be clear about eliminating discriminations for possible entrpreneurs. You do have an enormous amount of them today. A person who has a good idea to create an enterprise doesn't necessarily have the possibility of doing it in the absence of some of the support systems that should be put in place.

The figure I just gave you is a calculation made of the growth projections coming out of the fund and the private banks—mainly the bank in Basel—in terms of what the gross prospects for next year are. We've just taken account of the slowdown in growth, which is probably going to be much bigger than the one we have initially calculated, and have applied to it a coefficient that is more or less accepted in terms of how many jobs are created by growth and how many fewer jobs are created by less growth. It gives you 24 million, and that's the mechanism by which we have done it.

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We are not in the process of going much deeper in terms of sectors. For example, both the employers and the workers in the restaurant and food sectors are meeting in a few days in Geneva to discuss the impact on the whole tourism, restaurant, and food complex. They've decided that the ILO is the place to think together and discuss what it is we are to do. We have a common problem there.

As to the right incentives for capital, I think that institutions are important. Capital needs some perspective of stability for the future. If you create labour markets and also create institutions that give a certain stability to that labour market, which means giving certain elements of stability to the workers participating in it, that is also something that is useful to enterprises. Active labour market policies are good instruments to ensure that investment can proceed well.

Social dialogue, in my experience, is probably one of the most productive factors you can incorporate into an enterprise. The capacity to think together as a sort of joined process about the future of the enterprise and about the problems they have to face with each component of the enterprise is normally very much a part of the history of any successful enterprise. You have almost no successful long-term enterprises that have not been build on excellent industrial relations and excellent forms of internal dialogue. You don't have a tough, complex thing lasting very long if the moment things break down...the companies that succeed over time have been those that have been able to do that.

I would say it's a very large question. What are the right incentives? Let me just highlight one that is in the realm of the ILO experience: dialogue is definitely one of the elements of successful investment and a successful enterprise.

Finally, concerning the G-20, I must say that I think Canada is playing a very important role in having launched the idea of a G-20. I think that Minister Martin is developing a line of thinking internationally that can actually help bridge the numerous difficulties there are today stemming from the dissatisfaction with globalization, difficulties that are going to increase with the downturn. This obviously passes through how the world of finance ministers reacts to the downturn. What, from a political point of view, are the policy suggestions and the policy medicines going to be in order to deal with that?

I truly believe—and let me make a parenthetical comment here—that the voice of Canada is going to be key in these troubling moments we have ahead of us. You have in your history and in the manner you have approached international affairs this extraordinary capacity to make proposals that do not respond directly to a specific Canadian interest. You are of course taking your interests into account, but you're also thinking about the architecture of the system, namely the proposals that can make the multilateral system work better.

I'm not only thinking about the government in the multilateral context. I have in my own activities been in different walks of life. If I was a political activist, it was in the way political parties of Canada do a number of things internationally, which has been important. If I was in the UN system, seeing them with initiatives, I was opposed to a military dictatorship we had in Chile. The solidarity of Canada in those situations, with everybody all around, was extraordinary. I headed a research institute; I had a Canadian as a contact, and I had missions thinking about ideas and promoting things. I've been in civil society. There we are. We've been together in the streets with civil society from Canada, etc.

You do have this extraordinary possibility, and I would just urge you to use it because it's that sort of perspective and that sort of reflection that is going to be very much needed in a moment of crisis in which everybody sort of shoots back and says, look, now I have to think about my own interests. Let's think about global issues a little further down the road.

• 1620

Given the types of problems we're going to face, there's no solution to be found purely through a sum of national responses, and consequently something that would be.... Because of the importance the finance dimension has taken in the way the world is being run today, this will be absolutely critical. I think that Canada is playing a very important role there through Minister Martin.

In terms of the social clause, let me first of all say what the ILO opposition is. It is the following: you have most of the developed countries and the workers in the ILO feeling that some sort of a linkage needs to be made, and you have most or all developing countries and a good part of the employers saying there shouldn't be a linkage. So the first answer is, if you're asking whether there is an institutional ILO opposition to this, there is not. The same debate that divides you is present within the ILO itself.

What we have decided to say is that okay, this debate is going on. The last thing that should happen is that we become paralyzed within the ILO because this debate hasn't been resolved. What we're doing is to go about our business reinforcing the ILO's ability to promote, protect, and develop workers' rights; this is our responsibility, and we have done so. We do not have the time today to give you examples, but the truth is that in the last two or three years there has been an enormous advance in the types of things we have done, mainly through the ILO declaration on fundamental principles and rights at work.

Let me then tell you how, as I see it, we can evolve on this issue. The core labour standards were for the first time defined in 1995 at the world summit for social development in Copenhagen. Up until then, you had ILO conventions and the ILO promoting its conventions. In Copenhagen, 120 heads of state said if we want to move in terms of poverty reduction, social inclusion, and quality employment, we need to have a social floor for workers' rights. There, seven ILO conventions—now eight with the new convention on workers, on child labour—were approved. They were taken out of the ILO system, and it was said, look, these constitute the basic principles and rights at work we all want to promote. Developed and developing countries accepted this unanimously. The ILO then took that and transformed it into the declaration on fundamental principles and rights at work, which has a number of mechanisms in it to make some of these things happen.

What we believe at the ILO is that this is an issue that.... It is not just the ILO's responsibility to promote workers' rights in the world. Since it was decided in a global conference or summit, we believe that the whole of the multilateral system—the fund, the bank, the WTO, the whole system—has to debate among themselves what it is they do to promote workers' rights. We have discussions with the fund saying, well, you have to be careful about some of the policies you propose because the end result is that through your financial policies you may wind up weakening workers' rights. There are certain things the fund can do, and there are things the bank can do.

What we are saying is that each institution should debate this, and the WTO has to debate it now. Whether it reaches agreement or not, that's another matter, but we believe that the whole of our international system.... It's not just what you do with trade, it's very much what you do with your financial policies. It's very much what you do with the development policies the bank promotes or some of the other policies coming from the multilateral system.

What we believe to be essential is that we all acknowledge that there has been a decision that considers that there are core labour standards in the world and that the question is whether we all agree that they are there and that we agree fundamentally on the instruments to promote them. We may have instruments on which we don't agree, and obviously there's no agreement yet on trade, but that doesn't mean that we should stop promoting these rights. On the contrary, we should promote them with a lot of other instruments that are there, in particular the financial ones.

An hon. member: [Inaudible—Editor].

Mr. Juan Somavia: Exactly. For example, Canada is being very creative in this through side agreements that are of a promotional nature. There are a number of ways in which the energy that has been behind this trade and labour standards debate can be channelled so we make things happen.

Our business in the ILO is obviously to make things happen, and if that debate results in action, we will be very happy to run with the ball. In the meantime, we have to run with the ball with the instruments we have. That's basically the way....

• 1625

If tomorrow there's an agreement, we are going to do what we need to do from an ILO point of view to make it happen. For the moment, we're moving with the ones we have in our hand.

Child labour is a complex issue because it's linked to development. We want parents to be at work and children to be at school. The complexity of the issue is that for those who do not want to move, to hide behind the development argument becomes very easy. We have to be careful, we have to acknowledge the reality and at the same time make sure that we create the political momentum to move forward.

The basic thing we've done is to say there is child labour that is absolutely morally abhorrent, the worst forms of child labour. We cannot say that because of development reasons this is justified. This was also enshrined in the convention on the worst forms of child labour. It was approved unanimously in the ILO, and it has been already ratified by about a hundred countries, which is an enormous amount in no more than two years. We are also working on the rest, but the rest has to have a link with the development process.

Finally, because there was a final question also on international labour standards here, let me make the following point.

One of the key things that we need to do is to reinforce the capacity of people to organize locally, and to defend their interests at the local level. When I speak about why we have to concentrate on action, it's because we need to make sure that those who would like to defend their own workers' rights through organizations receive the proper international support.

We know that there is no magic wand through which you're going to do this. There's no quick-fix solution to promote workers' rights in the world. All of those who have been linked to these issues know that social struggle is part of making it happen. If you have the legislation and the laws that you have today here, it's because you've had to struggle in Canada to make it happen. We need to support that internationally, and you can do that through your development corporation policy. You can choose to promote workers' rights as part of your development corporation policies.

Colombia is a tragedy. It's a tragedy of a country confronted with itself in different forms of civil war. In the ILO what we have been trying to do is to precisely reinforce the organizational capacity of the workers, work with them, see what we can do. Unfortunately, we don't have in the ILO instruments that can stop people killing others in a civil war type situation, but we have been extremely present with the workers there, together with the trade unions, and also with the employers and the governments, to work together on many of these issues. But I completely agree with you that this is an open wound that we have in terms of what is happening to workers in the Latin American scene.

The Chair: Mr. Somavia, on behalf of my colleagues as well as the House of Commons, we thank you very much for your presentation, your candid remarks, your foresight, and your vision. Certainly we believe that the ILO is in good hands because of the leadership of yourself as well as your team. We wish you a good stay in Canada, and we hope you will have fruitful meetings with your colleagues in the days ahead. Good luck.

As you can see, pretty well every member of our committee has had a question for you. From the nodding of the heads I am concluding that they were exceptionally satisfied with the answers you have given us. I want to thank you very much again.

We will suspend for one minute exactly. When we come back, we'll move on with the rest of the agenda.

• 1629

• 1632

The Chair: Colleagues, we are going to proceed. We have a very charged agenda and we will now proceed to the study of Bill C-32, pursuant to the order of the House dated October 2, 2001, that Bill C-32, an act to implement the free trade agreement between the Government of Canada and the Government of the Republic of Costa Rica, be now read a second time and referred to the Standing Committee on Foreign Affairs and International Trade.

[Translation]

Pursuant to the order of the House dated Tuesday, October 2, 2001, that Bill C-32, an Act to implement the Free Trade Agreement between the Government of Canada and the Government of the Republic of Costa Rica, be now read a second time and referred to the Standing Committee on Foreign Affairs and International Trade.

[English]

We have, I would say, probably an hour to an hour and ten minutes. Hopefully we'll be able to hear from all of our witnesses. Members have been given copies of the bill, as well as briefing notes prepared by the clerks. You probably all received a summary from the Library of Parliament prepared by the economic division. As well, Mr. Berg and Mr. MacPherson have been very generous with the information they have provided us in terms of related information.

I thought the way we would proceed first is we will hear a presentation from the officials and after that we will hear witnesses. I have tried everything possible to make sure that the witnesses who will come are those who may have concerns, which may or may not relate to the legislation as it is, but nonetheless I felt it was important for us to hear them out. We limited the witnesses to those who have concerns.

There have been a large number of witnesses who are very supportive of the bill. We did not feel it was necessary at this point to go to the extent of having numerous hearings for a lot of reasons, one of which is that this bill has to be enacted no later than the end of November. Therefore, it will become law January 1, 2002, which means it will have to go back to the House of Commons, pass through the House of Commons, and then go to the Senate, and then pass through the Senate and then get approved, all within the next four weeks or so. That's why we decided to go today with an extended sitting and hopefully we will be able to hear from our witnesses.

Dinner will be provided, I understand, a little later on and we will break for about 10 or 15 minutes to go and vote and then come back.

• 1635

There's one small thing to add here, which is the process in terms of how we will proceed with it. I'm open to your comments, but my thought is that those clauses about which members have concerns we will leave to the end and the rest we'll adopt in bulk, rather than just going through the nitty-gritty of every single comma and period.

Also, remember that at the end of the day, because of the nature of the agreement, really, as a committee, as well as a Parliament, we don't have any chance to do any kind of amendment; we have a chance to either approve or to reject the act. But this does not mean that as a committee or as a House we will not be able to put forward suggestions or whatever to go in parallel as a part of the report of the committee or in terms of a directive to our witnesses or to the government.

With this, I am going to proceed immediately to our witnesses.

Do you have a point of order, Mr. Duncan?

Mr. John Duncan: Yes, I have a point of order.

I have tabled some suggestions, which are just a small change to the preamble, and which, in my mind, do not affect the content of the legislation. So as long as you recognize that in your preliminary comments as being something that has been tabled and something that I think would be allowable without upsetting anything....

The Chair: When we get to it, we'll make that provision.

Mr. Speller.

Mr. Bob Speller (Haldimand—Norfolk—Brant, Lib.): I'd like to have, before we decide on that, some sort of ruling. I understood this was an international treaty that we either agree to or don't agree to. So if it's in the text of the treaty, I don't think we can certainly.... It's not in there?

Mr. John Duncan: It's not in the text of the treaty, it's simply in the preamble. The preamble says that this agreement relates to continuing discussions on the free trade area of the Americas and it's simply a qualifier, in terms of those next talks, not the Costa Rica agreement itself.

Mr. Bob Speller: Mr. Chair, I'm looking at the witnesses here and I'm making an assumption, but I would assume that probably a lot of what they're talking about would be useful to us as we study the next time around the free trade area of the Americas, because I think their concerns are probably related to other countries and we certainly would want to see them back here as we talk about that issue.

The Chair: I think we all agree with what Mr. Speller has outlined. Perfect.

Mr. O'Brien, quickly, and then, Mr. Valeri, quickly, on a point of order on the process.

Mr. Pat O'Brien: While you have the officials here, I think it would be useful for members of the committee if the officials could see Mr. Duncan's proposed changes to the preamble. I've been around here long enough to know that there are different points of view on the importance of something in a preamble. I think we should have the benefit of their expertise on what he's looking at.

Mr. John Duncan: I have no objection to that. As a matter of fact, I think that's a very solid proposal to make.

The Chair: Thank you, Mr. O'Brien.

Before we proceed, we have a letter that I would like to table with the committee from the Confectionary Manufacturers Association of Canada. In the letter, obviously, they tell us that they are supportive of the bill and that they believe there is over $2 billion in confectionery sold on an annual basis that benefits from sugar. So I'm going to table it as part of the report. Thank you very much.

Now we have with us witnesses from the Department of Foreign Affairs and International Trade. Mr. Claude Carrière is the director general, trade policy bureau I, and chief negotiator, free trade area of the Americas. As well, we have Ms. Suzanne Vinet, who's the acting director general for the international trade policy directorate, Agriculture and Agri-Food Canada. We also have, on behalf of the ministers, Mr. Pat O'Brien, who's the parliamentary secretary for the Minister for International Trade.

• 1640

Mr. Carrière, the floor is yours.

Mr. Claude Carrière (Director General, Trade Policy Bureau I, Chief Negotiator, Free Trade Area of the Americas, Department of Foreign Affairs and International Trade): Thank you, Mr. Chairman and members of the committee.

I'd like to situate the agreement briefly and then offer to answer any questions. Madame Vinet, who is no longer acting, but a full-fledged director general of trade policy—and a very good comedienne—will amplify what I have to say on the agricultural component of the agreement.

[Translation]

I would like to talk about the context of the agreement. This is a first generation agreement which pertains primarily to the trade of goods and products, what we refer to as a first generation model agreement. This is also an agreement that will regulate a fairly small bilateral relationship.

Annual trade between Canada and Costa Rica represents approximately $270 million, the balance being in favour of Costa Rica. Furthermore, bilateral trade with Costa Rica has been growing quite significantly over the past five years, with our exports climbing by 7% per year on average and with imports from Costa Rica increasing by 5% on average.

With the free trade agreement, we believe that the long term picture will improve. We foresee some fairly attractive business opportunities, particularly for small Canadian businesses, which will be able to do business in Costa Rica or use Costa Rica as a springboard for doing business in neighbouring countries.

We believe that improved access to the Costa Rican market will enable our exporters to win some market share or take away some market share from our competitors, particularly our American and European rivals.

It should also be mentioned that most imports from Costa Rica already enter Canada duty free. More than 80% of these imports already enter the country duty free.

[English]

From the entry into force of the agreement, we had envisaged the immediate elimination of Costa Rican tariffs on most industrial products from Canada, notably automotive products, environmental goods, prefabricated housing, construction structures, metallic structures, and the like. We also see some interesting gains in agrifood products. I won't enter into that; Madame Vinet will address that.

I should also mention that when we entered into the negotiations, which were at the request of Costa Rica, we also entered into parallel negotiations on an environmental agreement and a labour agreement, and negotiations on the free trade agreement were concluded in parallel with the conclusion of these two other separate treaties. All three were signed at the same time—in a room very near here, as a matter of fact—this spring. We see these environmental and labour agreements as complementary to our goals of contributing to economic development in Costa Rica and contributing to improving their capacity to manage environmental and labour standards.

The negotiations were also seen in a broader context. You will recall that the negotiations were taking place at the same time as preparations for the Summit of the Americas, and the negotiations were concluded at about the same time as the summit took place.

The agreement has a symbolic nature, that a large country can negotiate and conclude a win-win agreement with a small country, and it was designed to demonstrate to other small countries of the hemisphere that it is possible to do so.

• 1645

Finally, we believe the agreement has shown Canada's continued commitment to the hemisphere, not only from a trade and economic standpoint, but from a broader social policy element, as I mentioned, in terms of the labour and environment agreements.

With that, I'll pass the floor to my colleague on agriculture to address some of the agricultural issues. Thank you.

The Chair: Thank you, Mr. Carrière.

Madame Vinet.

Ms. Suzanne Vinet (Director General, International Trade Policy Directorate, Agriculture and Agri-Food Canada): Thank you, Mr. Chairman.

Just to bring a bit of light on the importance of this agreement for agriculture and provide a bit of context and build on what Mr. Carrière has been saying, tariffs on over 90% of the dutiable exports from Canada into Costa Rica will now benefit directly as a result of the agreement, either through the immediate elimination of tariffs or through tariff phase-outs over periods ranging up to 14 years.

It means that Canadian agrifood exports will become more competitive rapidly, relative to our competitors, the U.S., the MERCOSUR most importantly. So as a result of the agreement, we can expect both the amount and the profitability of Canadian agrifood exports to Costa Rica to increase over the coming years, and as part of the agreement, Canada has agreed to eliminate tariffs on imports of most agrifood products from Costa Rica immediately upon the implementation.

There are exceptions to that, however. Those exceptions are dairy, poultry, eggs, and beef products, which will be excluded from the tariff elimination provisions of the agreement, and when it comes to refined sugar, there will be a phased tariff elimination over an eight-year period.

As the majority of Costa Rican agrifood products already enter Canada duty free or at a low rate of duty—in fact, 90% of their exports to Canada enter duty free—the agrifood provisions really mean that a lot of the adjustment will have to be borne by the Costa Ricans. Given the extreme divergence, if you will, in the development of our respective agrifood industries, it was felt important to address the issue of development in Costa Rica by allowing for a different phasing of the preferences between the two countries. So that will allow adjustment in the Costa Rican agrifood sector to take place over a period of time, while allowing them to build their competitive capacity. We felt that this overall allowed us to have the benefit of increased market access, as a result of this flexible approach for the Costa Rican market.

That's all I want to say. Thank you.

The Chair: Thank you very much, Ms. Vinet.

Mr. O'Brien, would you like to make a brief comment, or would you prefer to be at our disposal to answer questions?

Mr. Pat O'Brien: Very briefly, Mr. Chairman, we don't see this as a big complicated trade agreement. The precedent has been set with the Canada-Chile agreement. We're aware of some concerns on both sides of the House, from the sugar industry specifically, but we feel that, really, it's not a factor, and this agreement stands by itself. People are anticipating something that may or may not happen. So that's the view, in brief, of the minister.

The Chair: Thank you very much, Mr. O'Brien.

We will have questions, if you don't mind. Be as brief as you can, because you have to go to the vote and then come back. So the faster we can move, the better.

I'll go to Mr. Duncan. I'm just going to make it rotational.

Mr. John Duncan: Thank you.

I've just listened to what Mr. O'Brien, the parliamentary secretary, had to say in reference to the treaty, and I agree. People may be anticipating something that may or may not happen. The intent of what I've tabled is to bring some clarity to that anticipation. So if the witnesses have not had the benefit of seeing that, I'd like them to receive it. I'd also like to hear comments from legislative counsel.

• 1650

Mr. Svend Robinson (Burnaby—Douglas, NDP): Sorry, I haven't seen the document you're referring to.

Mr. John Duncan: I'm sure it can be circulated.

What I'm suggesting is that we have an amendment to the enabling legislation, not to the treaty, which would simply amend the preamble and clause 4, purpose of the agreement, in a way that allows that this is not a precedent for further FTA negotiations necessarily. I think that is some needed assurance, particularly for our domestic sugar industry.

The Chair: Do you want to wait until we answer the questions and get comments? Okay.

Mr. Speller.

Mr. Bob Speller: Thank you very much, Mr. Chairman, but that actually was going to be my question. The witnesses we're seeing here today seem all to be from one industry, an industry...when I read the act, it talks about a.... Well, maybe you could explain to us, Mr. Carrière, the impact you feel there would be on the sugar industry here in Canada.

The Chair: Mr. Speller, do you have any other questions?

Mr. Bob Speller: No, I'll wait until Mr. Carrière answers. I'll see what he answers before I—

The Chair: You may as well ask him, if the answer is yes, what your question would be.

Mr. Bob Speller: Let him answer first and then I'll let you know.

The Chair: Okay, maybe he can answer both then.

Mr. Claude Carrière: Well, this is the first time I've seen the preamble, Mr. Chairman, so we'll need to reflect on what is being proposed by the honourable member.

I'll answer the question from Mr. Speller, beginning, perhaps, by indicating what is in the agreement regarding refined sugar, which I believe is the issue of interest to many.

First, the MFN tariff on refined sugar into Canada is a specific rate that is equivalent to approximately 8% ad valorem. The Costa Rican tariff rate on refined sugar is 50% ad valorem. Both countries undertake to remove their MFN tariff in equal, annual phases over eight years. So we will go to zero in eight years, and they will go to zero in eight years—it's in a sharper way for them than for us. During those eight years, both countries will open tariff-rate quotas for imports of sugar originating from the other country in an amount equivalent to 1.7% of domestic consumption, rising to 3.4% of domestic consumption—20,000 to 40,000 metric tonnes in Canada, 2,000 to 4,000 in Costa Rica, in proportion to market size.

In addition, there is a one-way tariff preference level for Canada into Costa Rica where sugar refined from imported cane sugar, or imported sugar from any source, can be exported to Costa Rica duty free in the amount of 2,000 metric tonnes rising to 4,000 metric tonnes. It is an unprecedented concession on their part and it would allow our industry, should they so choose, to sell in the Costa Rican market and remove any implied sanctuary price advantages they may have in operating in a closed-market environment.

Finally, Mr. Chairman, Costa Ricans do not have a refinery. They produce raw sugar up to a particular stage, but short of what is known as white sugar. So they do not produce refined sugar. There is a concern that they may, some time in the future, invest in a refinery, and that's possible. But we all know a sugar refinery is an expensive endeavour. It requires quite a lot of capital and a very large market to sustain it. The Canadian market may be large in comparison to the Costa Rican market, but it's not a very large market worldwide. It's an open question whether they would indeed build one and, should they do so, how long it would take.

• 1655

We took into account all those conditions, Mr. Chairman, in arriving at this particular package.

Mr. Bob Speller: I take it that in terms of rules of origin, they couldn't ship sugar through there and into Canada. There are stop-gap measures to stop that.

Mr. Claude Carrière: The rules of origin are such that in order to originate in the area you must refine originating raw sugar.

In our case, we could ship beet sugar produced in Alberta, but there are high transport costs across the Rockies, which also in fact insulate the prairies from imported sugar coming into the port of Vancouver. But the Vancouver refinery could import Costa Rican raw sugar, refine it, and ship it back to Costa Rica. Or refineries in eastern Canada or in Vancouver could ship to Costa Rica sugar refined from cane imported from any other country to the limits that have been provided for—up to 4,000 metric tonnes.

Mr. Bob Speller: Are you concerned then that they may ship raw sugar up here to be refined?

Mr. Claude Carrière: Raw sugar is duty-free already. We already import raw sugar from Costa Rica. The concern is refined sugar, Mr. Chairman. But Costa Rica does not produce any.

Mr. Bob Speller: What about the question then in terms of setting a precedent? There's a concern that in signing this deal when you're dealing with other negotiations in the region, they may in fact use this as a stepping stone to say Costa Rica got this, why don't you give us the same deal?

Mr. Claude Carrière: When we negotiated the Canada-Chile Free Trade Agreement we were inspired by the NAFTA. But the Canada-Chile Free Trade Agreement is not identical to the NAFTA. There are provisions in the Canada-Chile agreement that are not found in the NAFTA and vice-versa.

When we negotiated with Costa Rica we were inspired by the Canada-Chile agreement. But again there are provisions in the Canada-Chile agreement that are not found in the Costa Rica agreement. In fact I recall one area in particular on clothing emports, which was quite a difficult issue to negotiate, where we had made quite a generous concession to Chile on clothing—a tariff preference level where we had granted to Chile a two million square meter equivalence. The reason we did so was because Chile could not actually produce that amount of clothing to be exported to Canada. But Costa Rica could. So, the level that we provided to Costa Rica, rather than being two million tonnes, is 1.3 million tonnes.

We do take into account the relative merits, the structures of industries, the capacity to produce or take advantage of concessions in both countries in coming to a negotiated solution, Mr. Chairman.

[Translation]

The Chair: Mr. Paquette, the floor is yours.

Mr. Pierre Paquette: I would like to go back to the issue of sugar, but I would also like to go back to the issue of the agreement on investment which, as you mentioned, is a first generation agreement.

As you explained, the North American Free Trade Agreement was based on the agreement we had with the United States and with Chile. There are, however, some slight differences. The fact remains, however, that in this case, in this approach that we will be taking towards sugar, we will be compelled to offer the same conditions to Guatemala, Honduras, Nicaragua and El Salvador. I don't see how we could refuse to give the other countries in Central America the same advantages that we have given to Costa Rica.

It is true that right now Costa Rica has no refining capacity. In fact, one of the Associated Press headlines last week was “Costa Rica Urges Shift to Sugar.” They are having problems right now with coffee because the price is very low. President Miguel Angel Rodriguez said that they were going to convert their coffee production to sugar production in order to take advantage of the free trade agreement with Canada.

• 1700

If you feel that this is not such an important issue in the case of Costa Rica, which does no sugar refining, why does the agreement contain a provision opening our market to refined sugar from Costa Rica?

Secondly, I found it a bit clever, although a little disingenuous at the same time, to read in the departmental documents that no new concessions on investment and services had been made, since the foreign investment protection agreement obviously already contains problematic provisions. When you came before the sub-committee with Mr. Pettigrew, you told us that chapter 11 of NAFTA and the Free Trade Agreement between Costa Rica and Canada were completely different.

I find some of the same elements in this agreement, including those on arbitration panels, that are found in chapter 11 of NAFTA. I am concerned by that, because Minister Pettigrew told us that he did not want to see the equivalent of chapter 11 in the FTAA with respect to investment protection and dispute resolution.

So, when we get to the end of all these first-generation agreements and establish the Free Trade Area of the Americas, how will we be able to say that we have an agreement on investment protection that is different from NAFTA's chapter 11?

I have a lot of problems, not regarding free trade with Costa Rica, but with the fact that as we move from agreement to agreement we are presented with done deals and have to swallow the fact that the foreign investment protection agreement is not scrutinized and not debated. There is also a serious problem where sugar is concerned. I would like to hear your explanations.

Mr. Claude Carrière: On sugar, I read the same newspaper story as you did. There is a small paragraph at the end that mentions that coffee grows better in mountainous areas, at high elevations, whereas sugar cane grows better on the plains in full sunshine. I am not sure that Costa Rica will be able to transform its high- elevation growing areas into sugar plantations. Sugar cane does not grow on mountainsides.

Secondly, Mr. Rodriguez's party is in an election campaign. Since there will be elections, it is possible... I would not want to venture an explanation for why this story appeared or why the president is giving this encouragement, but given that sugar cane cannot be grown in the mountains, I would conclude that there is something else behind it.

I will say to you what I already said to Mr. Speller. If we negotiate with Guatemala, Honduras, El Salvador and Nicaragua—and we still do not have a mandate to negotiate—we will use the Costa Rica agreement as a basis and so will they, but we will also use the agreement with Chile and their agreement with Chile. So there will be a menu.

Secondly, we have always negotiated with the countries that are at the table and not with other countries. We look at the circumstances that apply to that particular set of negotiations and to the balance at that bargaining table. In this case, we will be dealing with the four other Central American countries and not with Costa Rica. Where investment is concerned, we have a modern agreement on investment protection and promotion which came into force in September 1999. I remember that it was mentioned before the Quebec Summit, I believe. This agreement is working. Neither Costa Rica nor we had any interest in negotiating in that area, since this agreement is relatively new and there was already enough on the table with Costa Rica.

With respect to chapter 11, you know that the minister agreed with his colleagues in July to clarify and interpret certain aspects of chapter 11, which are now in force, and that we have proposed since that time, in the context of the FTAA Investment Negotiating Group, that those aspects be introduced in the chapter on investment negotiations.

• 1705

So, as far as possible, we are going to make use of the improvements to chapter 11 to provide information and make related proposals within that group. As a result, there will be a coherent strategy for the whole hemisphere.

[English]

The Chair: Mr. Robinson.

Mr. Svend Robinson: Thank you, Mr. Chairman. I'd like to ask questions in a couple of areas, but I also want to note that in reality the mandate of this committee is very limited, because we're dealing with legislation that flows from a treaty signed between Canada and Costa Rica. Basically it's up or down on this thing. That's my understanding of it, and that's the way it is. My comments are in that context. Frankly, I'm not here to suggest amendments because I understand if any substantive amendments were proposed that would mean we'd be back to the bargaining table.

I do want to make it very clear that on balance we do not support this legislation. But I also can count and recognize that position may not carry the day.

I want to ask questions on a couple of areas of concern. But before doing so, Mr. Chairman, I want to clarify one thing. We're basically having one hearing on Bill C-32. There are a number of important implications of this legislation, and we've had requests from a number of witnesses to appear before the committee on Bill C-32. The Canadian Labour Congress is very concerned about some aspects of this legislation with respect to labour. They've pointed out some of the very repressive and anti-union laws and policies in Costa Rica and want to raise some concerns around that as well as other countries. I'm sure there are other groups—environmental groups, the sugar industry and so on—that do have concerns. Before asking my questions specifically on this bill, I want to seek an assurance from the committee that in the context of our broader examination of the FTAA in the subcommittee there will be a full opportunity for these people to be heard on these important issues.

The Chair: I think I can speak on behalf of everybody to say yes. Just send us the name of anyone who has anything to do with the free trade area of the Americas or who is interested in it—the list of those interested in appearing. We'll do everything possible to accommodate them.

Mr. Svend Robinson: Fine, thank you. Certainly labour has some serious concerns with respect to the relationship between Canada and Costa Rica, but I'll raise them in that context and not here.

On the issue of sugar, I had the opportunity to meet in my home constituency in Burnaby in British Columbia with representatives from Rogers Sugar refinery—people representing both the over 200 workers there and management of Rogers. This is one of the oldest companies in British Columbia—a well-established, well-respected company. They are deeply concerned, not so much about the implications of this particular treaty, and of course the legislation that flows from it, but what may be next. My colleague, Mr. Speller, alluded to that, and I share the concern. When we look at the possible implications arising from an extension of this kind of legislation to countries such as Honduras, Guatemala, Nicaragua, and El Salvador—the CA-4. This could have a very destructive impact on the workers and on the company at Rogers and on the broader community as well, because this is an important corporation. I know there are similar concerns in other parts of the country.

I want to add my voice to others in saying this should not in any way be seen to be a template with respect to the issue of sugar in these other countries. I want to seek an assurance from the witnesses that indeed this is how they are approaching this issue.

The Chair: Mr. Carrière.

Mr. Claude Carrière: Yes, Mr. Robinson, I can assure you that we negotiate on a case-by-case basis with countries with which we negotiate, and that we seek the best agreement for Canada in the circumstances of that particular bilateral relationship, and that while we can be inspired by previous agreements—you used the word template—I can indicate we would not necessarily replicate every single clause in the agreement.

• 1710

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

It's not just a question of...not necessarily replicating, but I just want to put on the record that if this agreement were to be extended to these other countries, it would potentially have a very destructive impact on Rogers refinery, as well as others in Canada. We would strongly oppose that.

What kind of consultation was there with civil society, as well as with the sugar industry, the Canadian Labour Congress, environmental groups, and groups that are concerned about development issues?

Certainly one of the issues that's been raised with me, for example, is the whole question of the impact of this kind of legislation on small landholders in Costa Rica—some of the poorest. We've seen in other areas, such as Mexico, that some of the poorest people—the small landholders, people who are struggling to survive in the agricultural sector—have been driven off their lands because of cheap imports from countries like the United States and Canada. This has had a terrible impact on these people's lives. I've personally spoken with landholders in Chiapas, Mexico, for example.

We want hear about those kinds of concerns. What kind of consultation was there before this treaty was signed with the different groups I've mentioned?

Mr. Claude Carrière: Thank you, Mr. Chairman.

Just before I get to that, I should mention that some of those poor people in Costa Rica, Nicaragua and Guatemala cut cane, so we need not forget that.

Mr. Svend Robinson: They may cut it, but they sure don't get many of the profits from it.

Mr. Claude Carrière: Well, they make a living. Hopefully, they can improve their living through this agreement and other agreements that are negotiated by them.

On the question of consultation, we consulted quite widely before we engaged in negotiations. The minister wrote to many groups and organizations—businesses, NGOs, unions, and the like—to seek views. We consulted during the negotiations in a more narrow or focused fashion. The sugar industry was consulted very closely, before and during the negotiations.

On the question of labour and environmental groups, I can't speak personally because I did not negotiate those agreements. The environment department negotiated the environment agreement, and the labour department negotiated the labour agreement. But I do know we received correspondence from some unions and some environmental groups, or groups concerned with the environment. We negotiated with them and responded to some concerns they had. So I think we consulted widely.

I have to mention that the Canada-Costa Rica relationship is not a large or dominating one. It's actually very small. Many of the people to whom we wrote never responded. So we gave the opportunity to comment to as many as we could, for as long as we could. We kept that open through our website, but let's keep this bilateral agreement in perspective, Mr. Chairman.

Mr. Svend Robinson: I know that my time is almost up, but Mr. Carrière has indicated there were consultations and they received some input. I think we should, as a committee, have an opportunity to review that input. Frankly, it's a bit late in the day to be doing that, but it would have been helpful to have had that beforehand. I want to just flag that. But I wonder if, at the very least, we could ask Mr. Carrière to provide to the committee a list of those who were consulted and the input they gave.

The Chair: Mr. Carrière, you will provide Mr. Robinson with that information.

It's also my hope, and the wishes of the committee, to hear the same witnesses or other witnesses in the next event we will be hosting, and that is the overall review of our trade with the Americas. So it is well taken. But in the meantime, there is a document with some information in it.

Mr. Carrière, we are pressed for time, but before I move on to our witnesses, I wonder if you can tell us what the trade figures are between Canada and Costa Rica. How much are we talking about on an annual basis, two ways?

Mr. Claude Carrière: I would like to enter into evidence a document that will show the kind of relationship between Canada and Costa Rica, at least from the Costa Rican point of view. We photocopied it from a newspaper in Costa Rica. I'd like to circulate it to members, if you so wish. It's very interesting.

• 1715

The total bilateral trade between Canada and Costa Rica is $270 million a year. I think it's $170 million or so for Costa Rica into Canada, and $100 million—

The Chair: Thank you very much, Mr. Carrière, Ms. Vinet, and Mr. O'Brien. Whoever wants to can stay as we proceed to the next section, which is to hear from our witnesses.

I propose to the committee, with your permission, that because of the nature of the debate and because everyone we will be hearing from is from the sugar industry, we hear the presentations of all of them first and go to questions after. We can pick whomever we want and ask them questions, so we don't end up repeating the same question every time we have a witness. Is that okay with everyone?

I call to the microphone Mr. Bruce Webster, from the Canadian Sugar Beet Producers' Association Inc.; Sandra Marsden, president of the Canadian Sugar Institute; Mr. Dan Lafrance, vice-president of Lantic Sugar Inc., with Yvon Thibeault and Normand Carle; the Confédération des syndicats nationaux, Mr. Vincent Dagenais; and Mr. Steven Shrybman.

We don't all have to sit at the table at the same time. We can hear first from Bruce Webster. After Mr. Webster makes his presentation, he can move off and we will hear next from Ms. Marsden.

Okay, Mr. Webster. The briefer you are the better, so we can ask you questions. If you have a written document, we will consider that as part of the proceedings and will include it as part of our report.

Mr. Bruce Webster (General Manager, Canadian Sugar Beet Producers' Association Inc.): The Canadian Sugar Beet Producers' Association, at this time, consists of active membership from sugar beet growers in southern Alberta only. We are very interested in the matter of trade in sugar and in tonight's topic of the Canada-Costa Rica Free Trade Agreement. We support total liberalization in the global sugar trade, and we have joined the global alliance for sugar trade reform and liberalization, to that purpose.

Our main point tonight is that we think the matter of sugar trade reform is best dealt with at the multilateral level through the World Trade Organization. We look at the provisions here in the Canada-Costa Rica agreement and we see that there are the provisions for implementation of different volumes of sugar trade, and also in draw-downs of tariffs.

We think those matters may be somewhat hypothetical, from the prospect of both Costa Rica and Canada, because they don't have the white sugar refinery at this time, and we don't have customers down there. We don't know if there's a niche that can be filled, but we think that replicating those provisions and other regional or bilateral agreements would be very detrimental to the Canadian sugar beet industry.

Let me state that the sugar beet industry on the Canadian prairies, particularly in southern Alberta, is a logical industry. If the world went to free trade in sugar, we are quite confident we could survive competing against the Americans, the Europeans, the Australians, or whomever.

The primary evidence of that is the fact that we have been around since 1924, raw sugar from Australia and different locations has been competing against us, based on the world price for sugar, and we have survived. So we think that with reasonable trade agreements, we can survive in a free trade world.

• 1720

Again, it's the matter of extending the types of provisions that are in the Canada-Costa Rica agreement that would give us worry.

Free trade has not been kind to the Canadian sugar beet industry, if we look back from the early 1990s to this point in time. In the early 1990s, we were able to export about 55,000 tonnes of refined beet sugar, primarily to the United States. Our current capability is less than 15,000 tonnes. So for us, free trade has had a perverse effect to this point in time.

We're able to trade less, because these various tariff rate quotas are put in, and either we get reduced access or we get cut off, and then we have to fight back for a little more. So we're glad to see we're not at zero in this agreement, but we don't think 6:1 is a good tariff rate quota ratio for Canada to enter into in the future.

The Alberta government has communicated with the Government of Canada, and they support our position. We have many industrial sugar users in Alberta, and the Government of Alberta, on balance, has said that we cannot really grow our industry—either the primary industry or the food and manufacturing industry—if we keep on having these perverse types of agreements. The Canadian Federation of Agriculture has communicated their support for our position to the government, as well as Wild Rose Agriculture Producers.

Our Alberta members of Parliament and senators have been working very closely with us, and we thank them for that. As well, the Prime Minister's task force on western Canada, when they met us in Lethbridge, said they understood that we cannot trade off the sugar beet industry any more. So we thank everyone for that support.

We realize that trade agreements are a matter of give and take. We just let it be known to you that we have given, and we think it's now time to receive.

We are taking different procedures and actions now to try to deal with the rest of Central America on a better level through the Alberta government and the faculty management at the University of Lethbridge. We're trying to come up with methods of communicating with the sugar cane farmers in Central America and find out if there are better ways of doing these things so we avoid problems for us and problems for those people. It's going to be an interesting experience, but that's our basic message. We think the WTO is a better place to deal with this matter.

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

We'll now hear from Ms. Sandra Marsden, from the Canadian Sugar Institute. If you have a written document, you can give it to us as a part of the proceedings. If not, that's fine.

Ms. Sandra Marsden (President, Canadian Sugar Institute): Thank you, Mr. Chairman. I believe there is a written document in the package that was distributed.

The Chair: That's great.

Ms. Sandra Marsden: It's a little more extensive than my verbal remarks, but I'll try to get to the point, which is sometimes difficult given the complexity of our industry.

The Chair: Thank you.

Ms. Sandra Marsden: I do appreciate the opportunity for you to hear from the institute, which represents all Canadian manufacturers of refined sugar and sugar beets, the sugar beet processor in western Canada. We have three members: Redpath Sugars, which is not present today; Lantic Sugar; and Rogers Sugar.

The position of the industry is that the Costa Rica provisions must not be replicated in future trade agreements. We strongly oppose the inclusion of sugar in the Costa Rica agreement. Let me explain the three principal reasons why.

First, before I say that, I think it's very important for the committee to appreciate that our industry is a strong supporter of free and fair trade. The problem for our industry is that we live in a very distorted world sugar economy.

In Canada, an 8% refined sugar tariff is all we have. We have no domestic subsidies. We have no safety net. We have no export subsidies and no artificial import quotas or barriers. Yet we face a hugely distorted world sugar market. As Bruce mentioned, we have 10,000 tonnes access to the 10-million-tonne U.S. sugar market, and that is fixed under the WTO.

We were excluded under the Mexico-U.S. sugar arrangement under the NAFTA. Our refined cane sugar exports face a duty of $565 per tonne. That's about 150%.

Duties in the Americas are no exception. Guatemala, at 160%, is vastly prohibitive. Even under an arrangement where that duty would come down, it would be prohibitive for several years to come.

So our issue is one of timing. Regional trade agreements are proceeding in advance of a broader solution that will enable our industry to compete on an equal footing.

In the absence of access to the U.S. market, our most obvious trading partner, we have no means to offset the damage on our own market. That's why we have opposed inclusion of sugar while we are, in fact, founded on the principles of free trade.

• 1725

We are members of a broad global alliance for sugar trade reform and liberalization, including large producing countries such Brazil, Guatemala, South Africa, India, and excluding the major distorting sugar economies of the United States, the European Union, and Japan. These countries collectively are pushing their governments to press for a World Trade Organization solution.

So why is it that we oppose, specifically, the provisions of the Costa Rica agreement, and why are we so concerned about our future? First of all, that agreement does not provide meaningful commercial opportunity: 2,000, 3,500, or 4,000 tonnes of our 1.2 million tonne production is not commercially meaningful. So, yes, the provisions may be reciprocal in the sense of percentage of consumption, but the market size, the level of market development, is so vastly different, that it doesn't bring us commercial opportunity.

Also, the terms are not reciprocal in any commercial sense. While Costa Rica obtains a 20,000-tonne quota to Canada, we have a 3,500-tonne quota to Costa Rica. While we may export 2,000 tonnes of refined cane sugar, we face a potential influx of an unlimited volume of refined sugar.

Most importantly, we are concerned that this agreement will set a precedent for the central American trade negotiations. Why are we so worried? We've heard today that future trade agreements are inspired, not necessarily a template for future agreements; but this isn't our experience. With the Canada-United States Free Trade Agreement, with the NAFTA, and with the WTO, in all cases, we lost export market access—not that we stood still, but we lost access. In particular, the U.S. used the opportunity in all those cases to actually further restrict our exports of refined beet sugar, cane sugar, and many food products that are high in sugar content.

Recently, Agriculture Canada commissioned a study to look at the impacts that the extension of the Costa Rica sugar provisions could have if extended to the central American countries. The current refined sugar capacity in Central America is close to the size of the entire western Canadian market. It is greater than the size of our entire grocery segment, on which our industry depends for its profitability.

In the near to medium term, in the one- to two-year timeframe, the economic analysis determined an estimated cost to this industry of $30 million, including the significant potential for plant closures, particularly in western Canada. Those two plants are particularly vulnerable, given their proximity to the Pacific coast, which is where the vast majority of imports from Central America come in.

In fact, we're competing with those imports today. Our 8% tariff is not prohibitive. The closure of one refinery would result in the loss of 200 to 250 jobs, and many more indirect jobs.

In the longer term, the impact will be devastating. If sugar is included in the negotiations—not whether the agreement serves as a template—the only potential outcome for our industry is a phase-out of that tariff, which means vastly increased import competition from a region that exports 1.8 million tonnes of sugar and has the capacity to expand its refined sugar by adding refining to its mills. It doesn't need to build a new freestanding sugar refinery. So it is not a massive investment, such as you'll hear from Dan Lafrance that the Lantic Sugar refinery has added. So the outcome is very real and of great concern to our industry.

To summarize, the problem for our industry is one of timing. We support free and fair trade, but we must find a solution through the WTO. We are very defensive in the context of a government that's pushing forward very quickly on a regional basis, when the problem with the sugar world is a global one. We urge the committee to find some means to recognize in this agreement that it not transfer into the central American countries and the FTAA. Thank you.

The Chair: Thank you very much.

For Lantic Sugar, would Mr. Lafrance be the spokesperson?

Mr. Dan Lafrance (Vice-President, Lantic Sugar Inc.): Thank you, Mr. Chairman and members of the committee.

[Translation]

I am accompanied today by Mr. Yvon Thibeault, the Chief Shop Steward at the Montreal refinery, and Mr. Normand Carle, a Shop Steward at the Montreal refinery. Through a management agreement, Lantic Sugar and I are also representing Rogers Sugar today.

I would like to begin by telling you a bit about Lantic Sugar. We have been operating a refinery in the Hochelaga—Maisonneuve area in east Montreal for over 100 years. Until July 2000, Lantic Sugar operated two refineries, one in Montreal and the other in Saint John, New Brunswick.

• 1730

In order to be more competitive on a production cost basis, Lantic Sugar invested over $100 million in 1999 and 2000 in its Montreal refinery. The production capacity of the refinery was doubled and the Saint John refinery was closed as a result. The objective was to make us more cost competitive so that we could be on an equal footing with the American and European refiners. We will be ready when we get access to the American market.

Lantic Sugar employs over 345 people, 260 of them unionized workers with an average base salary of over $20 an hour. As you know, this type of job is increasingly rare, especially in east Montreal, where a number of manufacturers have closed their operations over the past few decades.

Lantic Sugar operates its refinery on a 10/4 basis, which means about 240 days a year. That is not a lot. The big American and European refiners operate their refineries 330 to 340 days a year. A large part of our costs are fixed costs. It is important to operate the refinery as much as possible. We are working at only 70% of our capacity because the market is limited and we have no export opportunities, especially to the United States.

The agreement with Costa Rica, or any similar agreement that could be reached with other Central American countries, will only aggravate this problem of overcapacity that Canada already has, and we are not able to export our products to the United States.

The problem today is that there are already sugar imports coming from Central and South America. These sugar imports have grown steadily over the past few years. They consist mainly of value-added products, the kind you find in the groceries today.

As Ms. Marsden said, there are about 300,000 tons of these products in the Canadian market. But this type of product accounts for a large part of the profits of Canadian refiners such as Lantic Sugar. Any reductions in this area will have a major negative impact on the company's operations. Many of our unionized workers and our managers work in departments responsible for wrapping, storing and distributing value-added products. At Lantic Sugar alone, 150 of our 260 unionized employees work in these areas. That is a very large proportion.

The expansion of Lantic Sugar's refinery was done on a fair and equitable competition basis, but even with a world-class refinery, we will be unable to compete with sugar imports from Costa Rica and Central America. Their cost basis is much lower than ours. To begin with, they already have the raw sugar. Wages and benefits are much lower than in Canada. Their energy costs are much lower than ours, since they get their energy from sugar cane bagasse, which is a by-product. Moreover, environmental costs are much lower than in Canada. As a result, we cannot compete on that basis.

[English]

As for Rogers Sugar, we've been operating in Vancouver since the early part of the century, since 1890. The beet sugar industry in Taber, Alberta, has been there since 1950. The beet sugar plant was expanded in 1988-89 at a cost of over $50 million, again to provide a better per unit cost of production and be more competitive.

Both these plants are operating far from capacity. First, when we look at the Taber operation, the growers over the last three years have been hurt badly with low prices of raw sugar and with more and more entry into value-added products.

In order for the Taber plant to be viable and for the growers to continue in that business, it is important that a value-added product be a large component of their sales. We share revenues of sales in Taber with our growers. When we sell bulk sugar or sugar to the liquid market, these are very low-margin sales.

On the other hand, they need a large portion of our value-added sales in order to be price-competitive against other crops. It is very important. That's where we're being attacked by the imports from Costa Rica or other central American countries.

• 1735

The Winnipeg sugar plant was closed in January 1997 due to the curtailed access to the U.S. market and the high cost-of-unit-production of operating a small beet operation.

When we look at the Vancouver operation, it's even worse. The Vancouver operation is a swing capacity. It operates approximately 38 out of 52 weeks a year. It has a very high cost-per-unit production. It is by far the most vulnerable to any sugar imports due to this high cost per unit.

We have seen the study that was done that confirms that Rogers Sugar will be the most vulnerable to imports, especially the Vancouver plant, because Guatemala, being a western port entry, will more than likely ship first into Canada. It's the same for any other Central American countries.

The Vancouver refinery employs over 180 people. Any further loss of volume will be detrimental to the survival of that operation. As I've said before, operating 38 weeks a year is not very good on a cost basis. So if we cannot operate more than 34 or 35 weeks a year, and any imports will hit the Vancouver refinery first, it will be damaging to the survival of that plant. These jobs, as you well know, the blue-collar jobs that exist in the east part of Vancouver, will be very, very hard to replace, if not impossible.

The Taber plant will also not survive if the sugar beet growers cannot get a decent return. They have to maximize the return on their land, and we understand that. But if we do not get the beets from the sugar beet growers, the Taber plant will not be able to continue operation.

So it is very important for Rogers that bilateral free trade agreements like the one with Costa Rica or the one suggested with Central American countries not occur, as Rogers is very, very vulnerable to imports from Central American countries.

Mr. Carrière said earlier we would gain access to these countries. Well, it's unreal for the Canadian refiners to gain access to Costa Rica or any other Central American countries.

I spoke before about the cost of labour, fringe benefits, and environmental costs. The costs of energy are much cheaper in these countries. We would have to import raw sugar from these countries, refine it in Canada, ship it back, and then compete with them.

This is impossible today. It would be impossible if you were to have the raw sugar here in Canada to do so. So these are not markets for us. This is not a natural market for the Canadian refineries or Rogers Sugar.

[Translation]

This is important for Sucre Lantic and Rogers Sugar. We are ready to support any free trade treaty if it is multilateral and includes the Americas, including the United States.

[English]

We fully support Mr. Robinson, who said the Costa Rican deal should not become a template for negotiation for any other Central American deal, because it will be very dangerous.

Costa Rica, which is not a producer of refined sugar—or does produce a little bit of refined sugar today—insisted on having refined sugar in their agreement. You can just imagine what Guatemala and the other CA-4 countries would require in order to have a negotiation with sugar.

Thank you.

The Chair: Thank you very much.

Next is Mr. Vincent Dagenais, International Relations,

[Translation]

Confédération des syndicats nationaux.

Mr. Vincent Dagenais (International Relations, Confédération des syndicats nationaux): Thank you, Mr. Chairman. I welcome the opportunity to present my comments to the sub-committee.

In a way, although I am not an expert on the sugar industry, I find that the presentations we heard were a good introduction to the first comment I want to make regarding this trade agreement with Costa Rica, namely that this trade agreement is based on a rather angelic concept of trade.

The first angelic concept is the very fact that markets do not need to be regulated and organized. One thing stands out clearly in the presentation of our colleagues from the sugar industry, namely that we cannot set all our hopes on merely liberalizing the markets.

• 1740

The second angelic concept, and this is at the very heart of the matter, is that growth and development will automatically flow from trade, and that other problems that are cited to show that trade cannot go on without regulations will take care of themselves, problems such as inequity, poverty, the environment, respect for human rights, respect for union rights, etc.

Now as we look at the agreement with Costa Rica, we see that it is based, in fact, on an angelic concept of trade. Thus, my first comment is that we must come back to concepts that are a bit more complex and a bit more realistic with regard to the nature of commerce, and we should include these concepts in agreements with other countries.

Let me tell you that while this sub-commission is sitting, the Inter-American Conference of Ministers of Labour is also being held. The entire labour movement is telling labour ministers that agreements, including trade agreements, should include clauses that ensure that basic labour standards are respected.

We do not claim that respecting basic labour standards would solve every problem, but it does seem to us that even in a strictly regulated climate of healthy competition among the different regions of the world, if we included basic labour standards like those adopted by the International Labour Organization, it would certainly facilitate trade.

I take this opportunity to say that we are far from being anti-trade. We need trade, but we think that the flow of trade should be regulated.

My second comment flows from the question that Mr. Carrière began to answer. What interest does Canada have in an agreement with Costa Rica, since the market is small? This trade does not involve much money, as we were told, and we are no doubt dealing with products like coffee, sugar, bananas, etc., that do not really grow on our western plains or on the banks of the St. Lawrence. Why is Canada interested in this agreement?

Mr. Carrière began to answer the committee by saying that this was the first stage of an agreement. Mr. Pettigrew also answered the question in a way, when he reacted—I do not know whether committee members remember this—to Mr. Parizeau's statements. He stated that Canadian interests, given that many of our products are traded duty free, consist in protecting Canadian investments abroad and developing the service industry. Here lies our interest in the agreement with Costa Rica.

There is, in fact, an agreement between the Government of the Republic of Costa Rica and the Canadian government to encourage and protect investment, one that was signed earlier. I am about to show you that there is a parallel between what we find in this agreement, what we find in NAFTA and what we might well find in the Free Trade Area of the Americas Agreement. The agreement with Costa Rica mentions in a brief sentence that with regard to service and investment issues, Canada and Costa Rica will continue negotiating multilaterally.

What is this multilateral framework? At present, the two multilateral frameworks for discussion are the WTO and the discussions on free-trade zones. For this reason, we ask ourselves what the main issue is in relation to this infamous clause regarding investments.

I'd like to quickly remind you of the problems that the investment clause causes, a clause which is found in both NAFTA and in the agreement between the Republic of Costa Rica and the Government of Canada, problems relating to the definition of an investment. What is an investment? The word can mean a lot of things. It could just be an investment in a Canadian company that might be doing business in the other country.

One problem is that companies can take legal action against the government, not because it may have violated domestic legislation, but because it may have passed regulations or legislation that violates the trade agreement. This is an extremely dangerous bias in this type of agreement. Both agreements make the same claim, namely that the new trade law that has been created by these agreements must be interpreted as taking precedence over domestic rules and domestic law.

• 1745

The NAFTA agreement sets this out very specifically, as does the agreement with Costa Rica. The people who will be ruling on complaints will have to determine how Canadian laws or regulations violate an international agreement.

Of course, there are dispute settlement mechanisms, which are secret, and which will mean judges will have to interpret Canadian legislation against an international trade agreement that will have been negotiated pretty much behind closed doors and presented to parliamentarians more or less as a fait accompli, yet this agreement will take precedence over Canadian legislation.

I have two final remarks to make.

Regarding the issue of expropriation, both agreements contain the same extension of this concept, which in reality is a guarantee of the right to profits, with all the drawbacks that entails. You realize that the latest challenges against Canada had to do with these issues. As well, within these agreements, the Canadian government does not allow itself to impose results-based objectives on companies.

I have one final remark to follow up on what Mr. Carrière said. When we asked the department that very question, when we asked them what they wanted to change in chapter 11, the two single answers that they give us so far were very flimsy. The first answer was that they wanted to be more specific about the concept of expropriation, and the second answer was that they wanted to make the dispute resolution mechanism slightly more transparent, that was all. We can ask the department the question every imaginable way and that's all we get. I would have liked Mr. Carrière or someone else from the Department of Foreign Affairs and International Trade to still be here to answer that question. For the time being, we have no indication from the government that it does not want to reproduce everything else from chapter 11 and what we find in the agreement with Costa Rica.

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

[English]

Is Mr. Steven Shrybman here?

[Translation]

Mr. Svend Robinson: He's not here.

[English]

The Chair: We have a vote, so it will probably take about 35 to 40 minutes. We will be back here as soon as we finish the vote, around 6:30.

Mr. Bob Speller: Is there only one vote?

The Chair: There are two votes, 36 and 287.

An hon. member: They were still debating it.

The Chair: Oh, so it's one vote. We'll be back in 20 minutes. There is a cafeteria upstairs.

• 1748

• 1828

The Chair: We will now begin. We have finished the presentations by our witnesses. Now we will have questions and answers. It's my hope that we will be as focused as possible, in a sense. Avoid the preamble; just go right to the questions. That will give you a chance to ask more questions. After that we will move into the clause-by-clause and talk about some of the concerns we have heard from our guests.

I can tell you I was very moved by the presentations and the excellent points that were brought to our attention today. I also want to let the witnesses know we have a sugar caucus in Parliament that crosses the party lines of all the political parties. I will tell you, it is the most vocal and dynamic caucus. I'm sure my colleagues would agree with me. So your voice is heard not only here but also in the caucuses in Parliament.

I want to thank you on behalf of my colleagues, and begin by opening the floor to questions.

We'll start with Mr. Solberg.

Mr. Monte Solberg (Medicine Hat, Canadian Alliance): Thank you very much, Mr. Chair. It's a pleasure to be here.

It's a pleasure to welcome the witnesses today. Thank you for your presentations.

• 1830

I have to start with a small preamble. As someone who comes from a region where we produce sugar beets and have a refinery, I know this is a huge frustration for people in my riding, and has been since 1993, when I became the MP. There's a sense—and I think it's backed up by the facts—that sugar is often traded off when it comes to negotiations. This seems to have been the case in NAFTA and in other negotiations, and I can't help but believe this has happened again, to some degree. The fact that we've seen our ability to export into the United States actually go down dramatically indicates it's not getting better; it's getting worse. It threatens the 50-year-old industry in my riding, which should be very viable, because these people are very productive and do a fantastic job in producing sugar beets.

I guess my question has to do with the response the industry gets from the government when we go to them to talk about some of these concerns. Of particular concern is the point that was made by Ms. Marsden with respect to our ability to export into the U.S., when at the same time we know we're facing new competition from outside the country.

Do you think the federal government can give us any hope that we'll start to open up markets, or we'll open a market in the U.S. in the near future—the quota in the U.S. will continue? If not, how can they continue to enter into these new agreements, knowing we're facing new competition on all these new fronts, but have no ability to export into that big market just to the south of us?

Ms. Sandra Marsden: Thank you.

Do we have any hope for improvements to the U.S. market in the foreseeable future? I would say no. The U.S. sugar program is under debate under the new farm bill. That will be a protracted debate, as it always is, but clearly the lines are drawn. The U.S. sugar program is in disarray, but the U.S. sugar industry is active and politically astute as ever. So there's very little likelihood that will bring major reform. I think the agricultural world understands that reform in that country depends on global pressure.

In the absence of EU sugar policy reform, EU dumps and subsidizes six million tonnes of sugar on the world market. The U.S. could never be competitive in that context. They certainly bring that argument, which is fair. The rest of the world brings that argument because for developing economies, in the absence of the removal of EU subsidies, their returns in the world market continue to be very poor.

So it is not likely in the foreseeable future. We have a bilateral understanding that at least ensures we keep that 10,000 tonnes, but it's fixed. So we are dependent on the Canadian market, and any erosion of that market share comes right out of the industry's profitability.

The industry is rationalized, as you heard from Dan Lafrance. We've closed three plants since I've been employed in 1987, so it has gone from seven to four. Those plants have reinvested, to ensure they're efficient into the future, but we can't compete when we can't maintain our plant capacities.

Mr. Monte Solberg: At a time when agriculture is in big trouble across the country, this is a relatively high-value crop. It's a crop option people in my riding—and until a few years ago people in Manitoba—have.

I'm wondering if Mr. Webster could expand a little bit on what kind of contribution this industry makes to southern Alberta, and to the country in general.

Mr. Bruce Webster: The sugar beet industry in southern Alberta is very important to the farmers, the people who work at the factory, and the general community. From a very narrow base of 40,000 to 50,000 acres, enough sugar beets can be grown to provide 10% to 15% of Canada's sugar needs. So just the dynamic of that makes them important to the equipment dealers, the fuel dealers, and the people who sell cars and clothes. We're a major supporter of the Lethbridge economy. There are more and more beets going into the Brooks area and around Bow Island. There are many communities that depend on it for seasonal or full-time employment and to provide a valuable input for the food processing industry in Alberta. We want to keep the industry; it makes a lot of sense. But free trade needs to mean expanding opportunities, not contracting opportunities.

• 1835

Mr. Dan Lafrance: If I may, I will add to what Mr. Webster said.

Just Rogers in the Taber economy adds probably $30 million to $40 million a year to the growers of sugar in Alberta. That's what we pay; that's payment for the beets. On top of that, we spend anywhere between $15 million and $20 million on salaries, services, and supplies for the Taber expenditures. So that's very large for the growers and also for the economy of Taber and Lethbridge and southern Alberta.

The Chair: Mr. Valeri, did you have a question?

Mr. Tony Valeri: I'll be very brief.

I just wanted to pick up on a comment made by Ms. Marsden. You indicated there was no commercial opportunity that you saw in Costa Rica. We certainly hear what you're saying as an industry. We appreciate what you're saying. But I was looking for something positive in this agreement for the sugar industry. There was a letter tabled earlier, or at least sent, by the confectionery manufacturers, who are supportive of this agreement, citing some potential markets in Latin America that they would want to penetrate.

Given the recent ruling by the CITT, about a year or so ago, extending the 1995 ruling that essentially keeps the EU and the U.S. out of the domestic market, and an increasing market for sugar users, are these factors not by extension going to increase your market, or at least some of your production capability or capacities?

Ms. Sandra Marsden: We don't like to be negative, but our experience is that agreements have not been positive. Let me give you as an example the NAFTA, and the WTO for that matter. Certain confectionery products might take advantage of this agreement over the long term—I could not deny that—and there might be incremental growth. In no way is that likely to offset the impact on our market.

Our problem is we will face a direct and very near-term impact on our ability to competitively produce for fine sugar. If we can't produce it we can't sell it to our customers. That was very evident from the CITT hearings when U.S. sugar imports were up to 150,000 tonnes, adding on to European imports—which were growing and growing—and very rapidly deteriorating margins in the industry.

The dynamic is very similar. It's a market opportunity for these countries. They're massive surplus producers and have no other outlets for their production. The U.S. has a fixed quota for their raw sugar exports, set at 50,000 tonnes, but they must compete with the rest of the world for access to a 7,000-tonne global quota.

So Canada is the commercial choice. The problem is the imbalance. We won't survive the timeframe it may take to create those new opportunities. It's not that we don't support freer and better opportunities for our customers: we have to be here to supply them with sugar. Otherwise, we'll be distribution centres.

The Chair: Mr. Duncan, do you have any more questions?

Mr. John Duncan: Just very quickly, the government consulted with you in some form, and you gave an opinion. Perhaps you could enlighten us as to what the government negotiators said at the time they consulted, prior to this Canada-Costa Rica free trade agreement.

• 1840

Given that all of that has occurred, I think it's very enlightening that at the eleventh hour you're still here saying the things you're saying that are of great concern to your industry. I'm sure you have something else you'd like to say in that regard before we move into another section of this discussion, because I know there's another session to come.

Ms. Sandra Marsden: Consultation is a very big word. Yes, we were consulted. But how were we consulted? I would say by and large it was at the micro level. I mean, once sugar was on the table—and I would argue that we really didn't have a say as to whether sugar would be negotiated—we were talking about the details. How long is the phase-out? How big is the quota? In fact, we had no ability to influence that. That took place at the negotiating table.

Essentially, we're picking up the pieces after the agenda is set. That's why we're so passionate today and why we're here at the eleventh hour again. We're very seriously concerned about what this will mean with Central America.

The Chair: Thank you.

[Translation]

Mr. Paquette, you have the floor.

Mr. Pierre Paquette: Mr. Lafrance, I would like you to explain to us why, in a multilateral liberalized market, which you favour, a company such as Lantic Sugar could be competitive. If I understood you correctly, you have made investments to become a world-class company. However, the market is holding you back because at present, it contains too many distortions. Could you explain this to us, because I wouldn't want to appear to be supporting a protectionist vision of the Quebec and Canadian sugar market. Could you also explain how Guatemala represents a danger, if a possible agreement with that country included the same kinds of provisions?

I would also like to get back to Mr. Dagenais, because I'm not so sure that everyone understood that in the free trade agreement with Costa Rica, reference is made to another agreement on investment, and consequently, the agreement includes elements that protect investments which are similar to chapter 11 of NAFTA, according to what you have told us.

Could you elaborate on the elements of this agreement between Costa Rica and Canada to encourage and protect investment which in your opinion are similar to chapter 11 of NAFTA?

Mr. Dan Lafrance: You first asked what level of competition we can sustain with our world-class refinery. Since Lantic Sugar doubled its capacity in Montreal, we now have a refinery that is quite comparable to other North American refineries.

Let's look at the North American market, the American market, the northern states, the states of New York, New Jersey, Rhode Island and Massachusetts. These states consume as much sugar as all of Canada does. This is a natural market for us. It's a natural market for Montreal and Toronto. We could easily compete with American sugar refiners.

In the past, Lantic Sugar had a refinery in Yonkers, New York. So we are very familiar with the American market and the production costs of American sugar refineries. If the market were open on both sides of the border, we would be ready to take on the competition. The Americans could sell here, in Canada, and we could sell to the United States. We are sure that with the help of our employees and our suppliers, we would do extremely well in this market, thanks to the expansion we have had over the past few years.

Now let's talk about Guatemala and the reason why that country is so important. As Ms. Marsden mentioned earlier, Guatemala has a very large surplus of sugar. Guatemala currently exports slightly more than 1.1 million tonnes of raw sugar. The entire Canadian market is 1.2 million tonnes. Further more, Guatemala produces approximately 300,000 tonnes of refined sugar for export. These 300,000 tonnes of refined sugar are what we call value-added products here in Canada. Actually, all products found at the grocery store are value-added products.

• 1845

It's a very large market, and it certainly would be targeted by that kind of imports. So they could enter the market easily, and because their production costs are very low, they could obtain a share of the market and really threaten the Canadian sugar industry.

The Chair: Mr. Dagenais.

Mr. Vincent Dagenais: If on one hand we look at chapter 11 of NAFTA and on the other hand the agreement between the Government of Canada and the Republic of Costa Rica, we see the same parallel provisions. I won't read everything out to you, but I will give you the references.

We can also see just how broad the definition of “investment” is. It's found in the first chapter, with the other definitions. An investment includes movable property, real estate, shares, capital, securities, bonds, cash, accounts receivable, goodwill, intellectual property rights and all forms of direct or indirect property.

In my presentation, I said that one of the most perverse parts of the two agreements is that they allow a company to argue that a contract, an international trade agreement, takes precedence over Canadian legislation. We see at paragraph 4 of article 1001 of NAFTA that governments can pass the legislation they want as long as it is not incompatible with the provisions of this chapter. So, the NAFTA agreement takes precedence over legislation.

The treaty with Costa Rica stipulates in article 12 that the tribunal can make a decision and apply domestic rules as long as these rules regarding domestic law do not conflict with the agreement. So once again, they will be judging the validity of domestic laws inasmuch as they do not conflict with the agreement, which prevails.

As regards the right to extend the notion of expropriation, in article 1110 of NAFTA, which talks about similar measures, according to the agreement it is not possible to directly or indirectly nationalize or take equivalent measures. In the Costa Rica agreement, chapter VIII stipulates the same thing. I will not read everything.

Investments of investors of another Party may not be subject to nationalization or expropriation or any other measures equivalent to nationalization—

In passing, that is the only aspect that Mr. Pettigrew is questioning, because it makes it possible to use such a broad interpretation of the measures that any measure that would limit the ability of a business to make a profit could be considered a measure equivalent to nationalization.

Here is one final example on performance requirements. Article 1106 of NAFTA, which deals specifically with that, says that signatories shall refrain from putting any performance constraints on foreign companies that invest.

The same thing is contained in the other agreement, where signatories refrain from imposing performance constraints on investors.

I do not know if that answers the question, but we can see that there is a parallel. Mr. Carrière, once again, put it clearly: future agreements are build by amalgation, construction, added touches. Existing agreements are used. So we can see what is being put together.

[English]

The Chair: On behalf of the committee—all my colleagues—I wanted to thank each and every one of you for your presentations. We received written statements from some of you. The proceedings are recorded and will be reflected in the Hansard of the committee. As well, the other documents will be part of our reporting. You have enlightened us and given us a lot of food for thought, not only for today but as we proceed in the future.

• 1850

The committee is going to be embarking on a major study of free trade in the Americas—I would say as early and quickly as possible. In that context, many things.... In particular I have heard from two or three of you the word “replicating”. That, I think, is a very important word you have put before us: replicating.

As we enter into the study of free trade in the Americas, your comments will be very much on our minds, and we will ensure that everything we do will now be based on what you have told us today should be the focus of the committee.

There's no question you have made some excellent and valid presentations.

What we are going to do now is move into the next phase, which involves looking at the bill on a clause-by-clause basis. We will suspend for one minute, because the meeting has been televised. The suspension will allow us to shut down the cameras and move into clause-by-clause.

Once again I want to thank you. There are and have been a number of recommendations coming from all sides of the committee to include, as part of our report to Parliament, the very specific concern you have raised. That is that in the future, when and if the government enters into any kind of agreement with other countries in the Americas, you'll be there, and your views and concerns will be considered and taken into account. It's my hope that the committee will see fit to adopt this proposal, which was worked out by some of the members of the committee. I want to thank you greatly.

We will suspend for one minute and then come back.

• 1852

• 1859

[Translation]

The Chair: Dears friends, we are going to resume our meeting. We have heard presentations from our witnesses and I think it is time to have a bit of a discussion about that, and about what we have before us.

I propose, if you do not mind, that we discuss the proposal from our colleague Mr. Duncan regarding the evidence we have heard from today's witnesses.

[English]

With your permission, I am going to read a suggestion that was made by Mr. Duncan that might respond to the concerns of many of my colleagues on all sides of the House—in particular, their concerns with regard to the sugar industry.

Frankly, from all of the comment we have received, it seems everything is positive with the exception of some of the concern that our witnesses have raised today, which is, in my view, valid and important. It's imperative for us as a Parliament to be vigilant as we enter into any kind of a future free trade agreement in the Americas.

• 1900

I wanted to read this for you, and it's my hope that it will receive the unanimous support of the committee. I would like to see a unanimous report going to Parliament, because, as I stated at the beginning, it is a treaty, and given the nature of it, we cannot do amendments to specific clauses. If we could, believe me, we would have a number of amendments to put into place. But the bottom line is we will be able to vote either for or against a specific clause if we have to.

Mr. Paquette wanted to have a comment, as well as Mr. Duncan. I wanted the clauses where we don't have unanimity flagged so we can put those aside to come back and discuss them, and to adopt the ones on which we have unanimity so we don't waste a lot of time on things we all agree on.

Mr. Paquette and then Mr. Duncan.

[Translation]

Mr. Pierre Paquette: Let's talk about procedures. I fully understand that we cannot amend the treaty because it is an agreement that has been reached between two governments. However, we can amend the implementing legislation.

I clearly recall when the North American Free Trade Agreement Implementation Act was adopted, at least two amendments were also adopted. Among others, there was an amendment banning the export of water, because it was not covered under the agreement. We could add elements to the implementation act to clarify the interpretation of the agreement. I would first of all like it to be clarified, because I would like to move three amendments. So I want to know if I will have an opportunity to move them.

[English]

The Chair: You could amend anything, Mr. Paquette, but what would end up happening at the end of the day is the agreement when it was signed was to be put into place January 1, 2002, so any kind of change to the proposal would not only have to have the support of the Canadian government, it would have to have the support of the Costa Rican government. As a result of that, the implementation date would no longer be valid. So the result of it is you open it from your end, and they may open it from their end, and at the end of the day we may never be able to have a situation where we can move ahead. Of course, you can amend anything.

[Translation]

Mr. Pierre Paquette: I am a reasonable guy, which I have already been criticized for on several occasions in other areas. I am going to set aside two of my amendments because they modify the agreement. One of my amendments seems to reflect everyone's concerns. Its aim is to ensure that any future negotiation on sugar agreements be undertaken in a multilateral framework. I do not think that will be inconsistent with the current Costa Rica agreement. It has no impact on the provisions of the agreement. It is an amendment to the implementation act.

[English]

The Chair: I would just say that you can do everything in a multilateral way, but it depends how much time you have and how many resources you have to put into it.

As we all know, ultimately we would like to see everything done through the WTO, but we know how complex it is, given the specificity of each one of those industries to each specific country we are dealing with. And we have seen a case in point where our witnesses today were telling us, look, in this particular case we know it's small, we know we don't have access to the market, we know there are challenges and so on and we're not going to be able to compete, and we are concerned about future agreements.

So in a sense, it's defeating the purpose. Mr. Duncan has proposed something I thought was very thoughtful, and it is that as we move ahead and negotiate agreements with other countries in the Americas, bearing in mind we prefer the multilateral at all times, we want to make sure that at least the concerns and the interests of the sugar industry are in our mind and always taken into account in consideration.

My fear that is that if we want to say multilateral, in effect what we are saying is we have given up on the bilateral type of arrangement, and the WTO has already clearly stated that they encourage parties that are members of the WTO to have bilateral agreements that are consistent with the WTO rules. But also they further encourage members that if they can do even better, go ahead and do it as long as they are not conflicting with the overall guidelines and standards as set up by the World Trade Organization.

• 1905

In other words, we're really not saying we're abandoning the multilateral but that we have a two-track approach. We have the WTO, about which we are going to have the meeting some time in November, and you will always have that forum. But this does not negate the fact that you will go and do bilateral agreements with specific countries.

My thought is that if you allow me to read what Mr. Duncan had proposed I'm pretty sure you will probably see the response to what you are saying. And I would suggest it does not negate at all the fact that we can continue, and we do, on the multilateral level through the WTO. Let me read that for you, with your permission.

Mr. Duncan proposed that as part of our report we say:

The subcommittee wishes to highlight the specific concerns of Canada's sugar industry and asks that their interests be taken into account in any future trade negotiations involving Canada.

In my view, this motion should respond to a large extent to your concern. And I know my colleagues are as vocal about it as are many others in the industry, as well as those who are friends of the industry. I appeal to all of us, in the spirit of cooperation, if you think that responds to the specific need of the sugar industry—and I believe it does—let's adopt it and proceed with it, if that is okay.

Mr. Duncan.

Mr. John Duncan: I wanted to clarify two things. The first is, are we in camera right now?

The Chair: No. We are televised right now.

Mr. John Duncan: We're continuing to be televised?

The Chair: Only on radio. No, we're not televised. No, that's wrong.

Mr. John Duncan: We're not televised, but we're not in camera.

The Chair: No, we're not in camera. Do you wish to move in camera?

Mr. John Duncan: No, it's just that I thought maybe we were but no such thing had been indicated and I wanted to clarify that.

The second thing is about one small item relating to your preamble. I understand the CA-4 negotiations precede the FTAA, or will start earlier than the significant FTAA negotiations, and you didn't say that. I want to ensure that really a lot of the sugar industry concerns are CA-4, and you only mentioned FTAA, so I wanted to get that little plug in there.

In terms of the resolution you read, I hope the committee will adopt it and we can get on with business.

The Chair: Thank you very much.

[Translation]

Mr. Paquette.

Mr. Pierre Paquette: What report would that motion appear in?

The Chair: It cannot be part of the report as such. It will have to be submitted separately. The Parliament will take note of it. It will be part of a report to Parliament.

Mr. Pierre Paquette: Can we refer to the fact that the committee would prefer that it be part of a multilateral framework, without bilateral negotiations? We have heard, first of all, that the sugar market is greatly distorted and secondly, that our true market is the American market.

We can sign all kinds of free trade agreements with countries in South America, but that is not where we will export refined Canadian sugar. Moreover, they do not even use refined sugar there, they use raw sugar and crystals. So in the end, the American market is the one that we will have to develop.

I think we must be aware of that and state that during negotiations on the Free Trade Area of the Americas, for example, liberalizing the sugar market will be a concern. We could see to it that the committee subsequently consider that efforts must be made to liberalize the sugar market on a multilateral front.

[English]

What we may be able to do is encourage the government to continue to pursue the multilateral approach to resolving some of the trade irritants. Is this what we're talking about here?

Mr. O'Brien.

Mr. Pat O'Brien: No, I think that's fine, Mr. Chair.

For the record, I'd note that we're moving on three fronts, as I think we all know—multilateral WTO, regional FTAA, and bilateral—and the government's going to continue to move on all three fronts. But I can quote the minister—I can quote him verbatim because I've heard him so often—having said that the cornerstone of our trade policy is the WTO.

• 1910

The Chair: Is it okay then to encourage the government to continue its multilateral efforts—bilateral, regional, and multilateral...?

Mr. John Duncan: It's diluting it.

The Chair: We will change “further”. Forget what you have, that “and further”, which means we want you to do this, but also continue to do the regional as well as the multilateral approach. Is that...?

Mr. John Duncan: Basically, you've got—

The Chair: Maybe we'll do it as a separate one.

Mr. Pat O'Brien: A separate one.

The Chair: A separate one, okay—a regional and multilateral approach.

If that's okay, do we have an agreement? Does this one deal with the concerns of my colleague?

Mr. John Duncan: Can you clarify what we've actually got now?

The Chair: Is this unanimous for Mr. Duncan? Okay.

Now we have a proposal by Mr. Paquette to encourage the government to continue its three-pronged approach—bilateral, regional, and multilateral. And what—resolving trade disputes, or...?

[Translation]

Mr. Pierre Paquette: For the sugar market.

[English]

Mr. John Duncan: That's exactly what got us here. This motion is what got us to this unsatisfactory circumstance here. Why would we want to reinforce...?

[Translation]

Mr. Pierre Paquette: I am talking about the multilateral aspect. I want the committee to make it known that if we do not have a multilateral approach to the liberalization of sugar, we will always be on the losing side.

[English]

The Chair: Okay. So encourage the government to continue its three-pronged approach—bilateral, regional and multilateral—in resolving trade irritants. Does that make sense?

[Translation]

Mr. Pierre Paquette: Multilateral, regional, bilateral—

[English]

The Chair: May I work out the wording with the clerk to reflect this?

Mr. John Duncan: If I understood where Pierre is coming from, he's saying that the focus should be on multilateral, not bilateral.

[Translation]

Mr. Pierre Paquette: Multilateral and regional.

[English]

The Chair: But you're not saying you don't want bilateral?

[Translation]

Mr. Pierre Paquette: We have a bilateral agreement with Costa Rica. We must be careful. The government should continue its efforts at the WTO and as part of the Free Trade Area of the Americas so that there is multilateral or at least continental liberalization of sugar.

The Chair: That does not mean stop producing beet sugar.

Mr. Pierre Paquette: Clearly not.

The Chair: So we can say bilateral, regional and multilateral.

[English]

So we're not saying no bilaterals? All we are saying is bilateral, multilateral—whichever way you can go and find a solution so you can have good sugar you can sell and buy at a fair price....

Mr. John Duncan: Aren't you and the committee telling the government to keep doing what it's doing? That's what you're saying.

[Translation]

Mr. Pierre Paquette: If we examine the sugar market, we know full well that it is not a priority for the government in WTO negotiations or in negotiations concerning the Free Trade Area of the Americas. The Canadian government must continue, as part of these negotiations, to promote the liberalization of the sugar market on the multilateral and continental fronts. The bilateral front is not a priority, in my opinion, because the commitment is already there. An agreement has already been reached with Costa Rica.

[English]

The Chair: Okay. Well, let me read it one more time, and we'll see if it's okay.

Mr. O'Brien and Mr. Speller.

Mr. Pat O'Brien: First, I just want to clarify what wording is on the table now.

The Chair: That's number two: encourages the government to continue its three-pronged approach—bilateral, regional, and multilateral—in its effort to resolve trade irritants. If you agree with the substance of it, we'll do the specific wording with the clerk.

Mr. Pat O'Brien: I agree with that statement.

The Chair: Does that satisfy you, Mr. Paquette?

• 1915

[Translation]

Mr. Pierre Paquette: With yours. If we consider Mr. Duncan and mine, it seems to me that—

The Chair: It works.

[English]

Mr. Duncan, are we happy with the bilateral? We're not taking anything away from it. That's what we wanted to do, but in addition to this we do something separate and stand-alone, to do bilateral and multilateral as well as regional.

Mr. John Duncan: In the interests of harmony I'm just going to let her go, but I don't think it contributes anything whatsoever. Carry on.

The Chair: As a lawyer might say, it's for the sake of further clarity. Is that okay?

We've gone through this. What I need to do is move to the clause-by-clause then. Pursuant to Standing Order 75(1), consideration of the preamble and clause 1 is postponed.

Shall clauses 2 to 60 carry?

[Translation]

Mr. Pierre Paquette: I am voting against these clauses.

The Chair: Oh, really. Mr. Paquette, can you tell us why?

Mr. Pierre Paquette: The reason is precisely that I would have preferred providing directions to the government for future negotiations in the implementation act. You are telling us that we cannot amend the act. So I'm voting against it.

[English]

(Clauses to 2 to 60 inclusive agreed to on division)

(Schedules 1 to 3 inclusive agreed to)

(Clause 1 agreed to)

The Chair: Shall the preamble carry?

Some hon. members: Agreed.

The Chair: Shall the title carry?

Some hon. members: Agreed:

The Chair: Shall the bill carry?

Some hon. members: Agreed.

The Chair: Shall a report without amendments to the Standing Committee on Foreign Affairs—

Some hon. members: Agreed.

Some hon. members: On division.

The Chair: Okay. We will report the bill tomorrow to the committee, and it's with the hope that it will hit the House on Friday.

All right. Thank you very much.

The meeting is adjourned.