SINT Committee Meeting

Notices of Meeting include information about the subject matter to be examined by the committee and date, time and place of the meeting, as well as a list of any witnesses scheduled to appear. The Evidence is the edited and revised transcript of what is said before a committee. The Minutes of Proceedings are the official record of the business conducted by the committee at a sitting.

For an advanced search, use Publication Search tool.

If you have any questions or comments regarding the accessibility of this publication, please contact us at accessible@parl.gc.ca.

Previous day publication Next day publication

37th PARLIAMENT, 1st SESSION

Sub-Committee on International Trade, Trade Disputes and Investment of the Standing Committee on Foreign Affairs and International Trade

COMMITTEE EVIDENCE

CONTENTS

Wednesday, January 30, 2002

1535

M. Harb

M. Bélair

1540

1545

1550

1555

Ms. Suzanne Vinet (Chief Agricultural Negotiator for International Trade and Policy Directorate, Market and Industry Services Branch, Department of Agriculture and Agri-Food)

1600

Mr. Harb

Mr. Casson

1605

Ms. Suzanne Vinet

Mr. Casson

Ms. Suzanne Vinet

1610

Mr. Casson

M. Harb

M. Rocheleau

Mr. Don Stephenson

M. Rocheleau

Mr. Don Stephenson

1615

Mr. Frédéric Seppey (Assistant Director (Multilateral Agreements), Department of Foreign Affairs and International Trade)

Mr. Don Stephenson

M. Rocheleau

Mr. Don Stephenson

M. Rocheleau

Ms. Susanne Vinet

M. Rocheleau

Ms. Suzanne Vinet

1620

M. Rocheleau

Ms. Suzanne Vinet

M. Rocheleau

Ms. Suzanne Vinet

Mr. Yves Rocheleau

Mr. Harb

Mr. Martin (Winnipeg Centre)

1625

Mr. Don Stephenson

Mr. Martin (Winnipeg Centre)

Mr. Don Stephenson

Mr. Martin (Winnipeg Centre)

Mr. Don Stephenson

Mr. Martin (Winnipeg Centre)

Mr. Don Stephenson

1630

Mr. Martin (Winnipeg Centre)

Mr. Don Stephenson

Mr. Martin (Winnipeg Centre)

Mr. Don Stephenson

Mr. Martin (Winnipeg Centre)

Mr. Don Stephenson

Mr. Pat Martin

Mr. Don Stephenson

Mr. Frédéric Seppey

Mr. Martin (Winnipeg Centre)

Mr. Harb

Mr. O'Brien (London--Fanshawe)

Mr. Frédéric Seppey

1635

Mr. O'Brien (London--Fanshawe)

Mr. Don Stephenson

Mr. O'Brien (London--Fanshawe)

Mr. Don Stephenson

Mr. O'Brien (London--Fanshawe)

1640

Mr. Don Stephenson

Mr. O'Brien (London--Fanshawe)

Mr. Don Stephenson

Mr. Stephenson

Mr. Stephenson

Mr. Bill Singleton (Director, Economic Policies, Policy Branch, Canadian International Development Agency)

1645

Mr. Pat O'Brien

Mr. Singleton

Mr. O'Brien (London--Fanshawe)

Mr. Harb

Mr. Valeri

Mr. Claude Carrière (Director General, Trade Policy I, Department of Foreign Affairs and International Trade)

1650

Mr. Valeri

Mr. Claude Carrière

Mr. Valeri

Mr. Harb

Mr. Claude Carrière

1655

1700

1705

1710

M. Harb

Mr. Casson

Mr. Claude Carrière

1715

Mr. Casson

Mr. Harb

Mme Lalonde

Mr. Harb

Ms. Lalonde

1720

Mr. Claude Carrière

Mme Lalonde

Mr. Claude Carrière

Ms. Lalonde

Mr. Claude Carrière

Ms. Lalonde

1725

Mr. Claude Carrière

Ms. Lalonde

Mr. Claude Carrière

Ms. Lalonde

Mr. Claude Carrière

Ms. Lalonde

Mr. Claude Carrière

Ms. Lalonde

Mr. Claude Carrière

Ms. Lalonde

Mr. Claude Carrière

Ms. Lalonde

Mr. Claude Carrière

Ms. Lalonde

Mr. Claude Carrière

Ms. Lalonde

1730

M. Harb

Ms. Lalonde

M. Harb

Ms. Lalonde

The Chair

Ms. Francine Lalonde

Mr. Claude Carrière

Ms. Lalonde

Mr. Claude Carrière

Ms. Lalonde

Mr. Claude Carrière

Ms. Lalonde

Mr. Claude Carrière

1735

Ms. Francine Lalonde

Mr. Claude Carrière

Mme Lalonde

Mr. Claude Carrière

Ms. Francine Lalonde

Mr. Harb

Mr. O'Brien (London--Fanshawe)

1740

Mr. Harb

Mr. O'Brien

The Chair

Mr. Claude Carrière

1745

Mr. O'Brien (London--Fanshawe)

Mr. Claude Carrière

Mr. Stephen Free (Director General, Americas Branch, Canadian International Development Agency)

Mr. O'Brien

Mr. Harb

Mr. Valeri

Mr. Claude Carrière

1750

Mr. Valeri

Mr. Speller

Mr. Claude Carrière

1755

Ms. Suzanne Vinet

Mr. Speller

Ms. Suzanne Vinet

Mr. Speller

Ms. Suzanne Vinet

Mr. Speller

Mr. Harb

CANADA

Sub-Committee on International Trade, Trade Disputes and Investment of the Standing Committee on Foreign Affairs and International Trade

NUMBER 017

l

1st SESSION

l

37th PARLIAMENT

COMMITTEE EVIDENCE

Wednesday, January 30, 2002

[Recorded by Electronic Apparatus]

¹ (1535)

[English]

The Chair (Mr. Mac Harb (Ottawa Centre, Lib.)): Merry Christmas and Happy New Year to everyone.

I would like to continue with the first meeting of the Subcommittee on International Trade, Trade Disputes and Investment of the Standing Committee on Foreign Affairs and International Trade, pursuant to Standing Order 108(2): assessment of WTO negotiating issues from a Canadian perspective.

We have with us today a group of distinguished witnesses, starting with Mr. Don Stephenson, the director general of the Trade Policy Bureau; Mr. Randle Wilson, the director of the Trade Policy and Planning Division; Steve Brereton, the director of the Investment Trade Policy Division; and Frédéric Seppey, the deputy director for Regional Agreements, along with Johanne Forest, a consultant for Trade and Environment, Environmental Relations Division. As well, we have a series of others who will be joining us later in the discussion.

Now, under the order of reference that was passed on to the committee on December 6, 2001, it is ordered as follows: that the Subcommittee on International Trade, Trade Disputes and Investment consider and hold hearings on the Doha development agenda of the World Trade Organization.

What I thought we should do as a committee was first to have a meeting with our officials, let them give us the lay of the land, and if we have any questions, ask them now. As well, through the clerk of the committee and associates, we have distributed some information to the committee members. It's my hope that we will be able to talk a bit about the process later on.

What I thought we would do, Mr. Stephenson, is to start with you so you can introduce some of your colleagues, give us a bit of an overview, and also tell us, from your side of the equation, how you would like to see this process taking place and what are the expectations, as well as any thoughts or suggestions you may want to pass on to the committee, as this is a very welcome opportunity. After that we will open it for questions and comments.

Thank you.

Mr. Don Stephenson (Director General, Trade Policy Bureau II; Services, Investment and Intellectual Property Bureau; Department of Foreign Affairs and International Trade): Thank you, Mr. Chairman.

On December 6, I appeared before the standing committee to review the results of the Doha conference. I will assume that the members of committee are well apprised of the substance of the declaration from Doha, at least in general terms, and on the negotiations that flow from the meeting in Doha.

I will move to the six issues I understood the committee had identified as being of particular interest. Those were: WTO outreach and transparency; the reform of the dispute settlement understanding, or the DSU; the relationship between trade and development; the relationship between trade and the environment; services, investment, and competition; and finally, agriculture.

I thought I would try to frame today's discussions with some general remarks about some of the issues we think we will be dealing with in respect of those issues and those negotiations, covering the first five of them, and asking my colleague, the chief negotiator for agriculture, Suzanne Vinet, to make some remarks on those negotiations. Then we would move as quickly as possible to questions and answers to try to address the concerns and questions members of the committee might have.

You have already, Mr. Chairman, introduced my colleagues. We like to travel in packs. We like to be able to outvote the committee.

When the detailed questions arise, I will direct the questions to the experts on the various issues.

Perhaps I could most usefully start with a brief report on where we are in the process of the round of the negotiations, of the state of play, in Geneva. The Trade Negotiations Committee, which will supervise the negotiations, met for the first time on Monday of this week, January 28. Last week, in anticipation of the TNC meeting, Canada organized an informal meeting attended by some 25 member countries of the WTO, including developed and developing countries and including least-developed countries. The meeting was chaired by Canada and co-chaired by Brazil at Canada's invitation. The discussion focused on the upcoming Trade Negotiations Committee meeting and the organizational issues related to the negotiations, but also on how to address the challenges of trade-related technical assistance and capacity-building assistance to developing countries. We wanted to make sure this was a prominent issue right from the outset in the negotiation process. We also attended other informal consultations leading to the TNC meeting on Monday.

At the first TNC on Monday members were not able to reach a consensus on the organization of the negotiations, including issues of the structure; that is to say, the number and mandate of negotiating committees, the chairs of the various negotiating groups, the chair of the TNC itself, and issues of timelines for negotiations. Our consultations prior to the meeting on Monday indicated to us that we were close to consensus across the membership, the 144 members of the WTO, but there were some remaining concerns that could not be resolved by Monday's discussion, ones relating mostly to the concerns of developing countries and their capacity to participate in the negotiations. These were issues such as overlapping meetings with negotiating groups and the like and the rules of the game. We expect that Stuart Harbinson, the chair of the general council, will be able to resolve those concerns, likely through the establishment of a set of rules or guidelines for the functioning of the TNC, and that we will then achieve consensus and be able to proceed.

Let me turn to the issues identified by the committee just as briefly as I possibly can.

With respect to outreach and transparency, there are essentially two issues here. The first is the relationship between the federal government and Canadian businesses, public interest groups, and the Canadian public, generally speaking. On this front we are in the process of developing our strategy for public consultations, which must be comprehensive, inclusive, and sustained throughout the three or more years of the negotiation. The first element in that strategy, however, was Minister Pettigrew's request to this committee to initiate the first round of public consultations and frame recommendations to the government in its connection. We believe Parliament has an important role to play in articulating the issues at stake for Canadians and in framing Canada's negotiating positions.

¹ (1540)

The second issue is the relationship between the WTO and the global public, whether individual citizens, NGOs, or parliamentarians of member states. These were the subject of discussions in Doha. In the ministerial declaration at Doha, WTO members committed to making the organization more open and transparent, reflecting long-standing Canadian proposals.

A greater window onto the WTO, including more timely access to documents, will allow Canadians and the global public to see how the organization works and how its rules are applied. We believe this will lead to greater confidence in such rules, and greater understanding that the multilateral trading system serves everyone's interests.

Some progress has been made on external transparency in the WTO. Negotiating proposals are now routinely posted on the WTO and national government websites. More documents are released by the WTO secretariat, and a consultation process is underway at this time to derestrict more categories of documents, and to get them translated more quickly into the three official languages of the WTO. A few weeks ago, the budget debates in the WTO approved a significant increase in the budget for translation costs. This should assist us in the direction of more transparency.

This having been said, it remains an uphill battle. There is no consensus on the scope or nature of further increases in transparency, and there remain a number of countries that are concerned about any weakening of the intergovernmental character of the WTO that would, in their view, flow from opening up the WTO processes to third-party participation.

It would be useful if your hearings were able to give guidance to the government on how to continue to move in this direction, and how to address the concerns of those members of the WTO that are concerned with greater transparency.

In particular, it's our hope that your hearings will engage Canadians on the role of parliamentarians in the WTO and of interparliamentary cooperation and the world trading system. More than 90 parliamentarians from around the world met on the margins of the Doha conference under the auspices of the InteParliamentary Union, the IPU, and the European Parliament.

Canada was one of the few to support a resolution adopted by the IPU to enhance transparency in the WTO by associating parliaments more closely with the work of the WTO, and to include reference to their role in this regard in the Doha ministerial declaration. We were not successful in Doha on this point, but we will continue to support the work of the IPU steering committee in that direction.

I note, by the way, a speech last week by Mike Moore, the director general of the WTO, to the parliamentary assembly of the Council of Europe, where he indicates in his closing remarks that:

The transboundary nature of poverty, environment, health and security issues and the interdependence of economies often require international and regional responses. Your work

--that is to say, the group he was addressing--

at the national level must clearly be complemented at the international level. The trend of the “globalization of public policy issues” will continue and cannot be ignored.... Parliamentarians need to engage in the critical issues and be perceived by the public to be doing so.

We should do this in a more structured and formal way.

So clearly, the director general of the WTO believes there is room for increased participation by parliamentarians in the work of the organization.

There is, however, no formal pressure within the WTO to create a parliamentary advisory counsel. Like the transparency agenda in general, there is no consensus on what role, if any, parliamentarians should play within the organization.

Broader engagement is useful and necessary, but in its initial form it might best be structured outside the WTO. We could then work to build a body of support to make it link to the WTO. The views of the committee on this point would be most welcome.

An important element that sets the WTO apart for most other international organizations is the fact that it has clear, well-established, and relatively effective procedures for settling disputes among its members. These procedures are set out in the dispute settlement understanding, or DSU, which is the result of negotiations between members. It reflects a shared commitment to bring clarity and certainty to the practice of international trade. It also embodies the fundamental principle that no member may act unilaterally.

¹ (1545)

The members of the WTO have agreed to negotiate clarifications and improvements to the DSU. In this context, we can ask whether the DSU is working and for whom; whether it can be improved; how it can ensure compliance through compensation rather than retaliation, or some other mechanism that would be more trade liberalizing and would avoid penalizing the injured party to the dispute. We can ask how we can improve the functioning of the dispute settlement body by making changes to the composition of panels and the size of the appellate body, or by clarifying procedural rules; and finally, how we can improve the openness and transparency of the process.

On trade and development and the integration of developing countries and LDCs--least-developed countries--into the global economy, these were major themes that emerged from Doha. The concerns of developing countries and least-developed countries will impact on all the negotiations and work in the Doha round.

In particular, developing countries will be interested in market access in agriculture, apparel, textiles, and footwear, and more generally, reducing barriers to value-added exports. They will be looking for increased access to our markets for their service suppliers through the GATS, particularly by means of temporary entry into Canada by service suppliers. The question here will be how to balance our commercial interests with our development objectives, not in general terms, but on very specific questions, with specific industry interests and consequences.

In our negotiating positions, we are likely to have to make distinctions between least-developed countries and developing countries. Trade agreements are reciprocal, of course, in that any improved market access to Canada for developing countries may mean improved access to those countries by Canadian producers. But LDCs, in particular, may invoke “special and differential treatment”.

To put this in perspective, Canadian imports from least-developed countries represent one-tenth of 1% of our total imports. By way of comparison, the Japanese imports from these countries are about three-tenths of 1%; U.S. imports, seven-tenths of 1%; and the EU just over 1%.

Approximately 60% of imports into Canada from LDCs face tariffs averaging almost 19%. For the U.S. and Japan, the average tariffs are 12% and 4.5%, respectively. Tariffs in the EU are now zero, since they introduced their “everything but arms” initiative last year--or as some less kind observers would say, “everything but farms” initiative.

The benefits to developing countries in the Doha round will depend partly on their ability to fully participate in the negotiations. They're going to need our assistance, and we've made many promises in the Doha declaration to provide that support. This is one of the central challenges of the Doha round.

When the round is completed and new agreements are concluded, the ability of developing countries to take advantage of the opportunities presented by improved market access and liberalized trade will depend on their capacity to produce goods and services for export. That's another development challenge linked directly to the Doha agenda.

We support a comprehensive approach to trade and development, which includes strengthening the capacity of countries to participate in the multilateral trading system, in parallel with access to markets. This means support for both trade-related technical assistance and capacity-building. Trade-related technical assistance helps developing countries administer trade agreements and implement trade-friendly practices, like consistent customs valuation.

Capacity-building supports the capacity of a country to use trade to further its economic growth. This can include assistance on basic economic and physical infrastructure, like the establishment of laboratories for health and for quality control. Capacity-building needs will require a response not only at the WTO, but through bilateral and other multilateral channels, like the World Bank and regional development banks.

On trade and the environment, we look forward to negotiations on the relationship between WTO rules and specific trade obligations in multilateral environmental agreements, or MEAs. This will be an important contribution to promoting coherence in the governance of environmental and trade issues. We also welcome negotiations on the reduction or elimination of barriers to environmental goods and services, where Canada has export strengths. Such negotiations can help protect the environment by making appropriate technologies more readily available. These negotiations on goods and services will take place in the context of mandated negotiations on non-agricultural market access and the GATT services negotiations.

¹ (1550)

The other challenge before the WTO is not in the negotiations, but in the work program agreed to in Doha. The Committee on Trade and Environment has been mandated to focus on several specific issues, including eco-labelling and the identification of win-win scenarios for trade and environment. These are initiatives that the WTO can take that would be both trade liberalizing and would benefit development and environment. This would help offset developing countries' concerns that the trade and environment agenda provides an opening for disguised trade protection.

The Committee on Trade and Environment is to report to the fifth session of the Ministerial Conference in 2003 with recommendations for further action, including any further negotiations on environmental issues. It also is to act separately, and with the Committee on Trade and Development, each within their respective mandates, to identify developmental and environmental aspects of all negotiations in the round so that sustainable development is appropriately reflected.

[Translation]

At Doha, members agreed to firm timelines for services negotiations. We will be asked to submit initial requests for specific commitments by June 30, 2002 and initial offers by March 31, 2003.

Services are an essential engine of growth to the Canadian economy, responsible for two thirds of Canada's GDP. These negotiations are important to Canada.

¹ (1555)

[English]

We're building a new economy based on technology and knowledge-based industries. Trade rules for that new economy are very much part of the GATT negotiations. Trade rules on trade and services in the WTO can provide new opportunities for Canadian companies, companies in such fields as engineering, professional services, research and development, financial services, information technology, telecommunications.

At the same time, however, Canadians have expressed concerns over what may be asked of us. As Minister Pettigrew said to you last fall before Doha, and last spring when he presented Canada's initial negotiating position for services, we will not negotiate on our health or public education systems, or on our social services. We will maintain the flexibility to pursue our cultural policy objectives. That being said, Canada participates in these negotiations from a powerful negotiating position. Canada is already one of the most open service economies in the world.

There will be work programs, not negotiations, on investment and competition until the Fifth Ministerial Conference, at which time ministers will decide how to proceed on those issues.

Foreign investment is a prominent feature of the global economy and an important contributor to economic growth, as Canada knows from direct experience. In the modern globalizing economy investment drives trade and Canada is heavily reliant on trade for its economic prosperity.

Perhaps more important, Canada has become a net exporter of investment. Investment agreements protect Canadian investors elsewhere in the world. As Canadian businesses seek to expand their operations abroad, they can encounter regulatory and other barriers related to investment. It's for this reason that Canada supports including investment in a WTO negotiating agenda. Canada's objectives in these negotiations will be to pursue greater transparency with respect to investment regulations and non-discriminatory treatment for Canadian investors in other markets.

Consistent with all our international investment obligations, a WTO agreement on investment acceptable to Canada would have to explicitly respect Canada's right to regulate in the public interest. It will also be important to Canada that any investment agreement help ensure that the benefits of FDI, foreign direct investment, can be realized by all WTO members, in particular developing countries. We recognize that investment protection agreements are only one of the many factors in attracting foreign investment.

It has been Canada's experience that market liberalization initiatives need to be complemented by effective laws and regulations addressing private, anti-competitive practices if full benefits are to be realized. Competition in the domestic market forces businesses to adjust to changes and to innovate. In turn, this is a precondition to successfully competing at the international level.

Many members of the WTO, however, have not yet any form of domestic competition law. It is not too surprising, then, that there is no consensus on what form minimum competition law standards should take or even the potential benefits of such regulation. Any contribution your hearings can make to articulating the benefits and minimum standards for competition regimes would make a valuable contribution to moving this debate forward.

[Translation]

I will now ask my colleague Suzanne Vinet to speak to us about agriculture.

[English]

Ms. Suzanne Vinet (Chief Agricultural Negotiator for International Trade and Policy Directorate, Market and Industry Services Branch, Department of Agriculture and Agri-Food): Thank you, Mr. Chairman.

From an agriculture perspective, as I mentioned to the committee in December, in our view Doha was a success because it does set ambitious goals, which allows Canada to get on with the job of aggressively negotiating a significant outcome for agriculture. But in fact the objectives laid out in the Doha declaration closely resemble those in Canada's initial negotiating position. So we're in a position of confidence.

The first agricultural milestone for us that was set out in the declaration is March 2003. By then we'll have to develop some modalities for the agricultural negotiations. What that means is that both amendments to the current rules in the Agreement on Agriculture as well as the formulas for reduction that commitments members are to use in preparing their draft schedule to communities have to be tabled at that time in March 2003. In practical terms what that means is that, for example for Canada and many other members, we've called for the elimination of all forms of export subsidies. So for the modalities in March 2003, we'll need to identify what we mean by that and elaborate on what kind of rules we're looking for as well as elaborate on how to calculate our existing subsidies and what formula we should apply in reducing them. So similarly the modalities would deal with domestic support reductions and market access improvements.

So by March 2003 what I expect will happen is that no one will be completely satisfied with the draft framework or the draft modalities, and that members--we could foresee--would agree to use, though, those modalities as a basis to prepare draft schedules of commitments by the time of the fifth ministerial meeting towards the end of 2003, while we would continue to seek changes to the framework. So progress of the negotiations in agriculture will be reviewed at the fifth ministerial meeting near the end of 2003, and at that time it will provide an opportunity for ministers to give negotiators further direction for our work or to make tough decisions to enable us to move forward.

Factors that will influence the direction and the progress of the negotiations done in the next 12 months obviously include how the Americans will handle the development of the farm bill. That certainly will have an impact as to the type of leadership they will be able to exercise in the agricultural negotiations, and that's certainly one of the key elements. Likewise, how the European Commission handles further reform to their agricultural policy will have an impact on the progress we can make in the negotiations. But not least, how we deal with developing country issues will be key in how well we progress in the agricultural negotiations. As you'll remember, developing countries felt that they had not reaped the benefits of trade liberalization of the outcome of the Uruguay Round, and clearly one of the big challenges we have in these negotiations is finding ways to address their concerns and ensure that this time around they do benefit from further trade liberalization.

So our objectives in the negotiations remain clear and are those that were outlined by Ministers Pettigrew and Vanclief back in August 1999 in Canada's initial negotiating position on agriculture. The objectives or the high priorities of that negotiating position are to eliminate export subsidies as quickly as possible, to substantially reduce or eliminate trade-distorting support, and to improve market access for all agriculture and food products.

We've been advancing these goals for the last two years, as we've begun negotiations in 2000, by promoting our objectives either ourselves or working closely with others who share some or all of the same objectives. That would include working closely with the Cairns Group or the United States or a number of developing countries where we find a great deal of convergence on the broad goals. But sometimes, as you can expect, there might be some variations on the detail.

So Canada, all in all, is well placed to participate, as we move forward in the agricultural negotiations. We have a clear position. We have engaged in a well informed industry. We've been working with the industry since 1999 in developing the negotiating position and also throughout the negotiations, and we have a commitment through the comprehensive consultation approach to keep on working very closely with our industry. All the work that we have been doing consistently over the past three or four years with the industry often puts us in a much better position with some of our trading partners in these negotiations.

º (1600)

The Chair: Thank you very much.

Would anyone else like to comment before we open the floor for questions?

Just before we do that, on behalf of the committee, and in fact on behalf of the House of Commons, I want to congratulate you, Mr. Stephenson, and your team at Doha. You made us all proud. You did an outstanding amount of work, and we were very impressed by the high-quality people you brought along with you and the tremendous contribution you have made. So that's just for the record.

Mr. Casson, and then Mr. Martin.

Mr. Rick Casson (Lethbridge, Canadian Alliance): Thanks, Mr. Chairman. I want to focus in on agriculture.

Suzanne, I heard you speak in Calgary at a convention a few months ago and appreciated your comments then.

With the position that Canada is taking--and in my mind, it's the right one to take, and hopefully we'll concentrate on the export subsidy issue--can we expect to realize, through these negotiations, a bottom line benefit to our agriculture producers? I guess what I'm asking is, will the playing field be levelled, how long will that take, and will it be a noticeable change for farm gate receipts when it's all done? I know there has been a lot of hope hung on these negotiations by the producers for quite a while. Are there maybe some concrete examples of some of the negotiations that are going to take place, and how they are going to reflect on stabilizing our domestic industry?

º (1605)

Ms. Suzanne Vinet: It's certainly a very important question, and the initial negotiating position was certainly developed with that in mind. That is the overall objective, for us to aggressively pursue the level playing field. What's encouraging in the negotiations is that we share that objective with a great number of developing countries, so we're not the only ones who are calling for that level playing field. Obviously the details are what we're going to have to negotiate.

The Doha declaration calls for the negotiations to be concluded by 2005, and that means, depending on the kind of commitments we negotiate for, if you look at the Uruguay Round, the results of the negotiations were to be implemented over a six-year period. So if you replicate this in these negotiations, say we concluded in 2005, you could see an implementation period that would start in 2006 over potentially anywhere between five and ten years, or six years like in the Uruguay Round.

So there won't be an overnight relief for our farmers, but we're striving to achieve fundamental reform and fundamental changes, so although there wouldn't be overnight relief, over time they could be assured the security that we're not going to go back to the chaos or the extraordinary levels of support that we're seeing now.

So certainly that's why we're pursuing an aggressive position in the WTO to bring down these levels of trade distorting subsidies as quickly as possible. WTO multilateral negotiations take a while. We're going to work very hard this year to meet the deadlines. The 2003 deadline for us in agriculture is quite critical because that's when we're going to see what the relief is going to look like in the future. So modalities in 2003 are significant for agriculture. That means the next 12 months are going to be very intensive in the negotiations, and we're going to be working very closely with the broader sectors to make sure we do meet the deadlines.

Now, whether we're going to conclude in 2005, I think, in agriculture anyway, we have a huge amount of work to do. It's very ambitious, and we're going to do everything we can, but it's hard to predict at this point whether 2005 will be the conclusion.

Mr. Rick Casson: You also mentioned a couple of other particular areas--the United States and the European Union. The Farm Bill in the U.S. is being debated right now, and all indications are that they're going to move ahead with that. How can we allow that, or how does that fit into these negotiations? If they go ahead with this and ignore some of the existing problems, and maybe add to those problems, how can we expect them in the future to buy into some of these negotiations and live up to their commitment?

Ms. Suzanne Vinet: Yes. I think it's a very crucial point you raise and that's why I make reference to their ability to exercise leadership. If we look back at past negotiations, clearly the U.S. were critical in the ability of countries to come to agreement in agriculture. If they're not sure of their leadership, then there's a great amount of difficulty in reaching an agreement.

If they have a Farm Bill that goes in the opposite direction from the direction we're trying to go, that doesn't send a very positive signal. So we have been making representations at an official level, but also Minister Vanclief takes every opportunity to remind the Americans that they have to “walk the talk”.

So we're making representations, but it certainly will make their life a little bit more difficult. We're getting assurances, though, that they intend to.... I think one other way to look at the Farm Bill is that while it doesn't necessarily send a very positive message, they will want to have an aggressive outcome, or a substantial outcome, out of the WTO so that they can rein in some of their own policies back home and use the WTO as leverage to bring them in the right direction.

So we'll have to wait and see how they handle this. We're still hoping that they're going to make changes to the U.S. Farm Bill that are in the right direction. Even without that, so far they have exercised quite a bit of leadership and we're hoping that will continue, but we're pressing them at every opportunity.

º (1610)

Mr. Rick Casson: Good. Thank you.

The Chair: Thank you very much.

Monsieur Rocheleau.

[Translation]

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

I would like to ask Mr. Stephenson what kind of bargaining room the federal and Quebec governments will have in the area of culture. How much scope will the federal government have to take cultural initiatives abroad and to protect us from foreign initiatives?

Here is what I have in mind, for example, when I think of the Quebec government. Is it conceivable that there could be another event like la Saison du Québec à New York—which had to be cancelled for the tragic reasons of which we are all aware—and that such an event could be given the go ahead under new circumstances?

Mr. Don Stephenson: I think that in the cultural realm, the most important negotiations are on services. The structure of the agreement on services allows us to choose which sectors are negotiable. To answer your question, I would say we have a broad scope to protect our cultural diversity in the negotiations.

There are other important issues like the negotiations on subsidies to services. Once again, the structure of the agreement allows us to make our own decisions on what is negotiable.

Canada has clearly made efforts in other fora to promote cultural diversity. Take, for example, Ms. Copps' initiative to set up a network of ministers of Culture to discuss the issue of protecting and promoting cultural diversity. For now, that is Canada's strategy to create an international consensus, not among international trade ministers, but first and foremost among culture ministers, around what is to be protected and promoted. It is not unlike environmental agreements. It is up to environment ministers, first and foremost, to agree on which initiatives to take to ensure the necessary protection and then to make the required connections with our international trade obligations at the WTO.

So that is Canada's strategy in relation to culture. I do not see how these negotiations could in any way undermine a cultural promotion event like the one you referred to, the Saison du Québec à New York.

Mr. Yves Rocheleau: You mentioned services. Someone recently asked me if there could be any objection, in the area of services, to an American university setting up shop in Montreal or Toronto. That comes under services, because it is a public service. Is it a government service? That may be an issue. When there is a board of governors and the corporation is classified as independent, is it governmental or not? That may have to be debated. And how much control does the federal government have over the provinces, particularly Quebec? You know how sensitive that issue is. What are the parameters that will guide this debate?

Mr. Don Stephenson: Before I ask my colleague, Frédéric Seppey, to provide details, I will say that just because an American or other foreign institution gets permission from one of the provinces to set up shop, we do not automatically have obligations under our international trade agreements. We already have a hybrid education system in Canada. There are private institutions and there are public institutions. The mere establishment of an institution does not place any obligations on Canada.

Frédéric may wish to elaborate on this answer.

º (1615)

Mr. Frédéric Seppey (Assistant Director (Multilateral Agreements), Department of Foreign Affairs and International Trade): The General Agreement on Trade and Services came into effect in 1995. In the context of this agreement, in order to protect our flexibility as regards public policy in areas such as public education, we refrain from making any commitments about national treatment and market access. In other words, all governments in Canada, whether the federal government, in a number of areas, or the provincial government, with respect to education, retain their full freedom to introduce discriminatory measures or measures that limit market access by foreigners.

That does not mean that at the moment our laws contain measures that prohibit access to the Canadian market, but we reserve the right to implement policies of this type if we feel this is necessary. Thus, in this regard, the obligations we have agreed to to date under the GATS have no impact on our ability to take action in this area. The position put forward by Minister Pettigrew last March, when Canada's initial position on the services sector was presented, was very clear: Canada would not make any commitment in areas such as public education.

Mr. Don Stephenson: I would like to point out that the Canadian position is determined in close consultation with the provinces, particularly in the area of education. Many of the sectors on the table at the Geneva negotiations have to do with provincial jurisdiction. Consequently, the Canadian position must be established in consultation and co-operation with the provinces.

Mr. Yves Rocheleau: Can we assume that aside from assurances, there has also been some action in this regard by the Canadian government with respect to the provinces, in particular Quebec?

Mr. Don Stephenson: As my colleague was saying, Canada's position is clear. It is public and was presented at Geneva as Canada's position. We will not be negotiating access to our education market.

Mr. Yves Rocheleau: This question is about agriculture. A few weeks ago, I met some dairy producers from my region of Quebec, who, as you might expect, are very concerned about supply management. Can you give us an update on this issue? They are very worried.

Ms. Susanne Vinet: Our negotiating position is clearly specified in the initial position announced by ministers Pettigrew and Vanclief in August 1999. They said that we would continue to ensure that the supply management systems continue to function effectively in Canada.

Canada's negotiating position clearly sets out the policies and measures specific to the supply management system to ensure its future within Canada. We are continuing to promote this position. There has been no change in our position. We meet regularly with the dairy producers to keep them up to date on developments in the negotiations.

Mr. Yves Rocheleau: These producers met with members of Parliament to inform them that the WTO was about to make a decision on this matter. That happened in September, October or November. Has something not happened since that time that clarifies the rules or that would prevent the export of dairy products, for example? Please correct me if I am mistaken.

Ms. Suzanne Vinet: I would like to make a slight clarification. You refer to a panel that the United States and New Zealand had wanted in order to get a ruling on how we set export prices for dairy products.

Indeed, we had lost a panel that said that the way we had established our export system for some dairy products amounted to export subsidies. We appealed that ruling. At the appeal, the conclusions made by the original panel were reversed, but the New Zealanders and the Americans requested that a new panel review the matter.

I believe it was in December that a ruling was made that reversed the initial decision, but since then, we have asked that another WTO panel be established. We have started to build our defence. We have worked very closely with dairy producers from all provinces and certainly very closely with the Quebec dairy producers as well as with the Quebec government in preparing the...[Inaudible].

º (1620)

Mr. Yves Rocheleau: A very high percentage of Canadian production comes from Quebec. That is why they...

Ms. Suzanne Vinet: The panel does not stop them from exporting, but it limits... The panel ruled that the way we established export prices amounted to export subsidy.

Current WTO rules limit the value of permissible export subsidies. According to the panel, we had exceeded our limits for export subsidies.

This does not mean we are not allowed to export. It means we are allowed to export, but without the help of export subsidies. There are several possible outcomes with the new panel. If we win, there's no problem: we can continue exporting as we do now. But if we lose, the panel could tell us to change our export system. We could continue to export within the framework of certain measures or make changes to our exporting process to ensure we stay within our limits.

The panel does not prevent us from exporting. It says we should meet the commitments we made on how we would export. That is the fundamental issue.

Mr. Yves Rocheleau: When is the next stage or the next panel?

Ms. Suzanne Vinet: The panel deliberations are to begin around February 18 and the panel results should be known at the beginning of the summer. If the results are not in our favour, we will certainly appeal, and we may have to wait until the fall of 2002 before getting any definitive results. If we win, we could get those results at the next panel, namely at the beginning of the summer.

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

[English]

The Chair: Mr. Martin.

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

As a member of the NDP caucus, I'm actually here as a substitute for Svend Robinson, so you'll excuse me if some of my questions are more those of a layperson than an expert in this field.

Because our NDP caucus has been quite outspoken on some of these issues and even on the other side of the barricades and the demonstrations that took place in some of the cities, I do have to start by saying we represent a lot of Canadians with that point of view. They are seriously concerned that the liberalized trade agreements that you're negotiating on our behalf in a way can jeopardize our Canadian sovereignty, can jeopardize our ability to regulate our own public services in the interests of Canadians.

I would share with you that some of the people we talked to on the barricades, on those picket lines, etc., are motivated by a quote that's been floating around. I would ask you as representatives of the WTO if this is accurate.

Ruggiero was, I presume, a director in the early days of the WTO, one of the first directors. It's commonly passed around that Ruggiero was quoted as saying that there's a surplus of democracy in the world that's interfering with the free movement of goods and services and investment and capital, and therefore we need these liberalized trade agreements to act like a charter of rights for corporations so that they can do what they want without the interference of nuisances like me or Mr. O'Brien or other people around this table. I'm paraphrasing, of course. That seems to be the underlying theme that drives a lot of the people who are protesting at any trade agreement.

I guess I would ask you first, if you can answer briefly, where that quote came from. Was that actually Ruggiero and does that accurately reflect the views of people you deal with at the upper levels of these international trade negotiations?

º (1625)

Mr. Don Stephenson: I'm afraid that when he might have made such a statement, which I kind of doubt, I was happily working in cultural policy for the Government of Canada. Perhaps some of my colleagues would have more experience, more than my year and a half in trade policy, and might be able to recollect such a quote, which I find astounding. No, it doesn't reflect the views that I've heard expressed in the year and a half I've been involved in senior level discussions around the WTO.

Just to take issue with your introduction, I'm not a representative of the WTO. I'm a representative of the Government of Canada, a member of the WTO.

The WTO, some might say, is democratic to a fault. That is to say, it's a consensus-based organization of 144 member countries. Some of those countries have deeper democratic traditions than others, but in any event it's a consensus-based organization when we all get to Geneva. In that sense, any one member can ultimately prevent a decision from being made.

The issues you raised are extremely large ones. Our view is that trade globalization is very much in Canada's interest. That being said, there are lots of difficult issues that we need to deal with, including the links to cultural issues, environment issues, development issues and a host of others, social policy issues like labour standards. All of those are real issues that we really have to grapple with.

Whether or not these erode our sovereignty is a philosophical debate. I don't know why we don't have that debate when we sign environment agreements, only trade agreements. When Israel and Jordan sign a peace deal, I don't know whether that's an erosion of their sovereignty in the same sense.

An hon. member: I understand your point.

Mr. Don Stephenson: In any event, we believe it is in Canada's interest.

Mr. Pat Martin: Having said those very general things, perhaps I could ask a few specific things. One of the biggest irritants that I think Canadians sense about being bound to these trade agreements is the inability for us to do anything about the length of drug patent protection in this country and the effects it has had on our health care system.

It seems to some people that the rules as they stand--and you as a negotiator for Canada, I guess, would be exposed to this--are kind of ambiguous and that some developing nations are, in fact, finding ways to opt out or to get around or to reduce the number of years. Yet we're told that it's impossible, that these are ironclad, hard and fast rules and there's no way to negotiate ourselves out of them.

We did this exhaustive cross-country tour in Canada on Bill C-91, etc., and we're stuck with it. It's killing us. Is there any hope for optimism that you at the negotiating table can get Canada out from under at least this specific thing that is crippling our health care system?

Mr. Don Stephenson: I'm not entirely certain I understand the specific references of the question. In the--

Mr. Pat Martin: Well, some developing countries are finding greater flexibility to override the terms and conditions than others. We're told it's impossible. Other countries just do it.

Mr. Don Stephenson: In fact, in Doha there was a specific issue on which ministers made a separate declaration and it was on the issue of the flexibility in the TRIPs agreement in the intellectual property agreement for developing countries-- in fact, all member countries of the WTO--to exercise flexibility in respect of access to medicines in circumstances of public health crises or public health problems.

Mr. Pat Martin: AIDS, tuberculosis, malaria, I know. I'm talking generally.

Mr. Don Stephenson: In fact, a public health problem in this context is self-defined. It's defined by every country for itself. It may be called to defend its decision by other members, but the flexibility of the agreement then provides for such countries to grant the compulsory licenses for the production of medicines without the consent of the patent holder, etc.

Also in the declaration, an additional 10 years was provided for least developed countries to come into compliance with their obligations in--

º (1630)

Mr. Pat Martin: Where they don't have their own manufacturing capabilities. Is that part of that compulsory issue?

Mr. Don Stephenson: All LDCs, many of whom don't have a manufacturing capability.

Mr. Pat Martin: May I ask one more brief question on the GATT issue? This has been of great concern lately. My understanding is, and perhaps you can confirm this, in other trade agreements we trade on those issues that we specifically agree to trade on. In the GATT the inverse is true, that we trade on everything except those things that we specifically exclude. Is it a reverse onus situation?

Mr. Don Stephenson: It's actually the reverse. In respect of the GATT--the agreement on goods--everything's included unless you say it isn't. In the GATS, everything is excluded unless you say it's included.

Mr. Pat Martin: Well, that's clear. It might not help us much.

Mr. Don Stephenson: These are referred to as “bottom up” or “top down”. In respect of services, we have a “bottom up” agreement--that's the GATS, the WTO agreement on services--and in the NAFTA we have a “top down” agreement on services.

Mr. Pat Martin: GATS: the apprehensions I hear in the community I was referring to concern the Canada postal service, education, health care. What can you say to assure people that things like our postal service won't be subject to challenges by UPS, or somebody like that? And education or health care: everybody seems to be in agreement that there are private aspects to our health care system now that are publicly funded. Who's to say the delivery of those services isn't subject to this GATS? Can you?

Mr. Don Stephenson: Well, in respect of the list you just enunciated, to give comfort to those who would have concerns, I would say, first of all, look at Canada's initial position on the GATS, where we clearly indicate we're not interested in negotiating access to the health system, to public education, to culture. That position is now clear and tabled in Geneva as the official position of the Government of Canada. Those are my negotiating instructions.

With respect to postal services, we met recently with representatives of the postal workers' union to discuss our position. I believe they were comfortable with the position Canada has taken in the negotiations and the protections that are provided.

I don't know if Frédéric has more specific comments.

Mr. Frédéric Seppey: The answer is similar to the one I gave to Mr. Rocheleau a bit earlier. The GATS, first of all, doesn't cover all the services. Services supplying the exercise of governmental authority, which include a lot of the public services we're providing in Canada, are not covered at all by the GATS. This is something that is excluded, and it applies to all the countries.

For the services we have in Canada for which we want to preserve our policy flexibility, we have the possibility of not making commitments. That's the positive aspect Mr. Stephenson was referring to. In areas like health or education, where there's a mixture of public and private, the exclusion of services supplied in the exercise of governmental authority applies and provides a certain degree of protection. On top of that, we decided not to make any commitments in those areas--and they include, as well, postal services.

In that regard, and similar to the point I made concerning education, we retain at all levels of government a power to take measures that may be discriminatory with respect to foreign suppliers of these services, which is the right to restrict market access by instituting limitations on the number of service transactions, on the number of providers, etc.

That is the basis for the level of comfort we have. In the cross-Canada consultations we held on the GATT in the year 2000, we heard the concerns you expressed, and they were built into our initial negotiating position in March 2001.

Mr. Pat Martin: Thank you.

The Chair: Mr. O'Brien, and then Mr. Valeri.

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

In a nutshell, then, in GATS, if you don't put something on the table--such as education--it's not on the table and can't be forced onto the table by anybody else. Is that a correct summary?

Mr. Frédéric Seppey: Yes, it is. In fact, the architecture issue is extremely technical. In both the NAFTA and the GATS, irrespective of the fact that they have a different way of scheduling commitments or taking exceptions, we're able to preserve our flexibility with respect to the key policy areas that matter to Canadians. In the GATS, it's by not making commitments on education; in the NAFTA, it's by taking very broad exclusions for things such as education, health, and social services.

º (1635)

Mr. Pat O'Brien: I think that's very important. I know as a teacher I think it's very important. The same kinds of people who have talked to Mr. Martin have talked to me, and they have these fears--that's the word they use. Given this assurance, they still have the fears. Have the fears, if you want, I guess we can understand that, but the fact is, as you say, if it's not on the table, it's not on the table, and it doesn't stop Canada.... Isn't that true?

We could export educational services or health services where they're very much wanted by some other countries such as in central Europe.

When I was there a year ago there were all kinds of Canadian teachers there and those countries want them, but there's no onus on us to accept their education. Is that not correct?

Mr. Don Stephenson: That's correct.

In respect of our interests in selling our services abroad, say in education, Minister Pettigrew always underlines that the last Team Canada trade mission led by the Prime Minister to China had something in the order of 400 Canadian exporters, private sector participants in the mission. Of that number, almost 100 were educational institutions seeking to export their services to other countries. Many other countries are indeed very interested in purchasing those services. Certainly in discussions I've had with my colleagues in Mexico, for example, they would very much like to import those services.

Even if we were to decide to ask for the elimination of barriers to our access in other countries in education, for example, the structure of the GATT makes it absolutely possible for us to refuse access to our own market.

Mr. Pat O'Brien: Thank you for that reassurance.

Mr. Chairman, all that those of us who are involved here in Ottawa can do is continue to make that point, because you continually hear the fears. Fine, we will continue to make the points. I think you made them quite well.

Mr. Don Stephenson: I could make one other point.

The concern that lies behind the concern often in respect of education, in respect of health, is creeping privatization of those services and changes in policy in respect of those services that don't have anything to do with trade. They are decisions that are made in other policy fora for other reasons.

Mr. Pat O'Brien: You've nailed it right on. I think they are misplaced fears and all we can do is continue to try to bring some clarity to the concern.

Mr. Chairman, I want to go on to this question Mr. Martin raised about surplus and democracy, because his leader asked me that in the House. I thought she attributed the quote to Mike Moore. Whoever may or may not have said it, I agree with Mr. Stephenson that it's unbelievable.

I made it very clear in answering Mr. Martin's leader some weeks ago in the House that I certainly didn't agree with that view and I didn't think the leadership Canada had shown around transparency, around, as Mr. Stephenson said, wanting to involve parliamentarians more.... After all, all the parliamentarians here are elected from various parties. That's our democratic system. The government is seeking to involve the elected representatives of people more. That's what I thought I heard Mr. Stephenson say.

Given that, and also the efforts of greater transparency being recognized, it shows that this government doesn't support that kind of quote, whoever said it--if in fact it's accurate. I'm not sure.

I'd like to take up another point with Mr. Stephenson. I think Mr. Martin said that a lot of Canadians share some of the concerns that he expressed, that the NDP party has expressed. And I've heard some concerns. A minority of my constituents have raised those concerns as well--a minority, I stress.

The lowest numbers I've seen in a variety of public opinion polls show at least two-thirds support; many polls show higher support for more globalized, liberalized trade among the Canadian public. A lot could be 5%, 10%, 20%, or 30%; it depends how you define it. And that's democracy.

I always had different points of view on important questions.

What are the latest numbers you can share with the committee about the level of support for the Canadian public for globalized, liberalized trade?

º (1640)

Mr. Don Stephenson: The latest numbers are consistent with what you've just said, that Canadians in the two-thirds range and above--at times approaching 80%--are supportive of trade. They recognize the importance of trade to Canada, they recognize Canada's unusual dependence on trade.

But I would say it's important to note that a slight majority of Canadians also believe that the people who are protesting on specific issues related to trade in the streets of Quebec City on the margins of the summit have real public policy issues that need to be addressed. So they're not mutually exclusive in any sense. Canadians want us to try to marry our economic and social objectives a little more in our trade policy positions. They want to see us dealing with issues of development--and I would note that the president of CIDA was a member of the Canadian delegation in Doha--and they want to see us dealing with the issues of the environment. And I would note that Canada has committed to make an environmental assessment of its positions in respect of the WTO and FTAA negotiations. They want to see us dealing with cultural issues and all of the rest.

Mr. Pat O'Brien: That's a very full and fair answer, Mr. Chairman, and I would just note that I think clearly an overwhelming majority of Canadians support globalized, liberalized free trade. Two-thirds and higher is pretty clear, if not overwhelming.

But I agree with you there are caveats. One of them you spoke to, Mr. Stephenson, is the need to ensure that least-developed countries are also helped and that they're not taken advantage of.

So I'll finish, Mr. Chairman, with tying that comment to a comment I've raised many times in the House and never had adequately taken on by anyone, so I'll continue to raise it. I wonder what your view is. It's the comment of the Secretary General of the United Nations, Mr. Annan, who very clearly stated that perhaps the best thing that the richer countries, if you will, or the developed world can do for the least-developed countries is to continue to globalize and liberalize free trade, give them fair market access. He quantified that and said that it could mean upwards of $150 billion a year to the economies of the countries, far more than all the overseas development combined.

How do you view that comment? None of my friends opposite, who disagree with it, have ever very successfully taken it on. I wonder how you feel about it.

Mr. Don Stephenson: Before I pass the question to the agency responsible for development assistance, I would note that Mr. Annan has also said that the poorest of the poor countries don't suffer from globalization, they suffer from a lack of globalization.

Mr. Pat O'Brien: Exactly.

Mr. Don Stephenson: They're marginalized. They don't get to participate in the multilateral trading system. It's such a complicated issue. They need support in so many ways that it's difficult to know where to begin. It's not just trade liberalization agreements, it's all of the infrastructure that they need. And everything else I'll pass off to my colleague from CIDA.

Mr. Bill Singleton (Director, Economic Policies, Policy Branch, Canadian International Development Agency): Thanks, Don.

The issues, the questions of market access and just better participation, as Mr. Annan, the secretary general, has noted, are really central. As Don mentioned earlier, the concerns of developing countries are central to the Doha declaration.

Perhaps I could describe briefly for you what CIDA's actually doing about that to give you a sense of it.

º (1645)

Mr. Pat O'Brien: Please, yes.

Mr. Bill Singleton: Certainly in the context of the negotiations in WTO, CIDA's working very closely with other departments to make sure the developing countries' interests are reflected in the whole work at the WTO, over and above Canada's position, to make sure they get the best possible deal out of this. This involves both increasing access to markets--they recognize this and they've raised it, it hasn't been us raising it with them--but also just enabling them to participate better.

CIDA's orientation around this is to focus on developing the type of WTO rules that will help developing countries to contribute to their economic growth in order to reduce poverty. Also, we're looking at the ways to provide assistance to them, both to actually export within the capacity that's there now.... There's a lot of market access there already that sometimes they are not able to take advantage of because of inabilities even to get goods to market or the infrastructure around even the financial side of trading.

Over the past decade, CIDA has disbursed around $300 million on trade-related technical assistance. That's been fairly narrowly defined; we didn't try to fool ourselves as to how much we were actually doing. And we're looking at more in this area, both in terms of enabling the developing countries to be more effective at the WTO, but also, in general terms, to build their capacities in areas that are really trade-related, including such things as customs procedures for the importing side, and also just knowing how the system works so they can take advantage of the advantages that are there.

Mr. Pat O'Brien: Thank you very much.

Thank you, Mr. Chairman.

The Chair: Okay.

Mr. Valeri.

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

Thank you for coming before us this afternoon. It's very helpful.

I want to focus on anti-dumping, subsidies, and the countervail.

At Doha, negotiations were launched to seek some improvements and clarifications. And I think in the United States there were some congressmen who were quite concerned about this initiative going forward. It's obviously of some concern from different perspectives in this country as well.

I'm interested in getting a sense of what progress you anticipate in these negotiations. What changes do you think might come about? As you walk away from the meeting, is it just an appeasement that's taking place, or is it actually going to have some substance? Are we moving forward in this area?

Mr. Claude Carrière (Director General, Trade Policy I, Department of Foreign Affairs and International Trade): Thank you, Mr. Chairman, Mr. Valeri.

Well, this is an area that's been and is still very controversial, and probably will remain so for quite some time in the United States and elsewhere.

But we should give credit to Mr. Zoellick and the U.S. delegation for showing the kind of flexibility that was not present in Seattle in the area of trade remedies, which was initially demonstrated in Buenos Aires at the FTA trade ministerial meeting, and in Doha subsequently. It was a mark of leadership by the United States, which is an essential ingredient to a favourable outcome for trade liberalization in the long term, whether in agriculture, as Suzanne mentioned earlier, or in other areas.

It's also no secret that a sacred cow in the United States is the freedom to take trade remedy action to address "unfair" trade practices, and it's also no secret that we have considerable experience with the United States' activities in this particular area.

TPA, the work that is ongoing in Congress to develop a trade promotion authority for the United States, contains certain conditions on trade promotion authority in a number of areas, including in-trade remedies, which again demonstrates the sensitivity of the issue with very powerful interests there. At the same time, it's a critical element for developing countries and a number of other countries to address the capacity to abuse the rules in the GATT on anti-dumping and countervailing duties.

Now, where the balance will be will be before negotiation. There was an agreement to negotiate in this area on the question of subsidies, but also on the procedures to deal with them and with anti-dumping. We have--I think it's probably typical, for Canadians--a balanced position where we wish to maintain the capacity of Canada to take action to deal with legitimate problems of injurious subsidization and dumping, but we want to make sure it is done in a proper fashion that is not subject to abuse--tricks, inflated rates, and otherwise. And we will be pressing that particular agenda as well as a due process agenda to deal with situations of abuse in a number of developing countries.

º (1650)

Mr. Tony Valeri: Is there a sense, though, coming out of Doha that the developing countries, as they're using their own anti-dumping laws more and more, are committed to providing greater clarity and transparency to this process?

Mr. Claude Carrière: I think the major users are aware that Europe, United States, Canada, and other developed countries will be seeking greater commitments from developing countries on due process and transparency in the administration of trade remedy rules. And those countries will be seeking to use that as leverage in their efforts to obtain more disciplines on the use of those measures in developed countries, so it will be part of the negotiating process. Both sides have objectives, and I think the clearest and the best issue is that everybody in Doha has indicated the willingness to negotiate in this area, being cognizant that it's very sensitive everywhere.

Mr. Tony Valeri: Thank you.

The Chair: Thank you very much.

With this, Mr. Stephenson, on behalf of my colleagues I want to thank you and thank your team. It is our hope that we will have a dialogue on a continuous basis, and that your resources and those of the department will be available from time to time if we want to call on you. If, during the hearings, members of the committee from all sides ever have questions that need some support, we will call on you, and we hope you'll be available to help us.

So with this, colleagues, we're going to move to the second part of our hearings today, pursuant to Standing Order 108(2), an examination of the Free Trade Area of the Americas in view of strengthening the economic relations between Canada and the Americas, and we have with us Mr. Claude Carrière.

While our witnesses are making their way out, I think I need a motion from one of my colleagues to move that the committee undertake to do the studies listed under A and B on the agenda, because the last time, Mr. Martin moved that these be items for discussion, and that hearings be conducted.

(Motion agreed to)

The Chair: Thank you very much.

Now, Monsieur Carrière, thank you very much for being with us. I think some of the witnesses will stay with you to answer some of the questions. I want to thank you on behalf of the committee for agreeing to come and meet with us and give us your words of wisdom. You know the terms of reference, what we are in the process of doing. We would appreciate it if you would give us some brief comments, and then we'll open it up to the committee.

Obviously the committee felt it was exceptionally timely to do the two hearings hand in hand, because there is a huge overlap between the Free Trade Agreement of the Americas and the WTO, and there are a lot of complementary types of arrangements. We thought it would be like icing on the cake to have the WTO hearing at the same time we do the FTAA hearings.

So with this, the floor is yours.

[Translation]

Mr. Claude Carrière: Thank you very much, Mr. Chairman, committee members. Some of those who came with my colleague, Mr. Stephenson, will also stay with me.

I understand the purpose of your study. I will try to deal briefly with some aspects of it. I do not have all the answers and I have great hope that you will be able to shed some light on many of the issues.

First of all, with regard to investments and the economic trade relationship between Canada and the Americas, perhaps I should say that the United States are our biggest partner in the Americas. I will set them aside and talk about other countries.

Our major partners besides the United States are Mexico, Brazil, Chile, Venezuela, Columbia and Argentina. In other words, Mexico, MERCOSUR and the Andes Pact. Most of our trade with the Americas is with those groups.

The long term outlook is for a significant increase in trade. For the past 20 years, especially the last 10, we have greatly improved our trade with that region. It is one of the regions where we have increased our market share at the expense of the United States and Europe.

Our major exports involve many sectors: agricultural products, fertilizers, forestry products, machinery, vehicles, pharmaceutical products, in short a wide range of products. But imports increased far more rapidly than exports, which points to business opportunities, chances to improve our presence in that region.

A fine example of what happened is our trade with Chile. This is our fifth year and trade for the year 2000 was at its highest ever. From 1999 to 2000, trade increased nearly 30% in both directions, and we have a slight surplus with Chile.

South American countries have also reformed a large part of their economy, which helps them cope with crises, such as the current one in Argentina. Is has spread very little to other countries of the region, which is a positive development.

º (1655)

[English]

With regard to opportunities and benefits that open ourselves to Canada, as I said earlier, we have a deficit with the region. Generally, in a symmetrical relationship in terms of tariff barriers, for example, the vast majority of imports from the region enter Canada duty-free. I think more than 90% enter Canada duty-free already, while the vast majority of our exports face tariffs that range all the way up to 30% in a variety of different product sectors. So addressing just that would rectify very much an unlevel playing field and provide for some significant opportunities in, again, agrifood, forestry, and information technology. Latin America, for example, is not a participant in the WTO Information Technology Agreement. It's the one region of the world that's really not participating and could provide some very significant benefits for us. The same thing is true in the services area. There are very interesting prospects in the financial services area, in engineering services, and the like.

In terms of state of play of negotiations, first I'd like to recall that there was a very significant success in Buenos Aires last April, which was confirmed at the summit, in terms of Canada meeting its objectives. Ministers agreed to a precise timetable for the negotiations. We agreed to conclude by the beginning of 2005 and to begin implementation by December 2005.

There was the unexpected consensus--a very welcome consensus--to release the draft text of the agreement. This was unprecedented in trade negotiations. There was a commitment to strengthen the mandate of the committee on participation of civil society. There was a firm commitment to ensure that the smaller economies receive the technical assistance they need to ensure their full participation in the negotiation and implementation of the agreement. There were precise instructions and timelines provided to negotiating groups for the next phase of negotiation, in particular in areas of market access.

Market access negotiations are scheduled to begin in mid-May, this spring, and negotiating groups are to make recommendations to the trade negotiations committee in April on the approaches and modalities for negotiations in market access, agriculture, investment services, and government procurement.

Progress is also being made in cleaning up the brackets. Some of you did look at the text that was released last April. There are quite a large number of brackets in the text. Negotiating groups are working to consolidate some of these proposals to make it more readable and understandable.

Work is also beginning on the architecture of the agreement. You'll also have noticed the text is limited to nine chapters. It's not an integrated agreement. There's no beginning and end. There are no standard clauses in agreements. Work on that kind of architecture and horizontal connections between chapters is ongoing.

This work is expected to continue until ministers meet in Ecuador in October to review progress and, in our view also, instruct the publication of the text. At the time, leadership of the process will be transferred from Ecuador to a co-chairmanship between Brazil and the United States for the last phase of the negotiations.

» (1700)

As for some of the challenges that the FDA face, well, there are many, not surprisingly.The first one concerns trade promotion authority. I think it's quite clear that the United States does not need, technically, trade promotion authority to enter into trade negotiations. It did not have such authority at the launch of the Uruguay Round, for example, in the mid-eighties. However, many countries of the hemisphere attach great political importance to the signal that would emerge from Washington should there be such authority and they would see that as a confirmation of the U.S. leadership in this area, and to a large extent, of credibility at the negotiating table.

There is a bill coming out of the House of Representatives and a different version coming out of the Senate finance committee. The calendar is unclear, but there are suggestions that the Senate might vote on its version of the TPA bill sometime in February or March, at which point there would be a conference between the Senate and the House, and a compromise could then emerge from there.

There have been concerns expressed by a number of countries about some of the conditions contained in both the House and Senate versions, especially in areas of agriculture and trade remedies, and in some of the conditions on labour and environment as well.

» (1705)

[Translation]

For instance, the Brazilian reaction, especially that of the Brazilian congress, was fairly pointed. Questions and doubts were raised about the possibility of negotiating with the United States under such circumstances.

As for the situation in Argentina, if no remedial action is taken, this could eventually have an impact on the process, but for the time being, in the short term, from a technical standpoint, there has not been any impact. We are following the situation very closely.

Finally, the question of small savings is a concern and a major challenge for the Free Trade Zone, but it is a challenge we share with the WTO. In fact, Mr. Iglesias, the president of the Inter-American Development Bank, wants to organize a workshop in Washington at the end of February to deal with those joint challenges; Mr. Moore from the WTO and various representatives from the bank would be invited to try to see how the two processes could be intertwined to meet the same challenges.

We have also tried to find practical solutions to the concerns about small savings within the framework of our bilateral negotiations. Some provisions of the Canada-Costa Rica accord, namely the asymmetry of safeguard measures in some areas, are examples of how we could deal with the concerns about small savings.

There are other examples, and we should look at all our options for solving the problem of small savings through negotiations. So those are some of the issues we must deal with.

[English]

There are also other challenges. There are sectoral concerns in other countries, but from our point of view in Canada, on the Free Trade Area of the Americas, these are not dissimilar to the concerns one would find vis-à-vis the WTO as well. These concerns are concentrated in certain agrifood sectors, textile and clothing sectors, and steel and other areas. We will be closely consulting with the particular industry associations and industry players throughout the negotiations, in the development of our detailed market access positions.

On the area of environment and labour, we have been supportive of considering environmental labour issues in the context of the FTAA. But there continues to be concern and resistance from a number of other countries in the FTAA process about direct connections between the FTAA and a number of social and environmental concerns.

The advantage we have in the FTAA is that the process is one of the elements of the Summit of the Americas that addresses a wide range of government priorities in the social area. In particular, Minister Anderson last spring hosted the first environment ministers meeting before the summit. This will be followed up next month with a health and environment ministers conference of the Americas in Ottawa, as part of our continuing efforts to develop an active agenda in the hemisphere, to build bridges between the FTAA and environment issues.

Similarly on the labour side, Mrs. Bradshaw last October hosted a meeting of the labour ministers conference of the hemisphere, again as a sign of our objective to improve cooperation in this area.

Finally, on transparency, we have been the champion of transparency in the FTAA. We have pushed the process in all areas, and some of these efforts are beginning to pay off. Much more needs to be done, but first steps have been taken, in both the publication of the negotiating text--again an unprecedented action in an active negotiation--as well as the creation and reinforcement of the civil society committee to engage and outreach with organizations throughout the Americas. I think we have seen considerable progress in the Americas and in the openness of Latin American countries to consult with their own civil societies, as well as international organizations.

» (1710)

[Translation]

On that note, Mr. Chairman, I would be pleased to answer your questions.

The Chairman: Thank you very much, Mr. Carrière, for your effectiveness and understanding of the topic.

[English]

Mr. Casson, you have a question.

Mr. Rick Casson: Thank you, Mr. Chairman, Mr. Carrière.

I have a couple of issues. If you're a developing country looking at some of the partners in this FTAA--United States, ourselves, and Mexico, some of the bigger economies--there's a wide range. You have one that's very unstable at the moment. It seems to me it's going to be a really tough negotiation to bring some kind of a sense or semblance of order to all of this. At the same time as we're talking about the FTAA, we're talking about WTO negotiations.

How do the countries balance all that off? I don't know, but maybe you could give some input. Industry input is important. They talked about some of the input that is going on through the WTO negotiations, and I would like your comment on what's happening there.

On point five of your presentation, you and I have had some conversations about the sugar industry in this country. It's very important to many of us. You said that maybe some of the things that have been done in Costa Rica, for example, could be looked at for some of these other countries. I was told Costa Rica would not be a start for moving into these other areas.

I'd just like you to comment on some of those issues. I know we've had some discussions in the past. Particularly, how are we going to bring all of this Free Trade Area of the Americas to some kind of semblance...when there's such a wide variety of countries? I guess it's the same in the WTO, but this is closer to home.

Mr. Claude Carrière: I'll try to answer some of your questions, the last one on sugar first.

The Costa Rica agreement has more than sugar, but we are consulting with the industry on sugar. We are aware that people in the industry prefer liberalization in this area to be done at the WTO, rather than the FTAA, probably because they think the United States won't be prepared to open up its sugar markets in the context of the FTAA. Their interest is principally oriented toward the United States market. We don't have enough access to the U.S. market, and we want more. We will be trying to do that in the WTO and also in the FTAA. How we will play our 8% tariff will depend on the prospects of getting access to the U.S. market and on correcting, in Geneva, some of the nefarious practices of other exporters of sugar.

Fortunately the calendar of negotiations is similar. Both have a very ambitious calendar, concluding negotiations by 2005. Our negotiators, whether it's in agriculture or investment or services, are the same people, whether they're negotiating in Geneva or in Panama. We will be seeking to achieve the same objective, sometimes in slightly different ways, depending on the forum and for tactical reasons, but fundamentally our objective is going to be the same: to promote and to defend Canadian interests in sugar or in other areas.

Your broader question on developing countries is a very big one. We are struggling with it through the bilateral negotiations we have with Costa Rica, and now with Central America Four and CARICOM, but also in Doha and in the Doha development agenda. As Mr. Stephenson mentioned earlier, we will need to address some key issues in some very sensitive sectors for Canada. At the same time, we're going to seek better access to developing country markets. That's principally my job.

To me, a free trade negotiation or a trade negotiation in the WTO is a two-way operation. We will not only be seeking to improve developing country access to Canada, we will also be seeking to improve our access there, both on a tariff basis and in terms of other non-tariff measures. We will seek to ensure that there is a level playing field and we have a larger market to share with the country.

» (1715)

Mr. Rick Casson: Thank you, Mr. Chairman.

[Translation]

The Chairman: Ms. Lalonde, do you have any questions?

Ms. Francine Lalonde (Mercier, BQ): Oh, yes!

The Chairman: Fine, go ahead.

Ms. Francine Lalonde: Good evening, Mr. Carrière. Thank you for your intervention.

I will go straight to the point of one of my many concerns. You probably know that, with the Bloc Québécois, we travelled to Mexico and met with various political, government, civil society and business sectors.

I do in fact have three questions but I will first of all focus on the concept of a social fund. You referred to small economies that may experience problems. Compared to the other economies of South America and Central America, Mexico looks like a big player. And yet Mexico is having problems. While it exports 87 or 88% of its products to the United States, there are winners and losers in Mexico and there have been adjustment problems, like the ones experienced by the European Union with countries such as Portugal, Spain, Ireland and Greece.

This situation caused Mr. Vicente Fox to consider the idea of a social fund and we feel that this was a marvelous idea. Is any thought being given to a similar idea in the direct negotiating process or in the discussion surrounding this eventual free trade zone? My first question is, therefore, whether or not people are talking about this?

Secondly, do you see any openness? We will try to convince the Canadian government to include this in its positions.

» (1720)

Mr. Claude Carrière: This was drawn to my attention during our trip to Mexico. Apparently you went to the same Spanish school as the new Minister of Foreign Affairs.

Ms. Francine Lalonde: Yes, the same one.

Mr. Claude Carrière: The social fund issue is not a new one. I do believe that Mr. Fox raised the issue, but the matter had already been raised before. This is not an issue that is dealt with directly at the negotiating table. Generally speaking, this is not an issue that is dealt with in a free trade agreement; it is a much broader issue. Trade ministers generally do not have this type of program at their disposal. There is, in fact, an institution that already exists in the region, the Inter- American Development Bank, which is very active. We are a member of this bank and we participate in a significant fashion. We feel that the best way to fund development is to use the already existing mechanisms.

Ms. Francine Lalonde: Mr. Carrière, I apologize, but I must stop you there.

We were given this answer and we also did some research. The drawback is that the Inter- American Development Bank, according to our information, provides loans whereas the funds in Europe truly enabled economies such as Portugal and Spain to take off—and some people are just watching them go now— because these were essentially investments made by countries that were already part of this union. They felt that these countries would not be able to—and this was not just charity—compete, that they would not be able to buy enough of their products, that they would only be exporting their products and never importing.

Isn't this a much better way to go about it, for both those countries that are in need and those that want to seriously broaden their markets?

Mr. Claude Carrière: We have already studied the European social plan. You also have to consider what Europe is, the way that it was built and how things were at the start and understand that the objectives were much more ambitious than those much more modest ones that Canada has for America. When you compare what was done in Europe and what could be done in the Americas, you can see that there really is a big difference in the objectives sought. Hence a mechanism that is used and is appropriate for Europe, given its much more ambitious objectives, cannot necessarily be transferred to the Americas, where we are much more modest.

Ms. Francine Lalonde: «Modest » is a strange word to explain that the wealthy countries want to remain wealthy and help those countries that have more difficulties but have incredible growth potential only by opening up their markets, whereas everyone knows, for example, that if they do not have adequate infrastructure—and I'm talking about infrastructure in the broad sense of the word; not just transportation infrastructure— they will not really be in any position to compete with us, or even buy what we would like to sell them. We are therefore trying to enhance a country's social capacity as well as its economic capacity.

You are telling me that this issue has to be discussed elsewhere so that you will receive mandates, is that not right? I understand. So we will do that. But thank you all the same for your openness.

What chapter are we talking about, exactly? You said that you had done a little bit of housekeeping in the brackets. Did you make any changes to investments, namely chapter 11 of NAFTA, which, as you know, bothers us a great deal? Did you make any changes there?

» (1725)

Mr. Claude Carrière: I am convinced that the negotiating group is also cleaning up this chapter. To my knowledge, according to the reports I have had, all of the groups are making progress in this area. In addition, there are some new proposals that have been made, even by Canada.

Ms. Francine Lalonde: Could you tell us about these new proposals?

Mr. Claude Carrière: The Canadian proposals? They are on our website.

Ms. Francine Lalonde: The new Canadian proposals are supposedly on the website. You should tell us about that. You know, when you're dealing with Foreign Affairs, you have to monitor many websites. We don't spend our time verifying whether or not they have changed from one day to the next, particularly if the sites show no dates.

Mr. Claude Carrière:The site changes quite often.

Ms. Francine Lalonde:As an historian, this poses a big problem because it is no longer possible to follow the history, but that is another matter.

Mr. Claude Carrière: We will see about that.

Ms. Francine Lalonde: In a nutshell, what is contained in the proposal? Since you are the negotiator, you should know.

Mr. Claude Carrière: It is very similar to the interpretations ratified by the NAFTA Commission in July.

Ms. Francine Lalonde: Well, we will take a look at that because that is not enough in our eyes.

In the area of services, what has been proposed?

Mr. Claude Carrière: I would say that things are progressing.

Ms. Francine Lalonde: You worry me when you say that things are progressing.

Mr. Claude Carrière: They have two jobs to do in the area of services: they need to clean up the text as best they can and make recommendations about the negotiating terms and conditions.

Ms. Francine Lalonde: I'm going to ask you a specific question. You know that in the Quebec model—allow me to call it that regardless of our political leanings— there are many institutions that provide services that are not necessarily government-owned. These are private institutions that are subsidized by the State. Hence they are not publicly owned, but we find that this is a model that works well. A former negotiator had told me here—not in this room but at this same table— in answer to a question that I had asked him about 5-dollar-a-day daycare centres, that we had to protect them because they could be covered if no provisions were made to do so. Does your approach protect, for example, services provided by these organizations that are private but funded by the State?

Mr. Claude Carrière: Earlier I said that we had one objective in a negotiating process, and this objective is the same, whether it be at the WTO, or whether it be in conjunction with a bilateral agreement or the Free Trade Area of the Americas. In the service sector, we have more or less the same positions. There may be some different tactics used given that the form is different, but the substance is identical. We are going to protect our right to regulate in the same sectors and we announced that we would be doing this in conjunction with the GATT, whether it be in the area of public education, health or culture.

Ms. Francine Lalonde: Culture—let me stop you there. In this agreement, negative lists are used. I read that the negotiations have not yet reached the stage where broader issues are being raised. Therefore, there is nothing in the draft documents, or anywhere else, on how culture will be treated. What is your sense of where the negotiations are regarding Canada's commitment, which was to put something in the preamble to exclude...? We are being told that this has not been done.

Mr. Claude Carrière: On the one hand, our draft preamble is still on the table and it will be reflected in a text to be submitted to the minister next October.

On the other hand, the services negotiation group has not yet made recommendations on the negotiation approach. So, whether it will be a positive or negative approach is still under discussion. However, regardless of the approach adopted, our positions will remain the same. We will not negotiate in certain sectors; I have already told you which ones they are. We will continue to protect our sectors, whether it be at the WTO, the Free Trade Area of the Americas, or in bilateral agreements with Singapore or Central America.

Ms. Francine Lalonde: I can tell you that, in the discussions we had after the Quebec City Summit with people from various embassies—I will not name them, but these were people from major South American countries—as well as people from Mexico, they were more conscious of this need to protect culture. Some were very much aware of it and others, even Mexico, are becoming more conscious of the need. We know about the Americans, moreover, but we can always opt for exclusions. That remains possible.

Finally, since the chair is allowing me to continue, for which I am very grateful...

» (1730)

The Chair: No, no...

Ms. Francine Lalonde: I still have lots of questions, you know.

The Chair: Go ahead, that is why we are here.

Ms. Francine Lalonde: Whether it be late or early, we are always the opposition, the entire opposition, is that not so, Mr. O'Brien?

The Chair: We are in good hands with Mr. Carrière.

Ms. Francine Lalonde: Where are you at regarding intellectual property?

Mr. Claude Carrière: At the same stage as on the other issues. The negotiating group is trying to clean up the brackets, condense the text and polish it.

Ms. Francine Lalonde: Was there some arguing over the issue of patents, for example?

Mr. Claude Carrière: On the issue of patents, the same countries which were advocating certain schools of thought in Doha are part of the Free Trade Area. The positions are therefore the same, and they will be dealt with in the negotiations.

Ms. Francine Lalonde: Thank you.

You will be coming back to see us regularly. At this point, I would like to raise the subject of the timetable. On our trip, as well as during the meetings that we hold here...but in Mexico especially, as I said earlier, we met with business people, and with the Under-Secretary of Foreign Affairs and the Minister for the Economy, and it is not clear that they believe it can be completed by the year 2005.

The crisis in Argentina and the impact that it will have, the attitude of Brazil, which is not too, too enthusiastic... Even though Brazil did win at the WTO, it did not get what it had hoped for. Is it not possible that this will slow down the negotiations?

Mr. Claude Carrière: That what would slow down the negotiations? The crisis in Argentina?

Ms. Francine Lalonde: The crisis in Argentina, the fact that certain countries are opposed.

Mr. Claude Carrière: Brazil—and this is no secret—for a number of years, since the start of the process in 1994, has never been very enthusiastic. It has always preferred to build the MERCOSUR and to extend its influence by concentric circles in South America to strengthen its geostrategic position. Furthermore, its business class was not interested and was very mistrustful, above all of the United States. More recently, however, in Brazil itself, there is greater interest in the Free Trade Area than there ever has been. This is a first step, and it is in itself a good thing because, two years ago, there was no interest.

» (1735)

Ms. Francine Lalonde: That is what business people are telling us.

Mr. Claude Carrière: So, it is there and they have to deal with it. There is greater openness to it then.

Secondly, Brazilians are saying that the Free Trade Area must be in their best interest, that it must deal with issues that are of concern to them, like agriculture, antidumping measures, the phytosanitary controls that prevent Brazil from exporting its oranges or... All of these things are items on the agenda of the negotiations. Neither the United States nor any other country can guarantee Brazil, at the start of the negotiations, that it will get what it wants in the end. You cannot do that. However, the Americans have not excluded the issues of interest to Brazil from the negotiations. In Buenos Aires, some concerns have been expressed about the Trade Promotion Authority, but, once again, this only shows that it is a sensitive issue in the United States. And even the current situation does not prevent the United States from negotiating in those sectors. It makes things a little more difficult, but it does not prevent negotiation.

As long as these matters which are of interest to Brazil remain on the negotiating table, why would it walk away?

Ms. Francine Lalonde: As you no doubt know, there is a huge social forum being held in Pôrto Alegre in Brazil. It was expected that 60,000 people from all nations would be attending this year. There will be a fairly large delegation from Quebec, numbering over 100 people, perhaps as many as 130 people. Two of our colleagues, Pierre Paquette, who is the official member here, and Stéphan Tremblay are attending. We met with some Mexican representatives who belong to the network en frente de which is concerned with globalization and free trade agreements. I mention this because it is related to my first question.

In our view, the social fund is a positive measure that could allow informed people not to oppose these free trade agreements, because there would at least be a chance that they would result in improvements to their situation. But if there are no real prospects for improvement, there are a number of countries whose people, generally in an intelligent manner, realize that other markets will not necessarily be opened up quickly to their products and that, consequently, their situation will not improve. Furthermore, they know that trade cannot do everything; trade must result in redistribution. I am not implying that you are not aware of this, but I must repeat that, during those negotiations, we must not imagine that this can happen. We intend to work to ensure solidarity between the workers and the people. We cannot tell ourselves that we in the developing countries are benefiting, and too bad for the others. We cannot maintain this, especially since September 11, and this hold true everywhere in the world. I'm telling you this because, usually, if we are not swallowed up by you know what, you will hear a great deal of talk about it. I believe that you have no objection to having other mandates.

Mr. Claude Carrière: Ms. Lalonde, I do not dispute what you are saying, but I am a trade negotiator, while the issues you are raising are social issues. There are pressing needs for social programs in the Latin American and Caribbean countries. This is very clear. The solution will not flow directly from a free trade agreement. This may help increase wealth, but the distribution of this wealth...

Ms. Francine Lalonde: Mas o menos.

[English]

The Chair: Mr. O'Brien.

Mr. Pat O'Brien: I know the CIDA representative has left, but I don' t know whether you, Mr. Carrière, or anybody else can help us a little with the--

Mr. Claude Carrière: I have another one.

Mr. Pat O'Brien: Good. We're talking about this social fund that Madame Lalonde raised, and as you point out, it's hardly a new idea. I'd like to know a little about the kind of money that CIDA has put into these countries.

The other point I'd like to make is that we hear over and over from the Bloc, Mr. Chairman, an attempt to compare FTAA to the EU. They seem to want what you might call an IAU or something, and then their American union...I guess that's the Bloc's objective here. I find it a little passing strange.

We've been looking at a 40-year evolution of the EU from something that started out as a little call community. It's been evolving for 40 years. It's continuing to evolve to the point where you don't have all the countries even part of the euro, as we speak, and yet I keep hearing from my colleagues from the Bloc that somehow they want to have the same kind of thing.

I'd like your comments. Is it not a little unrealistic? Even if Canada and all these countries wanted to go in this direction, which I seriously doubt they do, but even if there was a decision among the inter-American nations to do that, wouldn't you think that would take a long time, given the EU experience? Somehow our Bloc friends think we should be able to reproduce the same thing in the western hemisphere in a short time. That's the impression I'm getting.

I wonder if Mr. Carrière would respond. I'm happy to hear Madame Lalonde later on.

» (1740)

The Chair: As long as we are not entering into a philosophical debate.

Mr. Pat O'Brien: No, no.

The Chair: Mr. Carrière.

Mr. Claude Carrière: I will only deal with the technical elements. What we are negotiating in the Americas is a free trade area, which is an elementary level of integration, economically.

The next level is a customs union, in theory, which is not what we are negotiating, where countries not only have free trade among themselves, but have a common external trade policy. They usually develop an institution to govern that, which is where the European Union started off many years ago, as you said, Mr. O'Brien. Then other features can be added to that, dealing with freedom of movement of labour and of capital and of other factors. Again, these elements are not on the agenda of the Americas.

Of course, the decision on the means of integration is a political decision. It currently is not on the agenda.

» (1745)

Mr. Pat O'Brien: I appreciate that observation, Mr. Chairman. I would just point out that it's been a series of political decisions taking 40 years in Europe, and those decisions aren't over, because they're not even all in the euro. Anyway, thank you very much, Mr. Carrière.

I wonder if we can get from CIDA kind of an idea, a snapshot, of what kind of money.... I think it needs to be pointed out that Canada is not just hoping to liberalize trade with these countries. It has made substantial commitments to help those countries improve their situations, as I recall. It may not be under this so-called social fund that Presidente Fox is now talking about, but I think we need to recall, as Canadians, and give ourselves a little credit that we have been active in these countries.

I'd just like a little snapshot, if I could.

Mr. Claude Carrière: Thank you, Mr. Chairman. If I may, I'll introduce Stephen Free from Americas Branch of CIDA, who is also the lead Canadian representative at the smaller economies consultative group in the FTAA.

Stephen.

Mr. Stephen Free (Director General, Americas Branch, Canadian International Development Agency): Thank you.

In terms of a snapshot, what I would say is that CIDA currently gives about $120 million Canadian to the countries in Latin America and the Caribbean through our bilateral program. If you look at what we do overall, including support we give to non-governmental organizations and institutions through the international financial institutions, that figure gets up to around $200 million to $210 million a year.

I would also add that in the IDB program alone, over the next four to five years, it's going to be around $40 billion to $45 billion through Latin America and the Caribbean. That is available to the countries in the region to help with a number of the economic and social concerns that will arise out of the FTAA and their development challenges more broadly. This does not include support and assistance that would be available through the Caribbean Development Bank or the Central American Bank for Economic Integration, or a number of other mechanisms through which development assistance and support can and is being provided.

Mr. Pat O'Brien: Thank you.

Mr. Chair, I'll just finish by saying that this idea of a social fund is fine, it's interesting, and it needs political debate. But as Mr. Carrière pointed out, it's hardly part of a trade agreement. I appreciate the snapshot we had that shows how active Canada has already been in these countries. Who knows, maybe down the line those moneys and efforts would be directed to some sort of fund, if that's a common decision, but it's hardly part of a trade negotiation.

Thank you, Mr. Chairman.

The Chair: Mr. Valeri.

Mr. Tony Valeri: Mr. Chair, I have a question with respect to the small economies issue. It's just really a clarification, given that today is a bit of a briefing. I know we'll be coming back to these issues in more detail.

The agreement does state that obviously Canada has some concern about the integration of the smaller economies, and it does support inclusion of some measures. I wonder if you can perhaps provide the committee with some examples, maybe some detailed examples of what some of those measures are. What are some of the things we are doing to ensure that the smaller economies do participate in this agreement and are integrated properly?

Mr. Claude Carrière: First, I should preface my answer by saying that what we are looking for is an agreement that is a single undertaking, that has the same level of rights and obligations for all members of the agreement, big economies and small economies.

We think the smaller economies may be able to take a slightly different path from, say, Canada or the United States, but at the end, they will be where we are in terms of their obligations and their rights in the agreement.

Some of the techniques that could be developed to help smaller economies in a transition period are mostly around a differentiated timetable for assuming certain obligations--for example, in reducing their tariffs, because in a free trade area, first of all, the objective is the substantial elimination of tariffs. But a smaller economy may be able to take a longer period of time to reduce their tariff than, say, Canada or the United States.

For example, they may be able to negotiate exemptions in addition to those that a larger country may be able to negotiate. They may be able to obtain more direct commitments of assistance from countries like Canada to help them put in place the capacity to take advantage of some of the opportunities that are negotiated in the agreement or, again, put in place capacity to implement some of the obligations that are associated with the agreement in a number of areas.

Some of these programs already exist. For example, CIDA used to--I don't know if it still does--finance a significant proportion of the Caribbean regional negotiating machinery and also offers, with Banque interaméricaine de développement, considerable....

Does it still do that, Stephen? It still does. It provides significant resources to train officials to put in place mechanisms to consult domestically with interested parties, industries and other parties that are interested in what's happening.

So those investments are currently being made. They're also being made vis-à-vis Central America, and the benefits are not only translated in the regional sense but are equally applicable to the WTO, and if the Caribbean and Central Americans become more proficient at negotiating, have better information about their economic and trade interests and the interests of their countries, they can better negotiate, they can have a more durable negotiation agreement that reflects the interests of its economy and its players, and at the end of the day, it's better for us because they can demonstrate that it addresses their local concerns.

Those are examples of what we are doing, and I know the United States, through ASAID, is proceeding similarly.

The other areas where we provide assistance are in the customs area and where we train countries in techniques like customs valuation or the application of duties, and systems for improving their sanitary and phytosanitary regulations and techniques so that they are better able to export to developed countries as well as having a high quality food supply domestically. So all these have a mutually supporting objective, which is to develop their economy and their society.

» (1750)

Mr. Tony Valeri: Okay, thank you.

Mr. Bob Speller (Haldimand--Norfolk--Brant, Lib.): Thank you, Mr. Chair.

Maybe I'll move from small economies to a larger economy, not the largest but certainly one that will challenge us in the future, particularly in the agriculture area, and I'm talking about Brazil now.

I'm wondering, Ms. Vinet, where you see these negotiations going in terms of helping Canadian farmers, particularly western grain farmers, who will have many challenges from a country like Brazil? Where in the negotiations would we be in terms of helping our Canadian farmers not only to have access to markets in South America but also to be able to challenge the low costs in the grains and oilseeds particularly of a country like Brazil? Are there certain things in these negotiations that you are doing to make sure we'll be able to compete under a trade deal like this?

Secondly, Mr. Carrière, and I'll stay on with Brazil, in terms of what's going on in the trade relationships between Canada and Brazil and some of the challenges we face, what is that doing to the overall negotiations? We're two of the biggest players in these negotiations and we can't seem to agree on how to work out the rules of the WTO. What impact is that having?

Mr. Claude Carrière: Why don't I start with that and then Suzanne can complete the answer.

We have a good overall relationship with Brazil, although it could be improved and both sides are working to do that. We are making an effort to increase communications with Brazil and I think this is reciprocated in a wide range of areas, whether political or more broadly in the trade side. I think both countries recognize that there is potential that has been unexploited and should be exploited, where we have much to share and to teach to each other.

In terms of the impact on the negotiations, again, this is a multilateral negotiation, not a bilateral, Canada-Brazil negotiation, and differences between two countries on specific issues rarely have impact on the overall process. There have been other disputes and are other disputes between other countries; for instance, United States and Brazil, Argentina and Chile, and disputes in Geneva on very sensitive files. Again, there is the issue of intellectual property and there is a very sensitive file being looked at in the WTO between Argentina and Brazil on agriculture, which deals with Chilean price bans. That has had no impact on the negotiations themselves.

I don't think there is a person in this room who is more hopeful of finding a solution to the aircraft dispute with the United States, and I'll carry that hope with me next Friday in New York. I think that the panels, the Pro-ex panel last summer and the Air Wisconsin panel that was released publicly on Monday, contain the seeds of an agreement. They outline the rules quite clearly that need to be applied by both sides and now I guess it's the job of negotiators to find elements to sew these things together. And New York next week will be the beginning of that process.

On agriculture issues, in fact if we could eliminate the MERCOSUR tariff on wheat we would be able to export to Brazil, which is a major buyer, and they would then have the choice between Canadian wheat and Argentine wheat and we would have a much more level playing field.

Suzanne.

» (1755)

Ms. Suzanne Vinet: Basically you've got to remember that we're really dealing with the FTAA as a market access negotiation. We`re focusing the issue of the rules in the broader context of how we're going to deal with the unlevel playing field issues, if you will; we're focusing it at the WTO agricultural negotiations. As to what difference it's going to make to Canadian farmers, getting better market access to Brazil is going to be quite important. It should have a very positive impact at the end of the day within the context of the FTAA, because it should level out some of the disadvantages we have in the markets of the Latin American countries right now.

You'll remember, too, that Brazil is a member of the Cairns Group, of which we're also a member, so in fact we're working very much in the same direction, making sure we can compete on the basis of our comparative advantage, more broadly speaking. Certainly that's what we're doing in the multilateral context.

Brazil, being a developing country, is obviously looking for some special treatment as part of what we're doing in the WTO, but I think fundamentally we're definitely working in the same direction. I'd have to echo what Claude says, that also in agriculture we have a fairly positive relationship with Brazil in the negotiations, both within the context of the FTAA and certainly at the WTO.

Mr. Bob Speller: Do we agree with them, though, in terms of our market access?

Ms. Suzanne Vinet: In the FTAA, specifically?

Mr. Bob Speller: No, in the WTO. You said we--

Ms. Suzanne Vinet: In the WTO they certainly are one of the countries wanting a very aggressive approach to market access and would like to see the elimination of all tariffs as quickly as possible, at every level. So yes, we do have substantial differences with them on that, but when it comes to export subsidies and seeking their elimination, we're definitely on the same page. And when it comes to drastically reducing the levels of trade-distorting support, we're working from the same hymn sheet very closely.

On market access, I think both our countries are looking for improvements in market access. The detail of what that means is where we have some differences, but generally speaking we're both working towards overall reform in agriculture.

Mr. Bob Speller: Okay, thank you.

The Chair: Okay. With this, Monsieur Carrière, Madame Vinet, Monsieur Wilson, Monsieur Brereton, and Monsieur Free and all of your staff--à tous vos assistants et assistantes--we want to thank you on behalf of the committee. As we said before, it's our hope and expectation that the dialogue will continue and we will be able to use your office and department as a resource for the committee from time to time if we have questions, and we hope that if we need information you will assist us.

Also from your side, if things come up between now and the end of this study, maybe you will feed them to the clerk of the committee. With that, have a nice evening.

Just before we adjourn, I thought of something as we were going through the hearing: perhaps we should send a letter to all members of Parliament who may have ideas or suggestions or recommendations to the committee on these two subjects, requesting they send them to us by April 1. I think that would be plenty of time. Would that be okay?

Some hon. members: Agreed.

The Chair: Okay. We shall move, then.

We are adjourned.