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37th PARLIAMENT, 2nd SESSION

Standing Committee on Canadian Heritage

EVIDENCE

CONTENTS

Thursday, December 12, 2002

0905

The Chair (Mr. Clifford Lincoln (Lac-Saint-Louis, Lib.))

0910

Ms. Wendy Lill (Dartmouth, NDP)

The Chair

Mr. Jim Abbott (Kootenay—Columbia, Canadian Alliance)

0915

The Chair

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

The Chair

Mr. John Harvard

The Chair

Mr. John Harvard

Ms. Wendy Lill

The Chair

Ms. Wendy Lill

The Chair

Ms. Sarmite Bulte (Parkdale—High Park, Lib.)

0920

The Chair

Ms. Christiane Gagnon (Québec, BQ)

The Chair

Mr. Denny Gélinas (Director General, Department of Canadian Heritage)

0925

0930

The Chair

Mr. Peter Grant (Senior Partner, McCarthy Tétreault, As Individual)

0935

The Chair

Mr. Ivan Bernier (Professor, Law Faculty, University Laval, Individual Presentation)

0940

0945

The Chair

Mr. Robert Pilon (Executive Vice-President, Coalition for Cultural Diversity)

0950

0955

1000

1005

The Chair

Mr. Ken Stein (Chair, SAGIT for Cultural Industries, and Vice-President, Corporate and Regulatory Affairs, Shaw Communications)

1010

1015

The Chair

Mr. Garry Neil (Coordinator, International Network for Cultural Diversity)

The Chair

Mr. Garry Neil

1020

1025

The Chair

Mr. Jim Abbott

Mr. Garry Neil

1030

The Chair

Mr. Denny Gélinas

Mr. Jim Abbott

The Chair

Mr. Ivan Bernier

The Chair

Mr. Garry Neil

Mr. Jim Abbott

Mr. Garry Neil

The Chair

Ms. Christiane Gagnon

Mr. Robert Pilon

1035

The Chair

Ms. Christiane Gagnon

The Chair

Mr. Garry Neil

1040

The Chair

Ms. Sarmite Bulte

Mr. Peter Grant

1045

The Chair

Mr. Peter Grant

The Chair

Ms. Sarmite Bulte

The Chair

Mr. Peter Grant

Ms. Sarmite Bulte

Mr. Peter Grant

The Chair

Mr. John Harvard

1050

The Chair

Mr. Ivan Bernier

The Chair

1055

Mr. Ken Stein

The Chair

Mr. Robert Pilon

The Chair

Mr. Ken Stein

1100

The Chair

Mr. Denny Gélinas

The Chair

Mr. Garry Neil

The Chair

Ms. Wendy Lill

Mr. Garry Neil

Ms. Wendy Lill

The Chair

Mr. Ken Stein

1105

The Chair

Mr. Robert Pilon

The Chair

Mr. Ivan Bernier

The Chair

Mr. Ivan Bernier

The Chair

Mr. Robert Pilon

The Chair

Mr. Robert Pilon

The Chair

1110

Mr. Clifford Lincoln

The Chair

Mr. Charles Dalfen (Chairman, Canadian Radio-television and Telecommunications Commission)

1120

1125

The Chair

Mr. Jim Abbott

Mr. Charles Dalfen

Mr. Jim Abbott

Mr. Charles Dalfen

Mr. Jim Abbott

Mr. Charles Dalfen

Mr. Jacques Langlois (Director General, Canadian Radio-television and Telecommunications Commission)

Mr. Jim Abbott

1130

Mr. Charles Dalfen

Mr. Jim Abbott

Mr. Charles Dalfen

Mr. Jim Abbott

The Chair

Ms. Christiane Gagnon

1135

Mr. Charles Dalfen

Ms. Christiane Gagnon

Mr. Charles Dalfen

1140

The Chair

Ms. Sarmite Bulte

Mr. Charles Dalfen

Ms. Sarmite Bulte

Mr. Charles Dalfen

1145

The Chair

Ms. Sarmite Bulte

Mr. Charles Dalfen

Ms. Sarmite Bulte

The Chair

Mr. Charles Dalfen

The Chair

Mr. John Harvard

1150

Mr. Charles Dalfen

Mr. John Harvard

Mr. Charles Dalfen

Mr. John Harvard

Mr. Charles Dalfen

Mr. John Harvard

Mr. Charles Dalfen

Mr. John Harvard

Mr. Charles Dalfen

Mr. John Harvard

Mr. Charles Dalfen

Mr. John Harvard

Mr. Charles Dalfen

1155

Mr. John Harvard

Mr. Charles Dalfen

The Chair

Ms. Wendy Lill

1200

Mr. Charles Dalfen

Ms. Wendy Lill

Mr. Charles Dalfen

Ms. Wendy Lill

The Chair

1205

Mr. Charles Dalfen

The Chair

Mr. Charles Dalfen

The Chair

Mr. Charles Dalfen

The Chair

Ms. Christiane Gagnon

1210

Mr. Charles Dalfen

Ms. Christiane Gagnon

Mr. Charles Dalfen

Ms. Christiane Gagnon

The Chair

Ms. Christiane Gagnon

Mr. John Harvard

Ms. Christiane Gagnon

The Chair

Mr. John Harvard

The Chair

Mr. John Harvard

Ms. Wendy Lill

Mr. Charles Dalfen

The Chair

Mr. John Harvard

1215

Mr. Charles Dalfen

Mr. John Harvard

Mr. Charles Dalfen

The Chair

Mr. Charles Dalfen

The Chair

Mr. Konrad von Finckenstein (Commissioner of Competition, Competition Bureau)

The Chair

Mr. Konrad von Finckenstein

1220

1225

The Chair

Mr. Jim Abbott

1230

Mr. Konrad von Finckenstein

Mr. Jim Abbott

Mr. Konrad von Finckenstein

1235

Mr. Jim Abbott

The Chair

Ms. Wendy Lill

Mr. Konrad von Finckenstein

The Chair

Mr. Konrad von Finckenstein

Ms. Wendy Lill

Mr. Konrad von Finckenstein

1240

Ms. Wendy Lill

Mr. Konrad von Finckenstein

The Chair

Mr. John Harvard

Mr. Konrad von Finckenstein

Mr. John Harvard

Mr. Konrad von Finckenstein

Mr. John Harvard

Mr. Konrad von Finckenstein

Mr. John Harvard

Mr. Konrad von Finckenstein

Mr. John Harvard

Mr. Konrad von Finckenstein

1245

The Chair

Mr. Konrad von Finckenstein

The Chair

Mr. Konrad von Finckenstein

The Chair

Mr. John Harvard

Mr. Konrad von Finckenstein

Mr. John Harvard

The Chair

CANADA

Standing Committee on Canadian Heritage

NUMBER 012

2nd SESSION

37th PARLIAMENT

EVIDENCE

Thursday, December 12, 2002

[Recorded by Electronic Apparatus]

¿ (0905)

[English]

The Chair (Mr. Clifford Lincoln (Lac-Saint-Louis, Lib.)): I would like to declare open this meeting of the Standing Committee on Canadian Heritage.

I have to make two or three announcements before we start the hearings. First, I have received a letter from Mr. Geoffrey Elliot, the vice-president of corporate affairs of CanWest Global Communications, which has been translated and will be distributed to members today. I've been asked to read it into the record by Mr. Elliot, and I will try to do it as briefly as possible.

In the recent committee round table about the media a number of different points of view have been presented. Normally, we do not seek to respond in a formal way to such expressions of opinion. However, with considerable regret, we find it necessary to draw your attention to two specific areas of fact related to CanWest that were presented to the committee.

I refer to the presentation to the committee by Mr. Wilson Southam on December 5, 2002. At that time Mr. Southam accused CanWest of refusing to carry an advertisement organized by Mr. Southam. With respect to that advertisement, our sales staff were indeed approached by Mr. Southam. However, in the ensuing discussions at no time did CanWest seek to alter a single word of the message in the ad. In the interest of clarity and full disclosure, CanWest did initially ask that the advertisement indicate more clearly that the signatories were all former, rather than current, Southam directors or employees, and also show their current affiliations. Mr. Southam refused.

Mr. Southam's claim that “CanWest wanted 13% of their wording added to the ad” is untrue. Since we had assured him from the beginning that we did not require any change in the text of the message, we have to assume Mr. Southam was referring to an estimate of the amount of space required to include the current affiliations of all the signatories. It is, however, noteworthy that five of the people who signed that ad were employees or directors of competing media companies. According to the Ontario Press Council, “In the interest of credibility, a column should disclose any possible conflict of interest on the part of the writer”. CanWest's request to Mr. Southam was in the spirit of that principle.

Mr. Southam also accused CanWest of changing a story in the Regina Leader-Post to imply that a speaker approved of CanWest's policy, when the speaker had said the opposite. Again, that is incorrect. Here is what actually happened. A senior editor of a competing newspaper company, Mr. Siddiqui, delivered a lecture at the University of Regina on March 4, 2002. In his lecture he made the following statement: “I read the other day that CanWest, in effect, owned 60% of newspapers and TV”. It seems strange that an experience journalist would use “I read the other day” as a source. As has been documented on many occasions, including in our formal submission to the committee, the assertion about 60% was factually incorrect and greatly exaggerates the extent of CanWest newspaper holdings in Canada. An editor of the Leader-Post recognized that the speech by Mr. Siddiqui contained unsubstantiated information, and she edited the first paragraph of the story. The rest of the story ran essentially unchanged, including many criticisms of CanWest by Mr. Siddiqui. The headline read, “Columnist takes issue with CanWest Global”, a far cry from Mr. Southam's claim that the story was changed to make it appear that the speaker approved of CanWest policies.

We would be pleased to provide any additional documentation you may require. Thank you for this opportunity to correct the record.

The letter will be circulated to members in both official languages.

¿ (0910)

Ms. Wendy Lill (Dartmouth, NDP): I would like to add a little item, but maybe you are going to deal with it right now.

The Chair: Yes, okay. I have a second item.

I've been informed by the advisors that they are working on a document the researchers and they had agreed they would put together as a sort of overarching document for our work. It will be sent to the clerk and the researchers, and of course, the members first, sometime in January, hopefully, a week or ten days before we get together for a retreat.

The travel plans for England and Washington have been nixed by the House of Commons, so we won't be able to travel.

And in regard to a retreat, instead of going to Meech Lake, as approved, again we had to withdraw that submission to the budget committee. We will try to obtain a room in the House of Commons and meet there for the two days.

Mr. Abbott has asked for a few minutes.

Mr. Jim Abbott (Kootenay—Columbia, Canadian Alliance): Thank you, Mr. Chair. I truly will try to be as non-partisan as I can.

My understanding of the nixing of the travel expenditure is that the committee that takes a look at those things, pares them back, and so on gets its funding from the BOI. They just plain ran out of funding. The BOI then asked for additional funding, not just for our trips, which, I believe, were in the neighbourhood of $250,000. They were looking at many millions of dollars.

Second, unfortunately, on, I believe, Tuesday, at around noon, though an agreement had been struck about private members' business--it was the understanding of all of the opposition parties, and indeed many of the Liberal backbenchers, that there was an agreement that all private members' business was going to be votable--out of the blue, I'm told, there was a motion put forward that the Liberals voted unanimously for, and it was defeated seven to six: the private members' business has been turned back as far as the modernization is concerned. It's my understanding--and I would be happy to be corrected by the Bloc and NDP members here--that all the opposition parties are infuriated that the agreement was rescinded, in spite of the fact that there clearly had been an agreement. As a result, all the opposition parties, led by the Canadian Alliance--I want to take responsibility, as required, and it's really the only tool the opposition has--are concerned that all extra travel, all things every committee wants to do are now put on hold, and that will extend into February, or at least until this issue can be resolved. As an item of interest, the modernization committee was also supposed to be going to Westminster in January, and that trip also has been cancelled. All parliamentary travel has been cancelled, with the exception of association travel.

¿ (0915)

The Chair: The public will decide who's a loser.

Yes, Mr. Harvard, I think we shouldn't belabour this thing.

Mr. John Harvard (Charleswood —St. James—Assiniboia, Lib.): No, I know, but to allow Mr. Abbott to put only his version of the truth on the record I don't think is fair to the committee or the public. You just said, Mr. Chairman, that the public will decide.

First of all, Mr. Abbott's version of what happened with the modernization proposal and the private members' business is highly partisan. There was never a suggestion that whatever model was to be worked out by the committee would be just automatically accepted by the House of Commons. The plan, as first outlined or drafted, was highly problematic. For Mr. Abbott to suggest that we're just supposed to roll over at any suggestion brought forward, either by his party or by the opposition, is absolutely outrageous.

Second, his effort to make the link between his party's outrage over the private members' business and the travel is also outrageous. Can you imagine if every time a party got upset over another party's antics and decisions we automatically linked one to the other? I can tell you, Mr. Abbott, that we on the Liberal side have been very upset over your antics over gun control in the past week.

The Chair: Please, please, no--

Mr. John Harvard: Let me finish, Mr. Chairman.

We have not attempted to draw any link between your gross misbehaviour on gun control and travel with respect to committees or the work at this heritage committee. The work of the heritage committee should be kept exactly right here, and I think it's very regretful that we were not able to finish this project the way it's supposed to be finished, and that is, to see the executives and talk to the people at the BBC, the people at PBS, and the federal communications commission in Washington.

So you will have to take some of the responsibility for this, Mr. Abbott, and I think it behoves you, as a member of this heritage committee, to show some leadership and to talk to your leadership about a project that has been on the rails, has worked very well. I think this project of ours, this study of the Broadcast Act, has tremendous potential, and now, because of political partisanship, you have helped to undermine this project. I think that's extremely regrettable.

The Chair: I'm going to close this now, because it's going to become a debate, and it's not fair to the witnesses that we should have this debate. But for the record, I should mention that the actual travel budget was pared down to $150,000.

Mr. John Harvard: How's that for modernization?

Ms. Wendy Lill: It's really regrettable that we can't go on our trip, but I think it would be useful for us to try to use some of that time anyway to do some more work collectively on this document. I think we need to see the CRTC. I'm not sure when that is scheduled.

The Chair: We're seeing them today.

Ms. Wendy Lill: We're seeing them today at 11 o'clock. Fine, I'm glad to hear that.

I wondered, though, why we couldn't use a bit of that time to get together and take a look at some of the modules, start getting at some of the work that we have to do.

The Chair: I think this is for another day. I take your suggestions. It's not fair to the witnesses now to have a business meeting, which is completely unscheduled. I allowed Mr. Abbott time because he had asked me, and now it's starting to....

We'll close with you, Ms. Bulte.

Ms. Sarmite Bulte (Parkdale—High Park, Lib.): Perhaps one of the ways around getting to the FCC or the BBC is if we're personally prepared to use our own points. I'm just trying to help this study here. I'd be prepared to do that.

¿ (0920)

The Chair: I don't think you can use your points for overseas travel, that's the problem.

[Translation]

Ms. Christiane Gagnon (Québec, BQ): I have nothing to add.

[English]

The Chair: We will now turn to our witnesses. We are very pleased to welcome today from the Department of Canadian Heritage,

[Translation]

Mr. Denny Gélinas, Director General, International Affairs.

[English]

and Mrs. Barbara Motzney, director of international relations and policy development. Appearing as individuals are Mr. Peter Grant, senior partner at McCarthy Tétreault and a member of SAGIT,

[Translation]

And Mr. Ivan Bernier, Professor at the Law Faculty of Laval University. Representing the Coalition for Cultural Diversity, we would like to welcome Mr. Robert Pilon, Executive Vice-President, and representing the Sectoral Advisory Group on International Trade for Cultural Industries, we would like to welcome Mr. Ken Stein.

[English]

Also, from the International Network for Cultural Diversity, we have Mr. Garry Neil, coordinator.

I know we've taken a bit of time that we shouldn't have, but in the interest of time, please keep your opening remarks brief, so that we may have time for questions.

I would like to ask the representatives of the Department of Canadian Heritage whether they have any remarks to make for us to start with.

Mr. Denny Gélinas (Director General, Department of Canadian Heritage): Yes, Mr. Chairman, I have some preliminary introductory remarks.

I want to thank you, Mr. Chairman, and other members of the committee, for the opportunity to present to you the government's approach to international cultural diversity and the progress towards a new instrument on cultural diversity. I would first note that in March 2001 members of the committee were sent a written update of the government's pursuit of the new instrument, outlining the background and progress at that time. Today I'm joined by representatives of cultural industries and NGOs to provide you with a further update on our collective work in this endeavour. The panel includes key NGO and industry leaders who have helped put cultural diversity on the agenda, both at home and abroad.

I have prepared a short deck, which is included in the information kit you have received. The first part of the deck is really a background introduction. I propose that we start from slide 6 of the deck, which is really the substance of what I'd like to talk about today. I want to focus on the multilateral process, what we've done over the past couple of years in putting this item on the world agenda and our work in the International Network on Cultural Policy in developing the instrument itself.

Over the past number of years Canada has worked to ensure that the international community is engaged in a broad discussion of cultural diversity. We've placed this item, cultural diversity, on various agendas. We've had declarations and action plans emerge from UNESCO, the Council of Europe, the Francophonie, the Summit of the Americas, the Organization of American States, and the International Network on Cultural Policy. In the information kit there is a short summary of the work that's been done in each of these areas, with some website connections. These broad discussions on cultural diversity have helped to create the context where the specific challenge of ensuring the diversity of cultural expression through the new international instrument could be discussed.

The development of an international instrument is most advanced in the International Network on Cultural Policy, which, as you know, was founded here in Ottawa in 1998 by the Minister of Canadian Heritage. Since that time the INCP has grown from 16 ministers interested in this dialogue on cultural policy in the 21st century to some 50 countries with members who are very dynamic in leading the international cultural diversity agenda. Canada chairs a working group on cultural diversity and globalization that has been set up within this network. Following instructions of ministers, the group has been working to develop a new approach to international cultural policy, the international instrument.

The fourth meeting of the ministers, which took place in Switzerland in 2001, was the turning point for the INCP and the instrument. At this meeting, building on the action and momentum in other regional multilateral bodies and the impetus provided by civil society and the private sector, participating ministers of the INCP said, enough research and recommendations, give us the text of an international instrument. Ministers in Switzerland gave the working group two years to develop an international instrument that would include a common vision, objectives, and norm-setting elements to articulate the close and important relationship between cultural diversity and social and economic development. In the first year of the mandate ministers called for two things, development of a draft text based on the scope and form approved in Lucerne and discussion on governance issues for an enforceable instrument, including housing, dispute settlement, and monitoring. These two deliverables, a draft text and a first reflection on governance, were presented to ministers in Cape Town in October of this year.

The objective of the draft instrument is to ensure that states have the means to determine, from a cultural perspective and on the basis of their own circumstances, the policies that are needed to preserve and promote the diversity of cultural expression. The instrument is intended to provide a set of rules and disciplines governing cultural intervention by signatory states based on a shared concept of cultural diversity, centred on both the preservation of existing cultures and openness to others. In addition to guiding their actions in the domestic sphere, the instrument could also be used as a common approach to international negotiations. It is by no means intended as a static or protectionist instrument. On the contrary, the hope is that it will be a key tool in the development of cultures, cultural exchanges, and cultural diversity.

The instrument contains six chapters and a preamble. I believe you have copies of the instrument in your package, so I will just highlight items.

¿ (0925)

The preamble sets out the context in which this instrument is being developed and a common vision for global cultural diversity.

Chapter 1 details the definitions, scope, and objectives of the instrument. Key elements in this chapter are the general commitments of all signatories to promote and preserve cultural diversity and cultural expression, preserve the rights of states to maintain and adopt measures in this area, consider the instrument as a frame of reference for action, and increase international cooperation and solidarity.

Chapter 2 sets out the detailed commitments by signatories regarding how they will act to promote and preserve cultural diversity. Articles in this chapter recognize the need to take into account the particular nature of cultural goods and services and their role in society, not to treat them as mere commodities, and the importance of balancing actions taken to promote domestic cultural expression with openness to other cultures. Market forces alone cannot guarantee a diverse cultural expression. Public policy and partnership with civil society and the private sector is vital. Freedom of expression, transparency in operation, intellectual property, cultural rights, and human rights are also covered in articles in this chapter.

Chapter 3 speaks to the development of cultural expression and cultural diversity at the national level. This chapter recognizes the importance of the flexibility for states to use the cultural policy tools they deem appropriate in their own environment. This chapter highlights the importance of maintaining space for domestic cultural expression, the importance of public financial support to the sector, the role of the public service institutions, and the contribution of independent cultural industries.

Chapter 4, “Preserving and Enhancing Cultural Diversity at the International Level”, outlines commitments to promote cooperation and interchange between signatories to the instrument and their cultural institutions and private cultural organizations. Commitments in this chapter include exchanging information, improving access to our broad choice of foreign cultural products, promoting cultural diversity through actions, commitments, and other international fora, and cooperating among signatories and through international organizations to develop and strengthen human resources and institutional capacity in developing countries.

Chapters 1 to 4 are the substance of the INCP draft text. The draft then goes on in chapters 5 and 6 to cover off administration of the agreement and detail the kinds of issues that must be addressed to make the instrument enforceable. These are an administrative body, a dispute settlement mechanism, and procedures for entry-into-force modification, access, and withdrawal. These chapters are provided only as an illustration of how enforceability could be handled. The real content of chapters 5 and 6 will depend on where the instrument is negotiated and how.

In creating this draft, the working group of the INCP focused on defining what is needed in an international instrument to achieve the stated objectives, rather than trying to fit into the existing architecture of an international organization. In Cape Town ministers agreed that this draft was an appropriate basis to begin discussion. As a draft document, it is the first articulation in the form of an agreement of their vision and objectives, it is not yet the final agreement. Much remains to be done to more fully and clearly articulate the key issues to be covered, rights, and obligations, in particular, links between culture and trade and the perspectives of the developing world.

On issues of governance, ministers want the instrument to carry weight and to be enforceable. The working group last year examined a number of options on governance, including location, institutional context, dispute settlement, and monitoring. They looked at key potential organizations, the WTO, UNESCO, and a stand-alone version, and a number of other processes, such as the biodiversity convention and the Convention on the Rights of the Child. On this basis, the working group concluded that at this point there is no ideal institutional solution to meet the governance needs of an international instrument on cultural diversity. Each of the options explored presents policy or structural challenges.

Ministers discussed the potentials and pitfalls of these options, and a few key criteria emerged: the ability to move quickly--ministers see the international environment moving--and the need to ensure that the agreement is enforceable. Ministers agreed in Cape Town that UNESCO, recognizing its limitations, is the most appropriate organization to house and implement the instrument. To move forward, INCP ministers charged the working group, chaired by Canada, with developing a frame for cooperation with UNESCO to assess the feasibility of achieving their objective for the instrument in that forum.

Two other tasks for the working group over the next year are to improve the draft to address appropriate rights and obligations, the needs of developing countries, and culture and trade links and to intensify its work in promoting cultural diversity, generating awareness of the instrument and its coherence in other international agendas. Ministers were so engaged in the discussion at Cape Town and the advancement of the instrument that they do not want to wait a full year for the results of this work. Instead, a ministerial level meeting of the working group will take place in early 2003 to review progress. A delegation of INCP ministers, including Canada, is also expected to meet with the Secretary-General of UNESCO to discuss the instrument and the potential engagement of UNESCO.

It should be noted that the enthusiasm and commitment demonstrated at Cape Town was carried forward to the Beirut summit of the Francophonie a few days later. At that meeting leaders made a commitment to take the work of the instrument and of the INCP forward in that forum.

¿ (0930)

So, Mr. Chairman, awareness and commitment continues to build, and with the help of those at this table, so will Canada's leadership.

Thank you very much.

The Chair: Thank you very much, Mr. Gélinas. It was a very complete update. We really appreciate it.

Mr. Grant.

Mr. Peter Grant (Senior Partner, McCarthy Tétreault, As Individual): Good morning, members of the committee and Mr. Chairman.

I'm a communications lawyer with McCarthy Tétreault and a long time member of the cultural industry's sectoral advisory group on international trade, chaired, of course, by Mr. Stein, who is to my right. As a lawyer in the cultural industries field, I've been involved on the Canadian side in almost every trade dispute we've had in the cultural area, the split-run magazine case, the CMT case, the Polygram case, the runaway production complaint, and so forth, so I'm quite familiar with the issues as they relate to the interface between culture and trade.

The SAGIT committee is quite an active one, and it has played a central role in trying to develop a new approach to trade law. Of course, this responds to the desire of countries like Canada to promote or assist their cultural industries without fear of trade retaliation. The committee published a report in early 1999 that has been widely circulated. It's on the website, “New Strategies for Culture and Trade”. It was there, really, that we saw the first proposal for a new international instrument on cultural diversity, a treaty or agreement, if you will, that would be a better approach, we felt, than the cultural exception approach that had been focused on before.

Over the next few years the SAGIT focused on what would be in the instrument, and then went through the process of drafting one itself. I was pleased to be part of that process, and the draft model for discussion was published by the Department of Foreign Affairs on its website in late September this year. So it too is out there as a document for public discussion.

If you look at that document, you'll see that, broadly speaking, it covers much the same ground as the work of the working group of the INCP Mr. Gélinas just described. I don't know if you have a copy of the working draft in your kit, but it also goes through many of the same concepts and general principles involved. The key issue is to seek to immunize cultural measures from trade retaliation. So the key article in the SAGIT's instrument is article 6 and annex 1. I'll just read article 6, because it's the key section of the whole agreement:

Member states have the right to take measures with respect to the creation, production, distribution and exhibition of cultural content and to the activities of cultural undertakings in order to support, promote and preserve diverse cultural expression. In taking such measures, member states shall be guided in general by the principles and objectives of part 1 of this agreement, and in particular by the objective of ensuring choice, space and visibility for domestic and foreign cultural content. An illustrative list of measures that may be taken to provide the objectives of the agreement is provided in annex 1.

It's for each member state to determine whether or not they want to use any of these measures, but if they do and have the objective of ensuring choice, space, and visibility for both domestic and foreign content, so there's room for both, a balance, if you will, these sorts of domestic measures should not be subject to trade retaliation.

We've had a very long discussion--some of it Mr. Gélinas has taken you through--as to where such an instrument would reside. We elected that it should not, at the outset at least, involve the WTO. It should be drafted by people who are familiar with cultural products and services and understand the differences between those services and products and cars and refrigerators and normal commodities. They do follow quite different economic rules, if one studies the economics of culture, and of course, they are also crucial in the development of cultural identity for the nations that do support their cultural industries.

I'll leave my remarks at that point, Mr. Lincoln. I know Professor Bernier, who is quite heavily involved in working on both the working group version of this instrument and the SAGIT version with me and others from the departments, will be able to amplify what I've said.

¿ (0935)

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

[Translation]

Can you tell us, in your address, what the relationship is between the two groups and why there are two groups instead of one? Could you tell us why there are two distinct groups and how they relate and cooperate with each other with regard to the issues under study.

Mr. Ivan Bernier (Professor, Law Faculty, University Laval, Individual Presentation): Thank you, Mr. Chairman. I will try to provide you with a brief answer to your question, but let me just point out that my presentation is entitled “What new instrument on cultural diversity?”. Since there are several of them, it is a legitimate question.

As for the relationship between the three instruments and draft agreements which have now been made public, I feel we can make the following distinction.

The SAGIT agreement obviously comes from an organization which falls under the federal government's Department of Foreign Affairs and involves a certain number of representatives from cultural industries and professional cultural associations, and so on.

The second agreement is an international one which was drafted by the international network on cultural policy, which is an informal organization of countries which have created a working group studying the feasibility and the content of a potential instrument on cultural diversity.

The third product originates with civil society. It was basically created by professional cultural associations and various other representatives. This group presents a point of view which is distinct from government, but which seeks to influence the actions of government.

These are the different ways in which the three instruments came into being in terms of the basic elements underlying their creation.

I will now turn to my statement.

In some regards, it is remarkable that the idea of a new instrument on cultural diversity appeared so quickly on the international stage. In less than five years, three declarations on cultural diversity were adopted, the first by the Council of Europe in December 2000, the second by the Culture Minister of the Francophonie in June 2001 and the third by UNESCO in December 2001. These three draft agreements or conventions on cultural diversity were made public.

The fact of their existence undoubtedly proves that people increasingly feel that it is important to protect cultural diversity against the tide of economic globalization and trade liberalization.

Should this come as a surprise? Not really, because it is now well understood that these phenomena have major repercussions on cultural identity and thus on cultural diversity itself. Let me quote what the Director General of the WTO said in 1997: “The great challenge and the great promise of our age lies in managing a world of convergent economies, peoples and civilizations, each with its own identity and culture.”

I could quote other people, but the point I am trying to make is that people have to understand that there is a better vision of the kind of impact globalization and trade liberalization can have on cultural identity.

Now, how do we deal with the proliferation of texts which all claim to be international instruments on cultural diversity? One fact has to be pointed out from the outset: these declarations, in terms of instruments, do not carry any legal obligations and are not binding. They simply represent a first step toward commitment which does not bind any government.

Agreements or conventions, on the contrary, are more or less legally binding, depending on their content. It is interesting to note in that regard that two of the three declarations on cultural diversity which I have just mentioned, namely those of the Francophonie and UNESCO, refer directly or indirectly to the possibility of eventually drafting an agreement or convention on cultural diversity which is legally binding. So, as we have seen, people have already thought enough about this issue that we now have three draft instruments on cultural diversity.

This means that we are now well into the second stage, which will contain many references to the declarations on cultural diversity. In fact, as soon as everyone agrees on a basic draft which could pave the way for negotiations and measures to be taken, we will move into the third and final phase, which will involve the adoption and implementation of the instrument by politicians.

¿ (0940)

But at this stage , it is important to understand the similarities and distinctions between the three draft instruments in terms of their content and the effort involved. This is all the more important since Canada is closely identified with each of these instruments.

Each party contributes to the best of its knowledge to the issues involved in an international instrument on cultural diversity. The parties all share the belief that a country has the right to maintain or adopt measures it deems appropriate for the development of its cultural expression and to promote and foster cultural diversity.

Of the three drafts, the most radical and binding one, in terms of obligations imposed on countries, is the agreement drafted by the International Network on Cultural Policy. It clearly represents the type of contribution expected of civil society, that is, it presents a firm and clear position with regard to the needs of civil society. There is some overlap with the two other agreements, but this one also addresses specific issues. In several areas it uses fairly economic terms and you could say that the main problem with it is that it may not garner the support of enough countries to ensure its implementation because of its markedly more binding nature.

The two other draft instruments are not very different from each other. Rather than imposing many obligations on governments, these instruments focus mostly on giving governments the right to take the measures they deem necessary to promote cultural expression and diversity and, of course, on requiring that they recognize the measures taken by other countries.

In its current form, the International Network on Cultural Policy agreement focuses mainly on culture. The clear intent of the drafters was to make this instrument a reference document and a code of conduct for every government which considers the preservation of cultural diversity and distinct cultural expression as essential elements to true globalization. In other words, the objective of the instrument is not to amend the WTO's legal instruments per se, which only the WTO can do, but rather to build a mainly cultural vision of the relationship between trade and culture.

The SAGIT for cultural industries draft instrument, for its part, uses more trade-oriented language which aligns more closely with the WTO.

Therefore, can we say that there are two different concepts of the instrument? It is difficult to say for sure, but what is clear, however, is that UNESCO would have trouble dealing with an instrument which is clearly more trade-oriented. Following the last ministerial meeting of the International Network on Cultural Policy, which was held in Cape Town last October, and the last Francophonie Summit held in Beirut, also in October, it is now up to UNESCO to negotiate such an instrument. If those negotiations fail, there will be serious repercussions.

Indeed, if there were to be no independent instrument, which would be difficult to negotiate, the only other possibility lies in its negotiation within the framework of the WTO, which is highly risky of course.

Of the three draft instruments on cultural diversity, the one which responds the most to Canada's concerns today is the one drafted by the Sectoral Advisory Group on International Trade for Cultural Industries. Canada does not necessarily want the draft to remain unamended, but what it seems to be looking for is an instrument which contains economic and trade-oriented language which would align it more closely with the WTO. It would not be far-fetched to think that Canada has already thought about negotiating this instrument within the framework of the WTO.

If that were to be the case, we should worry. The WTO does not have the authority to deal with cultural matters and if it were given the mandate to do so, it would tackle the issue from a trade perspective. In fact, a successful defence of cultural diversity depends on a three-pronged approach: first, determined action by civil society and pressure on governments to take seriously the issue of preserving cultural diversity; second, a refusal on the part of governments to commit themselves to WTO negotiations unless there exists an international treaty on the preservation of cultural diversity; and third, the instrument in question should be a complement to the other two types of measures.

¿ (0945)

From that point of view, I do not think we can separate these three approaches, which represent the pillars supporting action in the area of cultural diversity. The instrument is as important as commitments made at the WTO and also as important as the action taken by civil society.

Thank you.

The Chair: Thank you very much, Professor Bernier.

Mr. Pilon.

Mr. Robert Pilon (Executive Vice-President, Coalition for Cultural Diversity): I would like to begin by thanking the chairman and committee members for having invited a representative from the Coalition for Cultural Diversity to appear before this committee.

I think it is extremely important that members of this committee study this matter at this point in time. I feel that parliamentarians in Canada and in other countries will have an important role to play in the coming years to ensure the success, that is, the creation, development and implementation, of this new international treaty on cultural diversity.

You have probably all heard of the coalition, which represents 32 professional organizations established in Canada and which represents artists, creators, authors, directors, editors, record and film producers, broadcasters, in short, every major professional association in Canada.

In the folder I handed out you will find a pamphlet which lists all the associations which are members of the coalition.

The coalition was created informally in Quebec in 1998 at the same time as the negotiations for the MAI were happening. Then, in the fall of 1999, the coalition grew to include all professional organizations, that is, most of the major professional organizations in Canada.

This coalition is somewhat unique in Canada, because it includes professional associations which represent writers, but also professional associations representing editors, and even others representing actors and movie producers, as well as movie directors.

It is an open secret that the members of movie producers' associations and members of actors' associations do not always agree. We do not always share the same vision on what the ideal film policy could be. It is also a fact that associations representing editors and those representing authors do not always share the same vision with regard to the best book policy, for example. I think this is a normal state of affairs in a democratic system.

The remarkable thing is that within the coalition, despite divergent opinions on certain issues, including issues affecting cultural policy, editors and authors and movie producers and directors all agreed to join because there was one basic thing everyone, including the thousands of artists and producers and editors in Canada, could agree on: the basic idea that Canada and other countries should have the sovereign right to be masters of their own cultural policy. That is key.

Culture, movies, books, records: these are not goods like any other.

¿ (0950)

[English]

You cannot apply to production and trade in film, books, music the usual rules you would apply to the production and international trade of cars and refrigerators, as Peter was saying. This is a key point here. This is the basis of our actions. All the members of the coalition feel strongly that cultural policies are crucial in Canada and in many other countries for the development of culture, and neither culture nor cultural policy should be put on the table of trade negotiation, they should be kept out of those trade negotiations.

This is also why we think--and this is in our mission statement adopted in June 2000--there should be a new international convention or treaty. I'm not a great fan of the word instrument--what are we talking about? I'm an economist, not a lawyer. Let's say a convention or a treaty, so everyone understands. We have advocated strongly for more than two years now the development of this international treaty or convention. What should that treaty be? It should be the legal foundation that will guarantee that states, countries, and governments all over the world will have the liberty to maintain, develop, and implement their film policy, their book policy, their music policy, their theatre policy, their museum policy, and so on, to make sure local or national culture will continue to develop in all parts of the world and there will be a true diversity of culture in all parts of the world.

Sometimes people here or in other parts of the world will ask me whether it isn't protectionist. I would answer, no, it's not protectionist, it's not an old guard idea, far from it. It's one of the more modern ideas, I think. Cultural diversity is not the past, cultural diversity is the future. I could speak about Portugal, I could speak about France, I could speak about Chile, because it's the same challenge everywhere. How do you make sure people living in Chile will have enough access to a film made by a Chilean director? How do we make sure Canadians will have access to books written by Canadians? How do we make sure French citizens will have access to French music produced by French creators? This is not closing the door to music, film, theatre, or books coming from other countries, but just making sure local culture will be available in each country and, if I could use an economics term, in the supply of cultural goods and services in any country there will be a balance between what is coming from the creators in those countries and what is coming from other creators in other countries.

There's another aspect to diversity. Take the example of film in Canada. Canadian films are only 3% of the Canadian market, which means that 97% of the films on our screens are foreign films, so this is not balanced. I'm not saying that balance is 50-50, there's no magic number here. Minister Copps now has put in place a new program to bring that level to 15%. It's already higher than 3% in Quebec. In France it's 42%, in Korea it's 42%, in other countries it's 8%. But 3% is not enough.

¿ (0955)

Second, if you look at the 97% of foreign films in Canada, most are Hollywood films--I'm not even saying U.S. films, I'm saying Hollywood films, those 200 movies produced each year by Hollywood's major studios. We see very few independent U.S. films in Canada. We see very few Italian films, Greek films, Spanish films, Chinese films, and so on. What we want is to be able to see more Canadian films. At the same time, we want to see a larger diversity of foreign films in the market, and this has nothing to do with quality of U.S. films. I'm a big fan of many U.S. films, but this is not the question. The question is how we make sure you have access to a diversity of films. Try to picture this at the world level, and then you will see that if we could make sure of a cultural policy that would be maintained, whatever the future of trade negotiations, we could develop more local productions in all cultural sectors in every country.

What would we be creating? We would be creating the basis for more trade, suprisingly. As an economist, I learned in International Trade 101 that the first condition for trade is local production. If you don't produce locally, you can't export. So try to picture a world, in 20 or 25 years from now, where there will be more local production in all sectors of culture in all countries. Then there will be a basis for more circulation and more balanced circulation and trade of those cultural products all over the world. This is the view we have in the coalition.

So this is not a protection issue, it's a very open view, but at the same time, we've been advocating with the Canadian government, and we're pretty satisfied with the position taken up to now. We have to make sure we don't put culture and cultural policy on the trade negotiation table, that Canada keeps its sovereign role.

I'm taking too much time, Mr. Lincoln, but I just want to say a few words about two other things.

[Translation]

Since the formal creation of the coalition in November 1999, we have made representations throughout Canada and abroad. In September of 2001, we organized an international conference in Montreal which brought together representatives from about 50 professional organizations from ten countries. There were actors' associations from Argentina, film producers' associations, book editors from Chile, professional associations from every sector and from several countries, including Denmark, France, Spain, Mexico, Korea and others.

There was a follow-up to this international conference, which included several missions abroad by coalition representatives. Since then, new coalitions were created based on the Canadian model bringing together both editors and authors, producers and directors, and so on. These new coalitions were created in Chile, France, Korea, Mexico and Argentina, and two new ones are in the process of being created in Australia and New Zealand. In short, we have created a type of model based on the idea of bringing together various professional associations by having them set aside their differences in order to speak with a louder voice to their governments.

In conclusion, I would like to speak to this new instrument. We have been supporting this concept since June of 2000. From the outset, we have asked for this new instrument to be focused more on culture rather than trade. We have also said from the start that this new instrument should not be developed under the auspices of the WTO, but that it should be developed in a forum which would make culture its priority.

That's about as far as we have gone. We have not yet discussed potential scenarios, but that will soon happen. However, as we said a little earlier, there has been a lot of activity over the last six months: on the initiative of Ms. Copps, a lot of work has been accomplished within the Network of Culture Ministers; many other culture ministers, such as those from Mexico and South Africa, as well as Minister Diane Lemieux of Quebec, have taken part in several of these conferences. The Network of Culture Ministers has made progress in its work. We now have a serious draft instrument which has received wide support and which will be the basis for future developments.

Furthermore, I would like to point out that the Declaration of the Francophonie Summit which was held in Beirut in October is now available in English. This represents a turning point. On the initiative of France and Canada, a group representing 53 heads of state and government, I think, including France, Canada, Switzerland, Belgium and several African countries, but also Quebec, which is a government member, as well as New Brunswick, adopted the basic declaration which states two things. First, countries should not make any commitments with regard to trade and commerce under international trade agreements, including at the WTO. This declaration was signed by both Jacques Chirac and Jean Chrétien. The declaration also states that countries should quickly draft a new international treaty on cultural diversity.

So, in this matter, France and Canada have shown important leadership, as has the Government of Quebec, which played a remarkable role both within the Francophonie and within the Culture Ministers' Network.

What should we do now? There will be many discussions. Should they be carried out within UNESCO or outside of it?

À (1000)

[English]

The most important thing in the few coming months is to build around Canada and France a core group of 15 to 25 leader countries that will drive the whole thing. That is the key thing. You will never have a new international treaty, in UNESCO or outside UNESCO, if you don't first have this core group of leader countries from different parts of the world to drive it.

A lot of work has already been done in the International Network of Ministers of Culture of the Francophonie. Through our informal network of coalitions, we have already done a lot of work. We're organizing, with the French coalition, a big international meeting at the beginning of February in Paris, where there will be between 150 and 200 professional associations from 35 countries. We hope, through this, another five to ten local coalitions will see the light of day and will be able to either work when governments favour this approach or pressure governments in countries that don't favour this approach. Building alliances at the government level or at the level of the professional organizations representing artists, producers, publishers, and so on is crucial now.

This thing is going in UNESCO now, and what should we do about that? At the coalition we have some reservations about some bureaucracy at UNESCO, but it's going there, so we cannot afford to miss the train. We discussed this matter at our executive committee meeting two days ago. We're going to have a board meeting that will focus on this issue in January. This is a personal opinion, but I believe at this time we must support the initiative taken by the Canadian and French governments at UNESCO. We must be sure what we get out of this process is not just a vague declaration, but a true international treaty that will be enforceable and will give a real legal foundation to the right of countries and governments to adopt their cultural policies.

Thank you. I've taken too much time, I'm sorry.

À (1005)

The Chair: Merci, Monsieur Pilon.

Mr. Stein is the chair of SAGIT, so it's really important to hear from him.

Mr. Ken Stein (Chair, SAGIT for Cultural Industries, and Vice-President, Corporate and Regulatory Affairs, Shaw Communications): Thank you, Mr. Chairman.

To summarize a number of points, I think you've heard of the initiative taken by the Government of Canada on the international network, and that's really a crucial part of this. I recommend that the research staff pull together Mr. Pettigrew's speech to the International Institute of Communications last week, where he laid out the point of view on the trade side, an important perspective on where this is all going.

The development of this instrument--what the Americans call “blame it on Canada” and what we see as very much a Canadian initiative--is important, because we're going from a world where trade has been very much about goods and issues on products like softwood lumber, steel, and pork to this century that is much more dominated by services. We are at a watershed, as was indicated at Seattle and is developing further within the WTO-GATS discussions. We really are at a crunch point in dealing with what the real future economy will be all about. So what I want to talk about is not so much where we've been, but where we're going, in that sense. As D'Rivera says, culture is not a commodity like the others, but neither are medical services, advertising, and a whole range of other things that are going to be put on the table in these upcoming trade negotiations. How countries deal with that and how we deal with it, both in Canadian terms and internationally, is going to be quite important.

On the cultural area itself, we issued a report in 1999. It was considered by your committee, and you supported the approach and the development of the instrument that was subsequently adopted by the Government of Canada. We were then faced with the idea of defining this instrument. There was also work done at the international level on a draft. There's been quite an effort within Canada, as you see represented here by the coalition. You're going to hear from Mr. Neil about the non-governmental organizations. There's been a very important discussion, but now the really hard slogging begins.

On the domestic side, we will have to be very clear about what we mean by cultural products and services, because it is so important to the future economy. When you get into areas like advertising, publishing, and entertainment, you have to recognize that other people may have different views. As Mr. Pettigrew said last week, Jack Valenti says cultural films are films about the north or about flowers, but Star Wars isn't a cultural product, it's entertainment. But we don't see it that way, we see it very much as a culture product. Within Canada we will have to be very clear exactly how we define culture, because we're going to be asked that question internationally.

We will also need to take a hard look at what kind of policies have worked and have not worked. When you have an exemption policy that basically says you maintain the right to do whatever you want in any area, you don't have to be that rigorous in defining what you're actually going to do, but when you're going to sit down and have a rules-based instrument, which is what we have advocated, we will have to be very clear about specifying what kinds of things we are willing to do, because if we don't specify them, we will be caught up by the definitions in the future.

Second, on the international side, SAGIT advocated a two-track approach. We indicated that there should be the development of the instrument, but we also felt that at some point there had to be a hook into the trade discussions, we had to be conscious of that. I think the Canadian government's policy on this has been quite strong. It has basically said we're pursuing these discussions on the trade side with respect to services, but we will put nothing that has anything to do with culture on the table until we have seen the further development of the cultural instrument.

À (1010)

But the train goes on, and the WTO-GATS discussions will continue. By March 31 there will be demands put on the table. We know there are content demands some countries are putting on to revise the broadcasting content rules. We know there are demands being put on the table with respect to advertising. Canada will have to respond to these demands, so it will be important to sort out our issues.

This brings me to the issue of time. If not decades, trade discussions tend to take at least a span of years. On the other hand, there are a number of other discussions going on with other bilateral agreements. Other kinds of accords are being discussed where cultural positions are really quite important. So I think this is not an area where we have the luxury of time. I think there has to be a strong discussion domestically about exactly what we want to do, as I've said earlier. As this moves forward, we also have to be very aware of what's happening on the international side.

As to the United States, this is a huge issue, because the Americans are not comfortable with this discussion. They have taken positions in other discussions bilaterally, either with respect to accession to the WTO of particular countries or in other fora where they have raised concerns about this. It's quite a natural concern. The entertainment business in the United States is a huge business. We understand it's considered to be their number one export business. It also has huge political clout in the United States. There are going to be concerns about how this instrument will develop.

On the other hand, the Americans are not homogeneous. In discussions we tend to think too much that the U.S. view of the relationship with Canada is on the Ottawa to Washington shuttle, but in fact, there's a whole range of diverse opinions within the U.S. about how one can deal with issues like local access with respect to ownership and tax subsidies. We see the discussions going on in Hollywood with respect to their concerns about Canadian production, ill-founded as they may be. Within the United States there are independent film producers, labour groups, and other groups that I think Canadians should do more to reach out to. I do not think we should judge everybody just by what the U.S. trade representative says.

The economics of this are really important. We maybe tend to feel we have more concerns with the current government approach in the United States in respect of how they would pursue this, but under the previous administration, one must not forget, the U.S. trade representative at the time felt that the best model for the development of telecommunications in the world was the Telecommunications Act of 1996 in the United States. We've all seen that this model didn't exactly work out the way we wanted to see it work out. The interesting thing about the United States is that they sometimes do have a single model they're putting out there, but there are means to have a discussion with Americans that can advance this understanding of the issues we have with respect to culture.

The other thing, as Robert said today and Peter Grant said previously, is that even if the Americans don't come along in the beginning, they are the largest trading partner. As Mr. Pettigrew indicated, it's important to try to come to an agreement with them on this. But on the other hand, having an agreement with France and 15 other key countries will have a tremendous impact on how this is viewed as the discussions move forward. This will have an influence on the Americans. As this is moved through the GATS processes and procedures, it will be important to have these issues on the table.

In conclusion, Mr. Chairman, I would just say this is now at a point where we will have to become more specific about what we want to see by way of an instrument. We will have to be more specific about what we really want to see in our cultural policies, what has worked and what has not worked. We will need to have a very good discussion within Canada as to exactly how we want to see this unfold. I think your committee will, of course, play an important role in how the debate moves forward.

Thank you.

À (1015)

The Chair: Thank you very much, Mr. Stein. I think you've made a very important point about exemption on one side and a positive instrument. It's much more challenging to set it out.

We'll now conclude with Mr. Neil from the International Network for Cultural Diversity.

Mr. Garry Neil (Coordinator, International Network for Cultural Diversity): Thank you very much, Mr. Chairman. Thank you very much, members of the committee.

The Chair: To allow some time for the questions, I just wanted to point out that we have three-quarters of an hour to go.

Mr. Garry Neil: I'll be as quick as I can be, Mr. Chairman.

The International Network for Cultural Diversity is a global network of NGOs concerned about the negative effects of globalization on our cultures. We have more than 350 members in 60 countries. We were founded in Santorini, Greece, in 2000. We met for the second time in Lucerne, Switzerland, in 2001. We have just concluded our third meeting in Cape Town, South Africa. We operate in parallel with, but quite separately from, the International Network for Cultural Policy, which is the ministerial network. We are the civil society side. Our delegates came from 37 countries. We had almost 200 people in Cape Town, from everywhere from Pakistan to Angola and Botswana to Brazil.

I would like to spend just one moment to tell you who was on our steering committee. I think it will give you a concrete illustration of the breadth of involvement we have in the INCD, and I think it will help you to understand some of the positions I will put forward in a minute about the new instrument.

We have Leonardo Brant from Brazil, who is head of the Pensarte Institute, which is a cultural advocacy group in Brazil representing primarily the audiovisual sector. There is Peter Curman, who is a distinguished writer from Sweden and president of the Swedish association of literary and artistic professionals. We have James Early from the United States, the director of folklife and cultural heritage at the Smithsonian Institute and a well-known museologist. He probably travels the world more than any of us in the room at the moment. Leah Enkiwe from the Philippines is with an indigenous people's network there, primarily working on women's issues and women's cultural issues. Mireille Gagné from Canada is head of the Montreal office of the Canadian Music Centre. Atul Kumar is artistic director of a children's theatre company in India. Richard Letts from Australia founded the Australian Music Council and is formerly the chair of the globalization committee of the International Music Council. Katerina Marinaki, from Greece, a script writer, is president of the Greek scriptwriters' association, and now chairman of the European Scriptwriters' Federation. Nina Obuljen from Croatia is with an organization called Culturelink Network, which is an information network involved in transmitting information around the world for people in arts and culture. She formerly worked at UNESCO. Burama Sagnia from Senegal is the head of the African Itinerant College for Culture andDevelopment, which was a very important theme in our Cape Town meeting. Raphael Segovia from Mexico is an impresario. He created a citizen's network in Mexico opposing the destruction of some very important paintings in a building that was bought by Costco, another aspect of globalization and culture. Yvon Thiec from Belgium is president of the Belgium office of Euro Cinema, which is the European arm of French film and television producers. Mike van Graan from South Africa has just created the South African Network for Arts and Culture, which which will act on globalization issues as the INCD South Africa. Megan Williams from here in Canada is the executive director of the Canadian Conference of the Arts.

I wanted to do this because I think it's important to understand the implications of the convention discussion in a far broader context. While concerns about cultural homogenization are shared by people everywhere, globalization challenges cultures in different ways. We are united in the INCD on various issues, but we have to understand that there are also some very important differences.

À (1020)

So we proposed a draft of what we call the convention on cultural diversity. I agree with Robert, I don't like this idea of an instrument. I don't think anybody, outside a couple of countries, really understands what this concept of a new instrument is, but if you talk about a treaty or a convention, people immediately understand what you mean. So we call ours a convention on cultural diversity. We issued a draft in March of last year. It was discussed within our membership. We revised that, and we presented it to a meeting of the INCP working group in May 2002. We further revised it. We had a rich and thorough discussion about our proposal in Cape Town. We will be further revising our draft as a consequence of that discussion, and it will be available by year's end.

Professor Bernier has pointed out some of the differences between our vision of the convention on cultural diversity, where it is different from the vision of the sectoral advisory group on international trade and the vision being addressed by the International Network on Cultural Policy. Let me just talk about a couple of points.

The INCD is committed to working to ensure that the convention cannot be used to justify acts that are contrary to fundamental human rights and basic democratic principles. That's why we've included in our draft recognition of the right of the artist and creator to freedom of expression and freedom from censorship. We also have language that provides an explicit prohibition on the use of the convention in a manner that would infringe human rights. We also are trying to provide benchmarks, measures governments can look to as a way of developing their own culture and their own cultural industries.

We also had a rich debate about how you define culture and how you define cultural diversity. It will probably interest you to know there are quite different perceptions of those words from different regions of the world. We were advised by a number of delegates from colonial countries that cultural diversity was used as a tool by the colonial masters against the colonized. We need to be very careful about how we use terms of that kind, how we define them, whether or not we should define them.

We spent a long time debating what culture is, and we determined that the best approach is not to define it within the treaty. Some of these things are well defined by UNESCO, for example, and we cannot allow the convention to engender debate on sensitive issues that have been resolved in other recognized international documents and treaties.

On diverse communities, we think it's critical that there be special recognition of the need to preserve threatened cultures, especially languages, including those of indigenous peoples. This is in our draft treaty, it is not in the other draft treaties. We believe this is quite an important matter.

On trade agreement language, Professor Bernier spoke about this a little. In fact, we used the language of trade in our draft convention to outline the kinds of government measures that are permissible in a cultural context. We think this is one of the important ways to make the treaty truly effective as a barrier against challenges under trade treaties. That's why we have gone in that direction.

With respect to dispute settlement, we have raised some very fundamental principles, as civil society, that we believe are vital, however the dispute settlement system is formalized. The dispute settlement process must be transparent, it must guarantee input from third parties and non-governmental organizations, and it must acknowledge that the rights of individuals are equivalent to corporate rights. This goes back to some of the fears that were expressed among our own members about how a treaty, if not drafted carefully, could be used as an excuse to violate basic human rights and used in way that is not what we perceive to be supporting cultural diversity, but quite the contrary.

These are some of the ways our convention differs from the other two drafts you have. I'd invite your researchers to get ours from the website as soon as it's posted. It will be up by the end of the year. In fact, just give me a call, and I'll send you a copy.

I agree with Professor Bernier that when you're looking at the three drafts, the best one for Canada is the draft from the SAGIT. That's the one that most clearly and simply would solve the Canadian problem. But I would challenge you to think about how you will, in fact, solve the Canadian problem. The only way to do it is when there are enough countries onside that you create the moral suasion necessary for this instrument to be the effective treaty under which cultural disputes are regulated and for that treaty to act as a barrier against actions under the trade agreements.

À (1025)

Professor Bernier said the main problem he saw with the INCD draft is the ability to bring together enough countries to make it workable, but I turn that very much on its head. I would counter that the problem with the SAGIT draft and with the ministerial draft is that you will not get enough countries together in support to make either effective as a barrier against challenges under the trade agreements. I think that's the real issue for us. How are we going to solve the Canadian problem when the Canadian problem might be understood in 12 or 15 countries around the world, but you don't have existing cultural industries and you don't have existing cultural policies throughout Africa? Then why is it in your interest? It's in your interest when the convention can do more than simply support the right of countries to maintain a shelf space for their own domestic product. It can point the way for you and your country on how you can occupy that space. I think that's the fundamental challenge we see in the INCD.

I thank you for your attention.

The Chair: It just occurred to me when you were speaking, Mr. Neil, that with such bright people as we have around the table facing us, maybe there should be a way whereby all our organizations could put their heads together to arrive at what is the best instrument for all. I don't know if this is too challenging to achieve.

Anyway, we have half an hour for questions, and if we discipline ourselves, everybody will get a chance.

Mr. Abbott, Madame Gagnon, Ms. Bulte, Mr. Harvard, and Ms. Lill have asked me for questions.

Mr. Abbott.

Mr. Jim Abbott: Thank you.

I agree with Mr. Lincoln. The nuances between the positions that have been expanded on today are lost on a novice like myself, as I'm sure they're lost on a lot of people in the world. Yet I do want to state clearly, from a Canadian Alliance perspective, that we are very sympathetic to what is being attempted here. We think there is a real role for the kinds of things you're doing, and as the heritage critic, I look forward to cooperating with you in trying to bring these things to fruition.

Mr. Neil, I was surprised at how much agreement I felt with what you were talking about, but I have a couple of practical questions. You mentioned freedom of expression, and I agree with you completely, but what about Salman Rushdie, and what about the other constraints that there are because of certain forces in the world? Perhaps I can put this to Mr. Gélinas as well. How, indeed, could these, whether they're instruments, treaties, conventions, or whatever word we choose, be put into effect in such a way as to provide a practical, down-to-earth way of overcoming the problem I've just identified?

Mr. Garry Neil: There's no easy answer to that question. On the one hand, the convention is not designed to solve that problem of Salman Rushdie and the fatwa against him. On the other hand, we do think there are important principles you can include in the convention, like the right of artists to freedom of expression.

Second, it goes to this question of the dispute settlement system, of having a system that is open to civil society input, so that you can bring the weight of civil society to bear on situations. That will be very useful in helping to raise awareness of these kinds of challenges and problems and will prevent the abuse of rights in the name of promoting cultural diversity.

So it's a difficult question. I don't think the convention can directly tackle that, but it can certainly raise some fundamental principles and indirectly have an impact.

À (1030)

The Chair: Mr. Gélinas.

Mr. Denny Gélinas: To complement what Mr. Neil has said, it's an important challenge. Our hope would be that the agreement will, at the end of the day, in respect of dispute settlement, have monitoring mechanisms. There will be expectations on the signatory governments to undertake certain actions and to behave in certain ways, and there will be a monitoring process as part of that mechanism. So in that context, we hope to be able to redress these kinds of issues, but as Mr. Neil said, it's a very difficult challenge.

Mr. Jim Abbott: I would like just a quick definition, Mr. Bernier and Mr. Neil, of “civil society”. It's a term that's used in so many different contexts. Mr. Bernier, I believe you used the term at least four or five times. I wonder if you could offer a definition within the context of what you were saying. Mr. Neil, perhaps you could also expand on the term within the context of what you just said, that civil society would bring pressure. I need to understand who or what is civil society.

The Chair: Professor Bernier.

Mr. Ivan Bernier: Basically, civil society is composed of non-governmental organizations that have an interest in a certain area, in the present case cultural matters. By and large, it excludes governments, but it can include all kinds of organizations that have different kinds of interests, including business. Businesses are organized to promote their interests, and they very often intervene, but the problem is less with business in general than with other organizations that have less power or less capacity to put forward their views. When many international organizations discuss their role in civil society, they include a broad spectrum of non-governmental organizations.

The Chair: Mr. Neil.

Mr. Garry Neil: I have nothing to add. Membership in our network is open only to those who are not related to a government.

Mr. Jim Abbott: But just to put a fine point on it, how would this civil society be able to bring pressure and accomplish what we're talking about in enforcing freedom of expression?

Mr. Garry Neil: It would do that precisely through its own networks and formal and informal organizations, networks that operate at national, regional, and international levels, in the same way that in the human rights field you have various international bodies, such as Amnesty International, PEN International, and so on, that raise awareness of some of these issues. So it would be those kinds of organizations.

The Chair: Madame Gagnon.

[Translation]

Ms. Christiane Gagnon: Thank you.

You talked about the Canadian problem. To counter the Canadian problem, which comes down to whether we can support our own culture, you suggest that governments should have the right to support their country's culture without interference from trade agreements. However, the coalition claims it represents about 15 countries and Mr. Neil, who speaks mainly on behalf of the NGOs, says that there is an even bigger coalition.

With regard to opening or widening the agreement, don't you feel that the NGOs, as described by Mr. Neil, would on the contrary receive less support for including countries which share our point of view?

Mr. Robert Pilon: There are in fact two separate Canadian organizations which cooperate on various issues. I think it is a matter of each organization having a different approach. Since their creation, the coalitions, as well as other coalitions in France, Chili, Mexico, Australia and elsewhere, were based on a different model; that is, they are first and foremost basically professional associations.

For example, in Quebec, there is the Union des artistes, the Association des réalisateurs et réalisatrices de films, the Association nationale des éditeurs and the Union des écrivains et écrivaines. These associations bring together creators and producers, that is, people who are directly involved in cultural production.

Under our rules, statutes and regulations, only these types of associations may become members of our coalition. It is not that we do not think there are other citizens or citizen groups which work in the area of cultural promotion. We think they can become involved in issues of cultural policy; we have nothing against that. Indeed, many of them are part of the international network which Mr. Neil represents, which is a good thing. It is simply that professional associations such as ours decided to speak with an independent voice, but what we have to say is not at all in contradiction with the work carried out by Mr. Neil's network.

I would like to come back to something Mr. Neil said with regard to third world countries. We have to be careful about what we say with regard to third world countries, especially since developed countries such as ours can easily become a little paternalistic when we talk about third world countries. We should be very careful. The third world is not a monolithic bloc anymore.

The cultural differences between the third world countries are huge. For instance, Chile produces 15 films per year. Korea has a very developed film and television production industry, of which 42% is directed at the domestic market. It also has quotas for Korean films and a developed economy. However, it is still a developing country.

On the other hand, there are very poor countries in Africa and Asia. It is not that they do not have any cultural industries, as Mr. Neil claimed, but their cultural industries are just starting out. They are starting to develop a music industry, but Benin, for instance, does not produce 15 films per year. So we must be careful not to lump all these countries together...

In fact, the United Nations has begun to draw distinctions. When the United Nations refers to developing countries, there is a sub-group called the least advanced countries, or LACs, which truly are the poorest of the poor. It is true that these countries do not have a very advanced cultural industry, but in many developing countries—I could name at least 50 or 60—there are book, movie and music industries. Of course, they are not as developed as those in France or Canada, but they exist nevertheless. People in those countries also want to produce movies, they want to watch homegrown movies and want to protect their cultural policy under international trade agreements.

Therefore, there are many similarities between the problems faced by Canada and France and other developed countries, and those faced by Mexico, Chile, Argentina, Korea and many other developing countries.

À (1035)

The Chair: Final question, Ms. Gagnon.

Ms. Christiane Gagnon: Mr. Neil said that the nature of cultural diversity should be discussed further. But in trying to defend culture more strongly and in trying to define the meaning of cultural diversity more clearly, do we not risk alienating some countries from joining such a cultural protection tool or treaty?

I read that Brazil or Argentina had shown lukewarm interest for this type of treaty, because they are in the midst of negotiating a trade agreement with the Americans who may find this type of agreement unacceptable. So I was wondering whether the approach taken by Mr. Neil and his associations would not prevent certain countries from signing on to this convention.

[English]

The Chair: Mr. Neil.

Mr. Garry Neil: First, just so it's clear, I am not arguing that we should define cultural diversity, quite the contrary. I'm arguing that we should be careful about defining anything within the terms of the treaty, because that would alienate certain groups of people who would take different interpretations of the same term. I'm saying we should be clear what we mean by cultural diversity, which is tolerance, respect, and celebration of our differences, because that's not the concept others use or would read into the words “cultural diversity”.

À (1040)

The Chair: Ms. Bulte.

Ms. Sarmite Bulte: Thank you very much.

Thank you all for coming today. I've been following the INCP instrument very closely, because I was part of the network in June 1998 when the minister first brought all the ministers together. And after listening, I have to tell you, as much as I know about the INCP document--there was a first draft submitted in South Africa--I was totally unaware of the fact that there were three different instruments or conventions being negotiated. I'm concerned that if we can't agree among ourselves when we have a common Canadian problem, how are we ever going to get international agreement among countries?

I have many questions, and unfortunately we don't have time. At the beginning, Mr. Harvard and I were talking about how this instrument, or convention, or treaty affects broadcasting as such. That's one question that's in our study.

I'm concerned that the GATS is coming up in March. That's when their decisions will be made as to what to put on the table and what not to. I know the Minister for International Trade has said that culture is not on the table--at least he said so a few months ago. I have not seen the minister's speech from last week, so I'll look forward to getting that.

To answer Mr. Abbott's question about the Salman Rushdie thing, I see that not every country is going to sign on to this. I see the arts and culture and why we preserve and promote it; it's an essential part of democracy. Countries that are not democracies are not going to buy into this convention or treaty. Not all the countries are members of the WTO.

Mr. Neil, you talked about the number of countries to get consensus. What is the critical mass? We started the convention on land mines with a few countries, and the Americans said it was never going to be done, yet it has happened. The Americans are still not onside, and there will be those who say that unless the Americans are onside, they'll never be onside.

Going back also to Mr. Neil and his questions on cultural diversity, my understanding is that the government has a framework on cultural diversity. It's in this package here. One of the pillars of that framework is this whole concept of promoting human security. Do we all agree on that? Do these three instruments address those concerns?

What will happen--and this is on the trade side--if telecommunications goes to the table in March with the GATS? How will that affect the things we're trying to do with this instrument and things we're trying to do with foreign ownership?

Since, again, we're not looking at this but the industry committee is, I have some grave concerns, and I'd love to hear Mr. Grant's comments on that.

Mr. Peter Grant: You've asked a number of different questions. I'll just try to go quickly through them.

On the issue of the fact there are three instruments out there and some confusion, the SAGIT instrument is the only one I would call a made-in-Canada instrument. It was created with the help of people from the foreign affairs and heritage departments, and the people sitting on the SAGIT, of which I was a member. As we've all confessed, then, it's really a document we constructed to think through, “What does Canada need?” So that's the context.

The other two documents come out of working groups that have other members and countries on them. Canada doesn't control what these documents look like. They reflect a variety of interests, although I think it is reassuring that, with the key elements of this concept, all three documents share most of the common goals.

While a Canadian lawyer helped prepare Mr. Neil's proposed instrument, it was, of course, a different process. His instrument does have some distinguishing features and goes a bit more broadly into human rights issues than the other documents do, which are focused primarily on the trade and cultural issues. But they have a lot of common elements.

Over the next few years, I would expect you will see many more versions of these instruments, as each country comes up with them, has its own meetings of experts, and puts its own drafts forward. This is what happens in all of these international conventions—there are draft sections. The end result of this will probably have all kinds of elements not in our draft. But that's fair ball. It's part of international negotiations. So we are really just setting this out as a model for discussion. It's a help to get people up to speed on what this is intended to do, and to work on this level.

Your second question was on how broadcasting is handled. I know your committee is working on this. If you go carefully through it, you'll see, as the first point, that broadcasting is included within the rubric of the cultural activities and industries embraced by the instrument. So it's specifically covered. You will find it in the definition of cultural undertakings.

You will also find explicitly mentioned, in the annex of permissible illustrative measures, things like subsidies, quotas, foreign ownership rules, and funding of public service broadcasting. These are all the techniques and tools that many countries have, including Canada, to support their broadcasting system. If you go through this list, it even includes the possibility of

measures to require that cultural undertakings that have a dominant position within a particular genre or activity support or give equitable access to cultural content of national origin that is created or originated by independent creators or producers.

So that sort of rule....

À (1045)

The Chair: Are we now talking about the SAGIT instrument, Mr. Grant?

Mr. Peter Grant: Yes, this is the SAGIT instrument.

The Chair: We don't have the document before us.

Ms. Sarmite Bulte: We don't. I was just going to ask, Mr. Chair, if we could get a copy of it.

The Chair: Yes, we are going to be getting the document.

Mr. Peter Grant: So our thought certainly was to embrace within our instrument, essentially, the tool box of cultural policy measures Canada currently has, or might consider adopting.

The interface between broadcasting and telecommunications is an interesting question. The WTO does have much more aggressive trade disciplines on the telecom side, because of the basic telecom agreement that was part of the WTO package. In their definitions, however, telecommunications carves out broadcasting and program-carrying undertakings. So for now, broadcasting, as defined in the country that has it, is not covered by these basic agreements.

We define broadcasting a little more widely than many other countries do. We include video on demand; Germany does not. We include various aspects such that some countries take the view, “Oh, well, that's more like telecom.” Within these agreements, it's broadly acceptable for each country to come up with its own definition. As it currently stands, we have the freedom under the trade agreements to have our own cultural policies on broadcasting.

Ms. Sarmite Bulte: Where does cable fit in?

Mr. Peter Grant: Cable is part of broadcasting, in that context.

The Chair: Mr. Harvard, followed by Ms. Lill.

Mr. Garry Neil: Mr. Chairman—

The Chair: Mr. Neil, can I just skip you right now, just to give a chance to these two members to ask questions? You can pick it up afterwards.

Mr. John Harvard: I just want to pick up or follow the theme established by my colleague. I want you to help me establish a connection between your work and preoccupations and what we're doing with respect to the Broadcasting Act. One of our jobs is to look at the Broadcasting Act, to determine in our own way how well it's working, and to make possible recommendations. We'll make many recommendations to the government on how it can be improved.

One of the questions I have is, given your knowledge of the Broadcasting Act and how a broadcasting act fits into our cultural preoccupations in this country, what do you want us to say in rewriting the Broadcasting Act? Anyone can answer this question. If the Broadcasting Act is not working well, help us. Give us an idea of how it should be improved with respect to promoting culture and cultural diversity, whether here in Canada or in our partnership as a country with other countries. I think this is really important.

Either through the Broadcasting Act or through other instruments, if that's the word, we already provide certain supports towards cultural diversity. Are we facing the possibility of losing any of these conventions or treaties, whatever you want to call them, or are they all safe, as it were?

These are the two areas I want you to address.

À (1050)

[Translation]

The Chair: We will start with Mr. Bernier and Mr. Pilon, Mr. Stein.

Mr. Ivan Bernier: As for a possible suggestion relating to the review of the Broadcasting Act, I think that a concern is definitely expressed in the text from the Ministers' Network, namely the need to ensure cultural diversity with respect to access to a much greater diversity of foreign products.

When we look at the statistics both for television and for movies, in Canada and elsewhere, we note that what is shown on our screens is clearly identified either as American production or Canadian production. When it comes to the production of the rest of the world, statistics indicate that the levels are absolutely minimal, namely in the neighbourhood of 1, 2, 3 or 5% and very seldom above 10%. In Europe as well as in America—I'm not referring to the United States where foreign production is approximately 2% or less—and in developing countries, it is a constant problem.

I think that if we wish to ensure cultural diversity—and it really is a question we should give some thought to—we must come up with ways of providing a greater diversity of foreign cultural production in addition to Canadian production. For the time being, in most countries, this production is concentrated among two or three sources. The remainder accounts for very little. That is my suggestion.

As for the impact, I think that in the field of television and the audiovisual media, generally speaking there are several sectors where we may see some possible risks with respect to the ability to intervene on behalf of the audiovisual media and television.

For example, there are negotiations in GATT relating to subsidies for services. These negotiations are not progressing very quickly because it is an extremely complex issue, but when we do come up with a system relating to subsidies for television and movies, we will have to be very careful because we may be quite surprised to learn of the possible repercussions on our ability to act.

Second, there are also of course well-known concerns such as radio and television quotas which will certainly come up in the negotiations.

Third, there is a hypothetical matter which may be raised, namely investment. We will soon have to decide whether we are willing to go along with negotiations in the WTO on an international agreement on investment. If so, we will once again be facing the controversial debate on investment and all the issues that were raised in the discussion of the MAI, the Multilateral Agreement on Investment.

So there are problems and issues that cannot but have an effect on Canadian broadcasting policy.

The Chair: We'll be hearing from the CRTC at 11 o'clock.

À (1055)

[English]

Mr. Ken Stein: I see.

The Chair: The CRTC is coming at 11 o'clock. We only have a few minutes left and I have a lot of requests for people to intervene, so perhaps you would be brief, Monsieur Pilon.

Mr. Robert Pilon: Mr. Abbott, in response to your question, the Coalition for Cultural Diversity has elected not to come in front of the committee and present a brief on the broadcasting review, but many of the 30 association members of the coalition have come to present a different view.

I want to insist on one point. It's great that this committee is still able to discuss whether we should amend, and how should we amend, the Broadcasting Act. Let me brief you on another country where this can't happen any more, New Zealand. New Zealand in 1994, at the end of the Uruguay Round, decided to make a liberalization commitment in the subsector of television, so they gave full market access to all other countries. They had before that local content on television just as Canada and many other countries do. Because they made a commitment in 1994--they were one of only ten countries that made a commitment to the liberalization of their television service--they were forced to dismantle their local content quota. It's too late for parliamentarians in New Zealand today to have a discussion like you're having about amending or not amending their broadcasting act.

Canada was courageous enough at that time in 1994 to resist the pressure and not make any commitment on broadcasting or any cultural sector. Trade Minister Pettigrew said, and repeated many times, and the Prime Minister said, we're not going to make a commitment this time around. So we're preserving our ability to have cultural policy.

Which broadcasting policy we should have is another matter, but at least we have the liberty to have a broadcasting policy. But to keep that liberty we should do two things: continue not to make a liberalization commitment that impacts this in trade agreements, and make sure that we can in the long term create a legal foundation for that right through an international convention on cultural diversity.

The Chair: Mr. Stein.

Mr. Ken Stein: I think the key on the broadcasting side, quite frankly, is that you have to look at whether you want to be all-encompassing. I agree totally with Robert that we have to be able to preserve the right to maintain what we do, we have to very much focus on content, because how other countries define telecommunication services, and satellite issues, can raise real issues. One example is on direct-broadcast satellites. The Americans pulled that out of the WTO accord, so we don't have an agreement there. They did reach a separate bilateral agreement with Mexico, and so now they're working out arrangements with Mexico that do not include us in those discussions. So it's an issue.

If we are all-encompassing, if we basically say in terms of our broadcasting that everything is included and we won't talk about anything, it will be a problem. If we focus on what's really important about broadcasting, what's really required in terms of maintaining our content obligations, what's really important in being innovative, which is very important....

We have focus groups where people have basically said, in the broadcasting system we need more competition. If I work for Canadian Tire and Wal-Mart comes to Canada, Canadian Tire has to change and be competitive.

So the broadcasting system and cable and broadcasting companies also have to be competitive. We can't just hide behind protectionist barriers. We have to be able to be out there and assertive about it.

To that extent, one of the concerns about the Broadcasting Act is it does not put enough emphasis on the consumer and it does not put enough emphasis on competition.

Á (1100)

The Chair: Mr. Gélinas and Mr. Neil, very briefly, please.

Mr. Denny Gélinas: Thank you, Mr. Chairman.

I wanted to pick up on comments by Ms. Bulte in terms of having three texts. In fact, I think that's a richness we now have. We have thinking about what this issue is and why it's so important coming from various angles. The challenge now will be to develop a Canadian perspective looking at these particular issues, but we've done so much work in this country and we're in fact leaders in this context. I think that's all to the good.

As I mentioned in my introductory remarks, we have a number of challenges down the road. We have to finalize the text and one of the issues we need to deal with is the trade-cultural context. That work has to come. It's going to proceed over the next while. The document we have is not a final document. It's going to be tabled in some organization, negotiation discussions will begin at some point, countries will come to the fore, as Peter mentioned a minute ago, with their perspectives and their positions. The whole challenge in this, certainly in terms of the government INCP text, has been engaging in a debate with countries around the world to produce a position on, in the first instance, why culture is important and why cultural diversity is important, and why it's important for governments to have a lead role in helping shape that in the respective countries.

And talking about a critical mass, I don't know what the critical mass is, but you do need leaders coming to the fore and we see this happening over the past year. South Africa, Mexico, Colombia, Senegal, big countries and small, all regions, are coming out and saying, we understand why it's important and we want to work with you. So you need to continue that work over the coming months and make sure that you have more voices both from the government perspective and from Mr. Pilon's work in terms of the associations, from the NGO groups, so that you have multiple pressure points coming on government so that we get this idea pushed forward.

Thank you.

The Chair: Mr. Neil, you're looking very sad there. I haven't forgotten you. Be brief, please.

Mr. Garry Neil: I will be very quick.

One of the things we are dealing with, Mr. Harvard, is the question of diversity within. In the International Network for Cultural Diversity, we're not just concerned about diversity among nations but within them as well. This is why we have U.S. members, because they say, “That culture is no more a reflection of my reality than it is of your reality.”

There are two things you can look at in terms of the Broadcasting Act. One is to maintain access to a diversity of non-Canadian content and also to ensure that the system fully reflects the rich diversity of cultures that we have here in Canada, because that's very much what the INCD is about as well.

Finally, Mrs. Bulte, it would surprise me, at this point, if civil society and governments had an identical text. Our job is to push governments to do more and to do it better, and so I would fully expect, at this point in the process, that we would be pushing our governments to do more.

The Chair: Mrs. Lill.

Ms. Wendy Lill: Thank you very much.

I find, Monsieur Pilon, your comment that we are fortunate to have the liberty to still have a broadcasting policy, that New Zealand has lost theirs, is a chilling comment, and I don't feel fortunate. I feel that is the right we should have, and so should the people in New Zealand. I know you feel the same.

To Mr. Neil, the fact is, there seem to be missteps all along the way that could suddenly just send you down a slide and then you no longer have the ability to make decisions around your cultural sovereignty.

There are GATS discussions coming up, and you mentioned, Ken Stein, that there will be further demands to revise Canadian content rules being put forward. I'd like to know if you are aware of what those demands are and what implications they could have. I would like to know, from your perspective, basically the kind of crises points that are in front of us that could in fact make all of this for naught.

Mr. Garry Neil: Let me start and I would expect that others would have a comment or two.

We don't know what demands have been received by the Canadian government under the process of GATS, General Agreement on Trade in Services. Those have not been made public in more than a very general way.

Recently I was in Europe, and they are publicly discussing the demands that they have received from other countries. More than half of the countries that have tabled requests with the European Community and its member states have requested significant changes in audiovisual policy. They've requested everything from the removal of the content quotas to the opening up of foreign ownership requirements--the whole range of cultural policy measures. So more than half of the countries that have tabled proposals with the European Community have tabled proposals on audiovisual.

So it is more that just the United States, which is very worrisome. We would like to see what requests have been made of Canada. I think a useful thing for this committee to do would be to ask.

Ms. Wendy Lill: Perhaps I can direct this to the chair. Mr. Neil asked if our committee could undertake to find out, in terms of the Canadian content rules, what kinds of requests are being put before the GATS regarding audiovisual materials.

The Chair: Does anybody want to comment? Mr. Stein.

Mr. Ken Stein: First of all, I should indicate that the Government of Canada has actually led the way in trying to develop an open and accountable process for the trade discussions. Mr. Pettigrew took that initiative with respect to the discussions in the Americas, so he is being quite open on how the process works.

I think what we're governed by is actually the GATS process itself. As Mr. Neil indicated, it's the discussions among various groups about what they've put on the table and what they have not put on the table. The WTO controls what will actually come out at the end of March, and Mr. Pettigrew is committed to making as public as possible what we put on the table. I think it's up to each country to determine how public it makes what is put forward.

So if those things are put on the table, we won't be forced to exceed them, or whatever. But we have to be concerned about being very clear what we want to do in broadcasting policy, because under the telecom agreement, at the last minute we basically pulled out on the ownership issue. It wasn't just the Americans who were upset and agitated, and reacted by pulling satellites off the table; the Germans and the British were also very concerned.

So we have to be very clear about what we're trying to achieve. That's why I said that time was of the essence to really define within the cultural sectors--through further discussions in broadcasting, etc.--what we really hold dear to our hearts that we really need to have. That's going to be important, because to just say, “Sorry, with broadcasting we do whatever we want”, isn't going to work in these trade discussions. But if you address it to the trade department, they'll certainly be quite open about what kind of issues Canada is putting on the table or reacting to.

Á (1105)

The Chair: So in that sense, Mr. Stein, maybe you've answered Mr. Harvard in a way--that what we are going to say here might send a message about what we want.

Monsieur Pilon.

Mr. Robert Pilon: Ms. Lill, you mentioned the local or Canadian content quota here. We in Canada have a 60% Canadian content rule on TV, and there are similar rules in many countries, especially in Europe. I was in Australia two weeks ago, and their rule is 55% Australian content on television.

The day I was there for a big conference--a meeting with professional organizations to help them create their coalition--was the day when the bilateral free trade agreement negotiation was launched between the United States and Australia. The Australian newspapers were full of that, and one thing that was in the Australian newspaper was that the 55% Australian content quota on television might be on the table of those bilateral trade negotiations.

I just give this example because it's really important, and we didn't have time this morning to speak about regional negotiations, FTAA, and a lot of bilateral negotiations that are going on throughout the world now. There is one that is close to being concluded between Chile and the United States, and one on investment between Korea and the United States. A lot of them could create precedents in the cultural sector that would be bad precedents for Canada, and would limit our ability in the future in trade negotiations and limit our ability in the negotiation of this new international convention. So we should be very careful, and monitor those regional and bilateral negotiations, as they pertain to culture.

[Translation]

The Chair: Mr. Pilon, you referred to New Zealand. If you have any material that you can send us, it would be greatly appreciated.

Mr. Bernier.

Mr. Ivan Bernier: Yes, we do have material on New Zealand. Among others, there is a comparative study on local content that was carried out in New Zealand where a comparison is made with 10 different countries, including several European ones, and New Zealand. The study shows that for some years now, the local content in New Zealand dropped to 24 percentage points, which puts New Zealand at the lowest rank among the 10 countries being compared. That is quite remarkable. The study was carried out by a New Zealand television channel and it does provide figures and tables.

The Chair: Do you have this study?

Mr. Ivan Bernier: Yes. I can give you the reference.

The Chair: If you would be kind enough to send us any material you think may be of use to us, it would be appreciated.

[English]

Mr. Robert Pilon: The person to contact in New Zealand is Jane Kelsey. She's a teacher at Auckland University--sort of the local Ivan Bernier. She's an expert on those issues.

The Chair: Is she as good?

Mr. Robert Pilon: She's really good. We met her, and she knows the whole story about what happened with the quota, the trade liberalization, the trade committee in 1994, and all that stuff.

[Translation]

The Chair: It is good to know that there are two Ivan Berniers in the world.

Be that as it may, we must now turn to our next panel.

Á (1110)

[English]

Mr. Clifford Lincoln: The House is taking a break in its work tomorrow, so we had no option but to pack a lot of people into one session.

It's been a wonderful session for all of us. Thank you very much for your time and trouble in coming here.

I'd like to suspend for a few minutes so we can organize ourselves for the next speaker.

Á (1110)

Á (1118)

The Chair: I'd like to resume the meeting of the Standing Committee on Canadian Heritage. In the course of our study on the Canadian broadcasting system, we are extremely pleased to welcome once again, from the Canadian Radio-television and Telecommunications Commission, Mr. Charles Dalfen, chairman;

[Translation]

Mr. Jacques Langlois, Director General, Broadcasting Policy.

[English]

and Mr. William Howard, senior legal counsel.

Mr. Dalfen, the floor is yours.

Mr. Charles Dalfen (Chairman, Canadian Radio-television and Telecommunications Commission): Thank you, Mr. Chairman, and good morning, members of the committee and staff. My name is Charles Dalfen, and I'm the chairman of the Canadian Radio-television and Telecommunications Commission.

[Translation]

I am pleased to be here today to make my first parliamentary committee appearance as CRTC Chairman, to speak with you on a number of the important subjects you have been considering for the past year.

With me from the CRTC are Jacques Langlois, Director General, Broadcasting Policy and William Howard, Senior Legal Counsel.

[English]

You've asked me to focus on issues dealing with foreign ownership and cross-media ownership. With your permission, I will give you a brief overview of the commission's position on these two topics, and then answer any questions you may have.

Let me begin with the issue of foreign ownership. The commission is instructed under the Broadcasting Act to give effect to certain directions of the governor in council. One of the most important of these is the direction dealing with the ineligibility of non-Canadians to hold broadcasting licences, which was originally issued in 1969, and was last amended in 1998.

Under this direction, the commission can neither issue broadcasting licences nor grant amendments or renewals to applicants that are non-Canadian. The direction spells out the criteria that applicants must satisfy in order to qualify as Canadian. In the case of a corporation, a minimum of 80% of the issued and outstanding voting shares of the licensee corporation and 80% of its voting rights must be owned and controlled by Canadians. The chief executive officer and a minimum of 80% of the corporation's directors must be Canadians who normally reside in Canada. Where the licensee is a subsidiary, 66 2/3% of the parent corporation's issued and outstanding voting shares and voting rights must be owned by Canadians. Where the foreign ownership of a parent corporation is over 20%, the parent corporation or its directors cannot influence the programming decisions of the licensee. Finally and very importantly, the applicant must not be controlled by a non-Canadian.

When the commission examines licence applications where Canadian control is in question, it reviews a number of factors. For instance, it examines the degree of influence that a non-Canadian shareholder or other person could exercise over the licensee and its broadcasting undertaking via any relevant agreements, such as shareholder agreements, program supply agreements, intellectual property licensing agreements, or others.

To ensure that control rests with Canadians at all times, the commission may require amendments to be made to such agreements in order to limit the influence of non-Canadians.

Á (1120)

[Translation]

The Commission may also oblige licensees to seek Commission approval before non-Canadians may exercise certain rights under this agreements.

I should add that in addition to determining the eligibility of an applicant under the direction, the Commission does, in its decision, consider Canadian foreign ownership from time to time under paragraph 3(1)(a) of the Broadcasting Act, which declares that the Canadian broadcasting system shall be a effectively owned and controlled by Canadians.

[English]

I'll move along now to cross-media ownership.

The CRTC's mandate in this area stems from a number of sections of the broadcasting policy for Canada set out in the Broadcasting Act. That policy declares that the programming provided by the Canadian broadcasting system should provide a reasonable opportunity for the public to be exposed to the expression of differing views on matters of public concern. It also provides that the Canadian broadcasting system should encourage the development of Canadian expression by providing information and analysis concerning Canada and other countries from a Canadian point of view, and it declares that the Canadian broadcasting system should serve to safeguard, enrich, and strengthen the cultural, political, social, and economic fabric of Canada.

The commission has applied these provisions to cases before it dealing with cross-media ownership by seeking to balance a number of sets of factors.

One of the most important is the need to ensure that the Canadian public is well served with a wide variety of diverse voices, while allowing an opportunity for Canadian media companies to grow and prosper in an increasingly competitive domestic and international environment.

Another is the need to allow Canadian broadcasters to explore the potential synergies in news-gathering that newspaper affiliation might allow, while maintaining the broadcasters' editorial independence.

[Translation]

The Commission addressed the issue of cross-media ownership in a number of decisions in the Summer of 2001, concerning TVA, CTV and Global, the largest media ownership groups in French and English Canada. In each of these cases, the Commission held public hearings on the renewal of the television licences of these groups, which had, or had recently acquired, ownership interests in large daily newspapers. While the CRTC does not regulate newspapers, it did need to examine the potential impact of this cross-ownership on the television stations involved.

In the CTV and Global decisions, the Commission acknowledged that some degree of cooperation and sharing between commonly owned newspapers and TV newsrooms could increase the amount of original journalism available to Canadians and enhance the quality of news coverage. The Commission stated, however, that it must also be concerned about the possible loss of diversity of voices and the potential reduction in the number of distinct editorial voices available to the public in the system as a result of cross-media ownership and convergence.

Á (1125)

[English]

The commission therefore imposed a number of safeguards by condition of licence, including the following: management of broadcast newsrooms must be kept separate from newspaper newsrooms; an independent neutral monitoring committee must be created to receive and handle complaints pertaining to the statement of principles that the parties are required to adhere to; and this committee must report annually to the CRTC on all complaints received and how they are dealt with. Similar safeguards were also imposed by condition of licence in the TVA decision.

The commission has recently received reports from two of these monitoring committees. In both cases, no complaints were received regarding the commission's safeguards during the first year they were in effect.

So despite some increase in cross-media ownership over the past decade, the commission has licensed numerous new television and radio services across Canada. Canadians have many new media outlets available to them and an increased number of distinct voices. There are also numerous foreign sources of news and information available by cable and satellite, and many more such sources are available to the almost 70% of Canadians with access to the Internet.

At the same time, we must be vigilant as citizens of a democracy to ensure that we continue to have access to a diverse range of viewpoints so that we can be fully informed on issues of public concern that affect us, our families, and our communities, and so that we can have an effect on how these issues are dealt with and resolved.

[Translation]

I hope these brief remarks have been helpful. I know that I, along with many others in the broadcasting sector, are looking forward to your forthcoming report.

Thank you, Chairman and committee members. I would now be pleased to answer any questions you might have.

[English]

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

Mr. Abbott.

Mr. Jim Abbott: Thank you for your presentation.

I'd like to take you to page 2 in the English version, to the top bullet, which reads:

where the foreign ownership of a parent corporation is over 20%, the parent corporation or its directors cannot influence the programming decisions of the licensee.

How could the CRTC tell?

Mr. Charles Dalfen: What we do, Mr. Abbott, is in fact require that when ownership reaches the 20% threshold, a special programming committee is set up, composed of members who are not directors of the parent corporation, so that this programming influence cannot be exercised. That committee is charged with the responsibility for programming decisions of the licensee.

Mr. Jim Abbott: Is that programming committee set up within the given corporation?

Mr. Charles Dalfen: Correct.

Mr. Jim Abbott: And they answer to the CRTC?

Mr. Charles Dalfen: They answer to the CRTC in the sense that they are seeking to comply with the law. Perhaps Jacques can inform us as to whether in fact that has been a subject of review at hearings. It's certainly a matter that could be reviewed if interveners raise an issue about that point. I don't know that we've had any such issues.

Mr. Jacques Langlois (Director General, Canadian Radio-television and Telecommunications Commission): No. Most of the time the issue arises either through a licence application or in a case of an acquisition, where we'll impose that such a programming committee be structured into the organization. That ensures that the programming decisions are made by Canadians. Then their programming schedules and their programming objectives, if you will, are reported on in their annual reports, and so on.

Mr. Jim Abbott: I have a few more questions. First, do you have the tools at your disposal to be able to take any measures that you would consider necessary if you ran into a problem? If so, what are the tools?

Á (1130)

Mr. Charles Dalfen: Bill reminds me that we, in effect, prior-approve those committees and the composition of the membership on them. Going in, then, there is an approval by the commission.

I think the normal tools that we have are sufficient in that, through renewals and a complaints process that exists, we can deal with them. To our knowledge, this hasn't been an area of substantial concern.

Mr. Jim Abbott: That being the case, what would the difference be whether the foreign ownership of a parent corporation is over 20%, 40%, or 80%? In other words, there's some kind of myth--or I suggest it's a myth, but others would disagree with me--that somehow, if we have foreign ownership of people who are conveying content, those people are going to try to screw around with Canadians' minds or society, or something. I really don't know. It is, after all, the Canadian marketplace that they are going to with their content, where they're hoping to drive an advertising revenue to drive a positive bottom line.

So if we take what you've just said, that you have these boards in place, that the boards are operative, that you have the tools in order to enforce it, then in your judgment--and I realize that this is a policy decision by the department, and I hope I'm not putting you on the spot--would it really make any difference if it were a 20% threshold, or a 50% or a 90% threshold, if you have the tool in place already?

Mr. Charles Dalfen: Thank you, Mr. Abbott.

The commission works within the rules. This direction has been amended. The numbers have been adjusted from time to time. I don't think it's a numbers game. The issue for us is both enforcing the numbers and adhering to the levels set out in the direction. If these were altered somewhat, I suppose we could carry on as well.

The issue of Canadian control is, of course, a separate test from all the ownership and composition requirements. As I said in my remarks, we try to be extremely vigilant about Canadian control.

I guess that's the best answer I can give, as the body that operates these rules.

Mr. Jim Abbott: Thank you.

The Chair: Madame Gagnon.

[Translation]

Ms. Christiane Gagnon: Good morning and thank you for your comments.

Mr. Dalfen, in your statement you said:

...the CRTC mandate in this area stems from a number of sections of the broadcasting policy for Canada set out in the Broadcasting Act. That policy declares that the programing provided by the Canadian broadcasting system should provide a reasonable opportunity for the public to be exposed to the expression of differing views on matters of public concern.

You also said that the system “should encourage the development of Canadian expression”.

In actual fact, however, you are doing the opposite of what you say your aim is, namely to encourage the expression of differing views and opinions in Canada. The CRTC is relaxing standards for broadcasters with respect to drama programs. We have the figures. I have here letters from English-speaking Canadians telling me that the number of English-language drama series has gone down from 12 in 1999 to five in 2001. There is starting to be an outcry. This is supposed to have resulted in a 10.8 per cent loss of time worked in Canada by craftsmen and creators. This goes against the aims that you described in your statement.

The Commission has not taken any action with respect to satellites. Once again, we know that there has been a great deal of pressure to change the regulations on satellites. These companies have been allowed the freedom of the market and in several areas of Quebec and Canada they do not provide local and regional programing.

I know that you have made adjustments but such piecemeal action is not possible under the circumstances. Why are you not providing a framework for this sector, as has already been done in the case of cable broadcasting? I could give you a number of other such examples.

For example, when you grant licences, it goes against the aims that you claim to have set in your policy.

Á (1135)

Mr. Charles Dalfen: Thank you, Ms. Gagnon. You have raised very important issues.

First of all, with respect to drama programs in English, no one considers this to be more important than I do. I think that it is one of the most important objectives of our system. We are now attempting to provide encouragement. It is not a problem in French Canada because there we have very popular drama programs that are produced in the normal course of events.

In English Canada, the problem does exist. I do not think that we have taken measures to thwart this aim but it is clear that in the future, we will have to take further steps to correct the existing problem, as I see it. I have already issued a number of guidelines and retained the services of consultants and a very well-known broadcaster, Trina McQueen, to engage in consultation with the leading figures in this industry and other stakeholders so recommendations can be made.

We also concluded an agreement with Mr. Guy Fournier, a broadcaster with a large amount of experience, to help us benefit from the Quebec experience with drama programs. Ten or fifteen years ago in Quebec there was also a large American influence but the situation was gradually dealt with. We would like to know how this was done in order to apply the same recipe. Of course the conditions are not exactly the same in both parts of Canada, but what lessons can we draw from the Quebec experience with drama programming? We will have recommendations on this subject within the next two months.

With respect to satellites, 10 days ago in a speech I gave to the International Institute of Communications here in Ottawa, I said that we would have to take some steps to put a stop to satellite piracy or bring about a considerable reduction in this practice. We do not yet know what measures we should take. We work in a system of public consultations and we will carry out such consultations but for the time being, we are conducting investigations and holding meetings in an attempt to solve this very serious problem.

Ms. Christiane Gagnon: In the case of satellites, there is the problem of piracy but even more serious is the freedom allowed these satellites with respect to the signals they provide. The regions must have some access to local information. That is the particular aspect I wish to raise this morning. When people have cable, the situation isn't the same. Once they subscribe to a satellite service and they buy the dish, people discover that they will no longer have their regional and local information. The satellite companies are going against the Broadcasting Act which says that they must provide local and national news. The CRTC does not provide any framework for this. We will be returning to cross-media ownership in just a while but there is also an obvious lack here. Satellite services are now available in large centres, they are no longer limited to regions where cable broadcasting is unavailable. They are in competition with cable services and they should therefore, like cable companies, be required to provide signals that allow the community to have access to local information.

You are aware of all the effects resulting from this situation. People no longer buy advertising in the community because there is no local broadcasting during prime time. Do you think that you could issue a directive that would require the satellite services, just like the cable companies, to provide the signal for local news?

Mr. Charles Dalfen: Thank you, Ms. Gagnon. I'd like to make two points, if I may.

First of all, with respect to the issue you have just raised, there is an agreement between one of the satellite broadcasters and the Canadian Broadcasting Association, which we now have before us and which attempts to deal with this matter. I cannot discuss it with you because it is one of the matters on which we will be hearing public comments, but a proposal aimed at solving the problem has been submitted to us. What will the results be? We don't know yet but we are looking at the issue. What you have said about the subject is true and we must come up with a solution.

Second, you refer to the act being contravened. As you know, in the broadcasting policy and in the act, a great many objectives are set out. for us it is a matter of balancing these various aims. It is not so much a question of contravention or advancement. We must determine how we can best achieve this balance between the different objectives, sometimes contradictory, even within the same legislative texts. We must reach a balance for the system to function properly. That is always what we try to do and that is what we will be attempting in this case.

Thank you.

Á (1140)

[English]

The Chair: Thank you.

Mrs. Bulte.

Ms. Sarmite Bulte: Thank you very much for coming before the committee today. We've been anticipating your arrival since your appointment last January.

I have two sets of questions, one unrelated to the other, but with respect to your presentation you stated that one of the safeguards that the CRTC had put into place as conditions of licence in the cross-media ownership was an independent, neutral monitoring committee to handle complaints. In your statement you said no complaints were received regarding the commission's safeguards during the first year they were in effect.

I'm astounded by that, that there were no complaints. I mean, we've had people appear before us in the last two weeks, and to say that what we were hearing were complaints would be putting it mildly. So what does this committee do that these people wouldn't go there? I'm just very surprised to hear that.

As well, we've received a backgrounder on the Competition Bureau and the CRTC. I don't know who put it out. I wonder if you could perhaps elaborate on how this document has come into being. Is this something that you've negotiated with the CRTC? Would I be correct in saying that this document came into being after the Astral decision and after the decision that was before the court was settled between the parties? And I know you're a visionary, so I'm going to push the envelope a little bit. Is this where you see the CRTC's role going with respect to competition, or do you see the CRTC's role differently in this context?

Mr. Charles Dalfen: Okay, thank you. There were a number of questions, and I'll take them in order.

On the first one, the complaints deal with the separation of the newsrooms, fundamentally.

Ms. Sarmite Bulte: Only.

Mr. Charles Dalfen: The reports, that is. That's what the monitoring committees that are set up at CTV, Global, and TVA look at. I guess complaints about separation of the newsrooms have not come forward. If you've heard them, then that is indeed different from the reports we get. But the role of these monitoring committees is limited to patrolling the frontier that was set up in these statements of principles and practices that were attached as conditions of licences.

So unless there is a violation of those principles and practices, they would say we haven't heard a complaint about that.

On larger questions of editorial influence and content, that isn't their job. So that may be how you reconcile the two positions.

Turning to your question about the backgrounder that was issued back in 1999, that date was October 1999.

Ms. Sarmite Bulte: Oh, right, sorry. I thought it was 2002, obviously.

Mr. Charles Dalfen: So it was long before.

I guess it was done in an effort to try to be helpful to the public. It was not an official commission document, but it was one of these things that are done from time to time to try to help the public. They ask, how do we get through the massive bureaucracy in Ottawa? Well, here's help.

Unfortunately, the toughest cases can never be dealt with. So parties exercising their rights do so, and despite the best efforts at explaining how the system works, they run into contradictions. I know that's what happened in the Astral case. It's one of those things that I think ultimately probably has to be resolved in legislation somehow.

Let me just back up one step. There is no question that in the 35-some years that the CRTC has been in existence it has never issued a licence without really looking at the market. The market always involves competition of some sort or another. Can the market absorb it? Are there enough players? Should there be more players, or would that impoverish all the players in the market? So the element of competition has always been, and really must be, looked at in that licensing decision, or it would be a rather low-quality decision. So we've always looked at it.

But the word “competition” doesn't appear in the Broadcasting Act the way it does in the Telecommunications Act, which we administer, where it's quite clear that this is part of what we're supposed to look at.

We think we're supposed to look at competition, and always have. So I think if I were making a recommendation, I would suggest that new legislation provide a very clear statement that it is something we look at.

As to where our jurisdiction ends and the Competition Bureau's then begins, views on that can differ. We can get into that, if you like, or we can leave it to the time when hopefully there's new legislation clarifying it.

Á (1145)

The Chair: Very briefly, Ms. Bulte.

Ms. Sarmite Bulte: Again, it's unfortunate that our time is limited, because I think now is the time, especially if we're going to be looking at amending legislation and the directives of what you have to do. Should the CRTC have the ultimate say or should it be like in the case of bank mergers, where you have the Office of the Superintendent of Financial Institutions, and everybody has to come in line?

Unfortunately, we may not have time, but I would be very interested to hear your views on this.

Mr. Charles Dalfen: Well, I can give you some preliminary thoughts.

As a preliminary matter, I know we couldn't do our job on licence applications if we didn't have the power to look at competition. For me, the logic of that then says, well, if some other body can come in and say, having looked at a piece of that market, we can't approve this deal, then I think Parliament's intention as set forth in the current act, that this independent agency regulates and supervises “all aspects of the Canadian broadcasting system”, is jeopardized.

So I think the logic of the position would suggest that there be this ability to have the ultimate say on that.

Now, the Competition Bureau, in my experience, has been very assiduous in appearing before the commission. When I was vice-chair many years ago, they would appear regularly on these cases, because in their act there is the power to appear before agencies and tribunals and put forward a Competition Bureau position on the matter in question. That has always been helpful and I think should continue. But as to how the ultimate decision should go, I think it flows inherently from the power to regulate and supervise all aspects of the system.

Ms. Sarmite Bulte: Thank you very much.

The Chair: You've made a very important point. If the CRTC were to be seized with the powers of looking at competition, should it also have the power to appear before other agencies, so the same rights would be given to the CRTC as are given to the Competition Bureau appearing before you?

Mr. Charles Dalfen: Mr. Chairman, I think the mandates are somewhat different. As a quasi-judicial regulatory agency--and as over the years I think the courts have told us from time to time, “We don't want to hear from this body on its decisions or positions”--we really speak through our decisions.

So I'm not sure an advocacy role would be appropriate for our institution. On the other hand, the Competition Bureau does have the power to advocate and is responsible for a certain advocacy role, including before the Competition Tribunal. So I think it's appropriate for them to appear before us and other agencies. I'm not sure how appropriate it would be for us to advocate any position, since we are the ultimate regulatory and supervisory body.

The Chair: Thank you.

Mr. Harvard.

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

I certainly welcome your appearance here today, Mr. Dalfen, Mr. Langlois, and Mr. Howard.

Mr. Dalfen, I'm interested in getting some opinions or advice from you. I know you're constrained by the terms of reference of your work, but you do have a lot of experience and you work on the front lines of these issues every day. I think some of your opinions would be helpful.

Mr. Dalfen, when it comes to what you might call the models of cross-ownership in this country right now, and the model of foreign ownership, in your opinion, do you feel these models are meeting the test of the public interest? Of course, I suppose it would be helpful to know if you have an opinion on what is the public interest. Or does the CRTC have an opinion on what is the public interest? Have you defined it? This is my first question.

Á (1150)

Mr. Charles Dalfen: I think the short answer is that, in every decision, we look at what we think the public interest is, expressed through our documents, the Broadcasting Act and the Telecommunications Act. Have we defined it? The answer to that is, it's a very hard thing to define in the abstract.

Mr. John Harvard: So you haven't got it down to a few sentences or a paragraph, that type of thing.

Mr. Charles Dalfen: You know, there are decisions where we tried to set out the elements that we saw as the public interest in play here, but it's extremely difficult to do as any kind of high-altitude exercise.

Mr. John Harvard: Let me then ask you for a personal opinion. I guess it would have to do with Charles Dalfen's definition of public interest.

When we look at the cross-media ownership in this country, the enormous concentration and convergence and consolidation, do you think it really serves the public interest? Are you comfortable with it, knowing what you know about the situation? Are you comfortable? Do you think it's really doing the job?

And if not, what are we going to do about it?

Mr. Charles Dalfen: I'm happy to give you the answer, but let me preface my answer by saying that I've only been in this job for under a year and—

Mr. John Harvard: But you had some jobs before that.

Some hon. members: Oh, oh!

Mr. John Harvard: You're not a baby or a rookie....

Mr. Charles Dalfen: Right, but what I wanted to say was that I'm here in my capacity as chair of the CRTC, and not in my personal capacity. So I feel constrained in this regard to express views that my colleagues, for example—

Mr. John Harvard: Well, speak as the chairman of the CRTC. Are you happy with the model? Is it working well?

Mr. Charles Dalfen: As chairman of the CRTC, I can answer this question. I can contrast the situation with when I was vice-chairman of the CRTC, a post I left in 1980.

At that time, the number of print and electronic media outlets in Canada, available to Canadians, were far fewer than they are today. We had a few conventional television stations; no specialty, no pay-TV; and only fledgling stations, such as Global and City, and basically CTV and CBC for English-language viewers. Then you had the three-plus-one American channels. That was your universe of television at the time.

As for newspapers, I can't count them. But I think we can agree, if we think back on it, that today the number isn't that different.

When you look at the array of choices for alternative news voices available to Canadians today, it's mind-boggling. Whether it's Canadian specialty services, information channels, foreign channels—BBC, CNN, and so on—none of these were available. I think Canadians are probably better served that any other group in the world in terms of the diversity of news voices.

Mr. John Harvard: So when you hear people talking about their concerns over concentration, are you suggesting they're all wet?

Mr. Charles Dalfen: No, I'm saying you have to be vigilant. As I said in my remarks, I think you have to ask yourself, case-by-case, is this concentration group a problem?

Mr. John Harvard: But if I hear you correctly, Mr. Dalfen, you're basically saying you don't see any... The concern is not so serious, in your mind, that we should address the question of whether we should break up CanWest, Rogers, or BCE--you know, roll back the clock. You don't think there's any necessity to even address that question.

Mr. Charles Dalfen: You know, addressing and.... If people have concerns, I think they should address them. We're a free country.

Before I got here, this commission a few years ago approved the BCE takeover of CTV and its affiliates for reasons that were set out in the decision, which I'm comfortable with. We did not pronounce on the CanWest acquisition of newspapers because that's not our power; we don't have the power to approve newspaper ownership. But we did look at it at renewal, and the result of the renewal of both those groups was, as I said in my opening remarks, the establishment of statements of principles as conditions of licence. We feel these are working and satisfy the problems that we, as the broadcasting regulator, have.

Á (1155)

Mr. John Harvard: Let me ask you this, though. The cross-media ownership model in the United States is more restrictive than it is here. Are they doing it wrong, or are we doing it wrong? Are they doing it right, or are we doing it right? They do have a different model.

I just want to squeeze in my other question, because I think it's relevant. We'd like to know--or at least I'd like to know--more about the membership of the CRTC, Mr. Dalfen. I would like to have professional biographies or resumés of all the members for, say, the last ten years, simply to get a sense of who these people are. I think it's important to know who the people are who sit on the commission.

Go ahead.

Mr. Charles Dalfen: I think that can be provided to you, the biographies.

In terms of the American versus Canadian case, as I understand it the American newspaper and television ownership prohibition that you're referring to is now in the process of being, I think, reviewed and opened up under the current chairman. They've come from having that restriction and are reopening it. So it may change.

We in Canada, as you probably know, from 1982 to 1985 had a similar rule in effect and part of the direction to the commission at that time was pretty well the same. But it was revoked for reasons that you may be more familiar with than I am, so there isn't an absolute ban.

That isn't to say, though, that we don't take a very careful scrutiny of situations where it occurs, as we did in the cases we just discussed. My colleagues came to a conclusion that I think drew the balances that have to be drawn in a way that took account of the reality of today versus, say, the way it was 20 years ago. They thought that the strengthening of the players in the system was unbalanced, to be approved, notwithstanding the concerns they expressed about cross-media ownership.

The Chair: Ms. Lill.

Ms. Wendy Lill: Thank you for coming. We don't have enough time--we never do--but we'll just do our best here. We'll obviously need to talk more on this.

Mr. Dalfen, you have the belief that there are thousands of media products and that we are well served by the number of sources of media at this point, but I'm sure you won't disagree that the number of people producing that media has shrunk dramatically.

Since the decision to give the seven-year licences to CanWest and BCE, there has been a firestorm in this country around this issue. We have heard it. We've crossed the country and we have heard about the cuts to local TV stations, in the interest of efficiency, I'm sure, on the part of the corporations. We've heard complaints from New Brunswick that they're getting all of their francophone coverage now from Montreal. We've heard that theme several times over. We hear newspaper journalists who have quit, or they've been fired. We have the spectacle of the owner of CanWest Global and his pronouncements around university funding and the national editorials. We have the ads put out by prominent Canadians calling for full-scale media concentration hearings. We have polls by Ipsos-Reid saying that Canadians don't have confidence that their media is providing them with a balanced view.

In your annual report in 2000, you talked about this, that the convergence would “hopefully result in financially strong players who can produce high quality Canadian programming”. I think “hopefully” is a very whimsical word to put in an annual general report, but I think it's clear that it hasn't happened. I don't think we've seen that. You yourself are on record as crossing the country saying that we need more drama, that our Canadian drama is in crisis.

You're being touted as a visionary, and I know you don't leap buildings in a single bound, but to get back to what Mr. Harvard said, today, 18 months later, if you had to okay that decision, would you do it? Do you think in fact that it has had the results that I guess were carefully worded in the decision? It sure doesn't look like it to us. We have grave concerns on this front.

Â (1200)

Mr. Charles Dalfen: Thank you, Ms. Lill.

I appreciate what you're saying. I think sometimes there are time delays on some of these things. You asked me specifically about the BCE-CTV decision, I think it was, and one of the things that struck me was that as a result of this decision, which was, as you know, taken before I was in this position, some $220 million of benefits were launched into the Canadian broadcasting system, many on programming projects, hardly any of which, because of the recent nature of the decision, have come to fruition. So I'm not sure we've yet had a chance to draw the judgment that you're suggesting we may be able to. Maybe in two or three years we would discuss it and come to the conclusion that, well, notwithstanding all that, here we are, we haven't had the results.

Like you, if I don't see more Canadian drama on television I will have to admit that maybe something we've done has been wrong in this whole thing and we have to take another look at it. I don't know. I think we're perhaps at too early a stage to draw up a final verdict on that. I do know that there is a lot of money out there funding a lot of projects currently that will hopefully find their way onto the screen in due course.

Ms. Wendy Lill: I appreciate that comment regarding drama. But what about the groundswell around the closing of local and regional stations? What about the prominent Canadians saying that voices are being silenced--that is, the whole journalistic news side of this equation?

Mr. Charles Dalfen: Good point. I think on the journalistic issue, the two-way flow is not symmetrical. On the firewall we attempted to set up, we did that as the broadcasting regulator to ensure that the television newsrooms are insulated from comment from the newspapers and that there is editorial independence. We can't go the other way because we don't regulate the newspapers, and we can't make the same decisions and come to the same pronouncements on that side as we can on the television side.

I can tell you that on the television side the fact that there is a statute and it is regulated, and that it has required balance for 35 years, has had the effect on broadcasters of giving rise to very few complaints about editorial influence and about editorial bias. That isn't to say that there aren't complaints about reportorial bias, and those complaints are certainly there when it comes to matters of high emotional anxiety in different parts of the world. Those complaints about what broadcasters do are looked at either by the Canadian Broadcast Standards Council or ourselves. But in terms of what goes on in journalistic editorial offices, we simply don't have the jurisdiction, nor do I think Canadians would want us to have that jurisdiction, to regulate the freedom of the press.

So that's why we look at one flow, but we can't as fully look at the flow the other way.

Ms. Wendy Lill: Thank you.

The Chair: I think Madame Gagnon wanted another brief question, so I will allow her to after I've spoken.

I wanted to ask a couple of questions of Mr. Dalfen. We had somebody from Drummondville here last week, from a radio and TV station. I think it was Mr. Morin. He made his point, and he was extremely passionate in his view. He referred to the Astral decision. What he said struck me, because you say that one of the roles is to ensure that the Canadian public is well served by a wide variety of diverse voices, and he was making the point that exactly the reverse has happened, because before you used to have editorial content, his radio station and TV station and others, smaller independent ones, had diverse voices, whereas now it is all canned stuff that comes in from Montreal through Astral, and the convergence of all these stations has made it so that now the diversity of voices is lost. That was his point.

I wanted to ask a second question about a comment from Senator Gauthier in regard to the decision made by the CRTC not to licence TFO in Quebec. The CRTC said that it took the decision in terms of the public interest, and Senator Gauthier suggested that if that is the public interest, then “public interest” should be defined.

My questions are these. How do we reconcile the testimony of Mr. Morin from Drummondville and the Astral decision about diversity of voices? Secondly, should we define “public interest” in our review of the act?

Â (1205)

Mr. Charles Dalfen: That would be a daunting challenge, Mr. Chairman. I wish you luck in your efforts in that regard.

I think it is useful. One of the things I've tried to do in our decisions, since I have been at the commission, is to spell out the reasons we come to our conclusions, grounded in the Broadcasting Act, and, to that extent, grounded in the public interest, because for us the statement of broadcasting policy in the act defines the public interest from that point of view.

As you yourself know--and I know you are very familiar with the act and policy--there are ends in there that are colliding and require a balancing, as I was discussing with Madame Gagnon. Not everybody agrees with the way the CRTC draws that balance on every occasion, and that's fair enough. People are entitled to their views. But to try to abstractly define the public interest seems to me to be a daunting challenge given the provisions of both the Broadcasting Act and our other legislation.

On Mr. Morin from Drummondville, was it...?

The Chair: I think it's called TéléCentre.

Mr. Charles Dalfen: I'm sure that when there is a merger or amalgamation of stations in one sense there is a loss of a voice. There is no question. I am not familiar enough with the particular community that you're referring to.

The Chair: This is an example.

Mr. Charles Dalfen: Yes. There is no question, but if you look at the evolving situation in Quebec, at the same time that amalgamation or merger was approved by the CRTC, we have had a call out for new licence applications to serve those markets. Indeed, we will be hearing on that at the beginning of February in Montreal.

So, again, it's a changing landscape. As I said in my remarks, we try to balance the need to have strong Canadian players so that they can do proper public service on the one hand with having an adequate diversity of voices on the other. In many of the communities served by Astral there are new applications being called for. In one of the communities, Quebec City I believe, we required a divestiture by Astral of one of the properties that it owned. Again, we're trying to carry that balance forward in a universe that's changing to achieve the goals we see in the Broadcasting Act.

The Chair: Thank you.

Madame Gagnon.

[Translation]

Ms. Christiane Gagnon: A number of witnesses have appeared to ask us for a moratorium on concentration and cross-media ownership until the committee has finished its study and there are certain guidelines governing the behaviour of owners who have interests in various media.

I know that you will soon be hearing witnesses relating to the application of COGECO for a radio licence. Do you not think that this would be a good opportunity to say that there will be a moratorium to determine how we can provide a better framework or guidelines for behaviour and a code of ethics for the media? Do you think that you will be establishing this kind of moratorium that we would like to see in your forthcoming decision?

Â (1210)

Mr. Charles Dalfen: It is happening already since we have issued a notice of public hearings on the applications to be heard. Stakeholders can raise the particular point you have mentioned and we will be handing down our decision. I don't think it would be appropriate for me to comment on it right now, in view of the fact that the matter is before us and there has been a notice of public hearings to begin in February in Montreal.

Ms. Christiane Gagnon: I know that the matter is pending but if other applications for a merger were submitted to you, would it not be advisable for you to decide on a certain moratorium on the issuance of licences to purchase multimedia concerns?

Mr. Charles Dalfen: They are different issues. Sometimes the granting of new licences does improve a state of imbalance. Our hearings relate to applications for new licences. As for the purchase of particular concerns, that is a different matter. We are in a free country where business transactions can take place and be presented to us. We deal with each individual case. Very seldom do we impose a moratorium. We have occasionally established a moratorium for new satellite stations so that the existing services can be digested. But we attempt to allow people to engage in their transactions and present their applications. If the stakeholders think that this will have the effect of decreasing competition or creating particular problems, then they may raise these points before us and we attempt to base our decision on the individual circumstances. We have not yet given thought to imposing such a moratorium.

Ms. Christiane Gagnon: You say that they are opportunities...

The Chair: Thank you, Ms. Gagnon.

Ms. Christiane Gagnon: All right, but I am like Mr. Harvard. He showed me how to do it.

[English]

Mr. John Harvard: It's all my fault.

[Translation]

Ms. Christiane Gagnon: I have to leave.

[English]

The Chair: Ms. Lill.

Mr. John Harvard: Just one more tiny question, Mr. Chairman?

The Chair: No, no, it's Ms. Lill, please.

Mr. John Harvard: Oh, I'm sorry.

Ms. Wendy Lill: Sorry, John.

I would like to ask you how you think it's in the public interest for the CRTC to exempt the satellite service providers from the provision of community TV channels, particularly since the direct-to-home distribution market has increased its market share from around 2.6% to 16% between 1998 and 2001?

Mr. Charles Dalfen: I guess there are two parts to that answer. One part is the fact that, as with the cable distributors, the satellite distributors are required to allocate 5% of their gross revenues to Canadian production funds or to local programming. In the case of cable operators, they can allocate 2% to their community channels out of that 5%. But both have equal obligations to devote 5% of their gross. In that sense there is a level playing field.

The other thing is the practicality. Cable operators grew from the bottom up, satellites are, by their nature, top down. So when you ask about a community channel for a DTH service, which community would you really have in mind? It becomes very difficult to contemplate that.

At the same time...and here I should put in a commercial for our community policy document that we issued a few months ago, in October, which seeks, through the use of low-power television transmitters and through opening up a variety of questions on community channels, to improve local community reflection. It's a document that I know your staff people have. Again, that has been an effort to move more from the bottom up direction and satisfy community concerns that perhaps have been somewhat neglected as we've moved into the world of satellites and large corporations.

The Chair: I will allow a brief question, Mr. Harvard. We have to close because we have guests waiting here.

Mr. John Harvard: Thank you.

I was just thinking, Mr. Dalfen, if you ever get tired of this job you could always consider coaching hockey. You're a hell of a stickhandler.

Some hon. members: Oh, oh!

Â (1215)

Mr. Charles Dalfen: Mr. Harvard, my idol was Boom Boom Geoffrion. He had a hard shot.

Mr. John Harvard: Yes, I'm old enough to remember him. He had a hell of a slapshot.

A question, though. We heard from a gentleman from British Columbia earlier this week and he alleged that local and regional advertisers are being shut out from the television market because the television operators are reserving all that precious advertising time for the national advertisers.

Have you heard of this concern? And if it is a legitimate concern, do you think the CRTC, if it's in your power, should consider allowing or providing for some space on the television screens for local and regional advertisers?

Mr. Charles Dalfen: Thank you, Mr. Harvard, we have heard of this concern. I'm not sure whether we have a formal complaint before us--we may or we may not--but I certainly have heard of the complaint and it may well percolate up to our attention. In that case we'll have to look at the options that are put before us.

Jacques is nodding and suggests that we may not have had this formal complaint yet. But it has certainly been discussed informally and I know there are certain concerns.

The Chair: Thank you very much, Mr. Dalfen, for appearing at short notice. I know we bumped you from yesterday. We really appreciate that you made time today for us. The CRTC, of course, is a key institution within the Broadcasting Act, so we are extremely grateful for your presence here today as well as that of your colleagues.

Mr. Charles Dalfen: Thank you very much. Merci beaucoup, monsieur le president.

The Chair: I'd now like to welcome Mr. Konrad von Finckenstein, who is the Commissioner of Competition for the Competition Bureau.

Perhaps you would introduce your colleagues, Mr. von Finckenstein.

Mr. Konrad von Finckenstein (Commissioner of Competition, Competition Bureau): Yes, thank you, Mr. Chairman. I have with me Richard Taylor, assistant deputy commissioner of mergers, and Peter Sagar, assistant deputy commissioner of policy.

I have a short statement to make, Mr. Chairman, if that's all right with you.

The Chair: The floor is yours.

Mr. Konrad von Finckenstein: Thank you very much for the pleasure of appearing before you again. I want to give you a brief overview of the recommendations I made when I appeared before you last time, on May 7, and then make some comments on the issues of cross-media ownership and foreign ownership rules.

Before engaging into specifics, however, I want to emphasize the basis on which I have considered the key issues that you are considering. As you know, as Commissioner of Competition, I have specific responsibilities for the maintenance and enhancement of competition in the Canadian market place.

My staff at the bureau has considerable expertise in assessing issues related to competition, and we are responsible for enforcing a modern and effective Competition Act. Our interests in broadcasting and telecommunications are strictly focused on economic competition in the key markets.

We recognize that the government is also interested in pursuing other objectives, such as cultural and social goals. The challenge is to find approaches to these cultural and social goals that are efficient and effective and that permit economic competition.

Â (1220)

[Translation]

Here are the recommendations in the submission of the Competition Bureau, tabled on April 3, 2002.

Our submission in April was based on this perspective. At that time, I noted the substantial pressure of the evolving environment and made three sets of recommendations.

First, I recommended including, as part of Canada's broadcasting and regulatory policy, an objective that regulation, where required, be efficient, effective and directed solely to the realization of the act's cultural objectives; an objective of increased reliance on market forces; and an objective of enhanced efficiency and competitiveness of Canadian broadcasting services.

As you can see, these three related recommendations are focused on achieving a competitive market and industrial base, which is essential for a durable and progressive cultural industry in a global context.

[English]

I also noted in April that the CRTC's mandate should be clarified to specify that the CRTC has a responsibility to preserve a diversity of voices within the broadcasting system, and at the same time, to focus its review of broadcasting transactions solely on the impact the mergers would have on core cultural values and diversity of voices.

Canadian culture is based on democratic values. A democratic system, for its optimum functioning, requires a diversity of voices. Diversity of voices is not an issue of economic competition, and consequently does not fall within the purview of the bureau's mandate. However, we feel it's a natural adjunct to the CRTC's mandate to maintain and enhance Canadian culture.

The CRTC's mandate should therefore clearly state that it has a responsibility to preserve a diversity of voices within Canada's broadcasting system, and its regulations should be consistent with and foster the freedom of expression guaranteed by the charter. The CRTC should develop objective measures of content domination, and apply such measures to the industry to preserve the diversity of voices.

In terms of media mergers, currently both the CRTC and the bureau possess the power to review and approve certain broadcasting transactions. We are in favour of a clear division of responsibilities and jurisdictions, as outlined in the interface agreement between the bureau and the CRTC, which is posted on our website.

The CRTC's review of proposed transactions should not attempt to duplicate the commercial review conducted by the bureau, but should be focused solely on the impact the proposed merger would have on the attainment of core cultural objectives. In other words, the bureau would deal with the economic consequences of a merger, while the CRTC would deal with the consequences of the merger in terms of cultural values.

[Translation]

Thirdly, as an additional measure in support of the enhanced operation of market forces, the Bureau recommended in April that one should ensure that foreign investment levels for broadcasting distribution undertakings remain consistent with those applicable to telecommunications carriers.

In our view, in terms of carriage, there is no distinction between the carriage of telephone signals and the carriage of broadcasting signals. Consequently, the carriers of either signal should enjoy the same access to capital and be bound by the same ownership rules.

This approach will ensure that broadcasting distribution undertakings are not placed at an unfair competitive disadvantage vis-à-vis telephone communications, given that both compete in high-speed access and telephony. Issues related to the achievement of other goals, including cultural objectives, can and should be addressed through more effective and less intrusive means.

[English]

Now let me say a few words about the bureau's perspective on cross-media ownership. I will just comment briefly from my perspective as Commissioner of Competition on a number of the questions that the committee has recently set out concerning cross-media ownership and foreign ownership. Rather than addressing each question in turn, I will comment more generally.

First, you have raised a series of questions regarding cross-media ownership. We think this is a timely question regardless of whether one believes we are in a phase of convergence or de-convergence. From the media reports, it would appear that there are a lot of media assets at play as firms seek to rationalize their holdings after the substantial acquisitions they made in the push to achieve convergence. Whether this marks a move toward de-convergence or is simply a settling process following the exuberant 1990s remains to be seen, but the implications are clear: We need to have clear and effective rules in place to allow this process of adjustment to work effectively.

For an efficient process to occur, we need a clear and understood framework of rules for industry that will let people align themselves where they see the greatest opportunities.

The Competition Bureau has established such guidelines for mergers to assist companies to understand not just the act, but also how it will be applied. This reduces uncertainty for businesses and has the added value of forcing us to be transparent about how we work.

We have not set specific rules governing cross-media ownership but would analyse each proposed transaction from the perspective of the impact on the levels of competition in the affected markets. Should a cross-media merger cause a significant lessening of competition in a market, then we would seek to block it or find ways to remedy the transaction.

In short, we are prepared to examine the economic effect of cross-media ownership. Historically, the principal markets we have focused on are the advertising markets. It's not part of our mandate to take into account impacts on cultural objectives such as diversity of voices.

What is our perspective on foreign ownership? I've already addressed some of the issues, but let me summarize our position--and I'm speaking here as Commissioner of Competition and champion of a competitive market.

First, access to capital is essential for a dynamic and efficient industry, and squeezing out foreign capital is not consistent with an effective capital market. For optimal functioning of a market, there needs to be a diversity of options and sources of capital, including diverse sources, diverse risk acceptance, and diverse terms and conditions. Moreover, foreign capital is not just about bringing cash to Canada, but involves bringing outside financial ideas, financial influence, sources of technology, and managerial efficiency.

As we approach the expected adjustments in media industries, which I spoke of, in the near term, access to foreign capital can only facilitate the transition and ensure a stronger Canadian industry in the end.

Secondly, as I said before, in our view, in terms of carriage, there is no distinction between the carriage of a telephone signal and the carriage of a broadcasting signal. Consequently, the carriers of either signal, be they telephone companies or broadcast distribution undertakings, should enjoy the same access to capital and be bound by the same ownership rules. Anything less would give one sector an unfair advantage over the other and distort economic decision-making.

In conclusion, as Commissioner of Competition, I am concerned about the issues of economic concentration, ownership restrictions, and cross-media mergers.

I'm delighted to have the opportunity to appear before you and answer your questions.

Â (1225)

The Chair: Thank you very much, Commissioner.

I'd like to turn to questions, starting with Mr. Abbott.

Mr. Jim Abbott: Thank you for your presentation.

I would like to underscore our full agreement with your bullet point on the top of page 8 with respect to there not being any distinction between the carriage of phone signals and broadcasting signals. I believe you said it again in your summary. I think to try to have a separation between the two is just ideologically driven and would create all sorts of havoc in the marketplace.

I am interested, though, in the bullet point on page 11: “In short, we are prepared to examine the economic effects of cross-media ownership”. You would perhaps be aware that we had a representation the other day from a gentleman from Vancouver, who was making the point that in his business of buying advertising space for his clients, he and his regional and local clients were effectively being frozen out of the television marketplace, fundamentally as a result of the CanWest Global situation in the greater Vancouver and British Columbia area. We didn't touch on radio, but let's just deal with television and print media alone. So they were effectively being frozen out of the television marketplace, and therefore pushed into the arms of the print medium. If I recall the testimony correctly, the print medium had multiplied by a factor of 10 over a 10-year period. Quite literally, it was a licence to print money by CanWest Global.

Is the Competition Board in a position to examine this kind of unintended consequence, I believe, of the decisions made by the CRTC, and the fact that if we take his representations totally at face value there is a lack of competition for advertising dollars in the Vancouver and British Columbia marketplace?

Â (1230)

Mr. Konrad von Finckenstein: Yes, we look at these issues on two occasions. First, when a merger is proposed and needs approval from us, we will look at the effect of the merger. We look at the advertising markets. We consult with advertisers. We try to determine whether there is a market and whether the merger will lead to a substantial lessening of competition. Where we feel it does, we will intervene. For instance, we have intervened in the newspaper market in Vancouver. We had a lengthy court case that went all the way to the Supreme Court, which finally resulted in the divestiture of a paper in north Vancouver.

But second, the situation as you have posed it is really ex post facto, or after the merger has taken place. There's a provision in section 79 of the Competition Act, which deals with something called “abuse of dominance”. Basically, you have such a dominant position in the market that you can abuse it, and you can do it in order to hurt your competitor.

Now, remember, we are interested in competition. Therefore, we want to make sure that what they're doing is not driving somebody out of business. If they are competing successfully and vigorously, that's fine. That's how the market should be. But if it's action that really has no commercial value or makes no commercial business sense, or it's really just meant to drive somebody out of business, in order for them to recoup later on, then we can intervene.

I must say, and hasten to add, these are the most difficult cases to establish. To draw the boundary between the two is not easy.

Mr. Jim Abbott: With respect to foreign ownership, if I understood your position here, you're saying in the second bullet on page 6:

The CRTC should develop objective measures of content-domination and apply regulations to the industry to preserve the diversity of voices.

I just want to clarify. Your position is that it is up to the CRTC, or the responsibility of the CRTC, with whatever tools they have at hand—and perhaps they may feel they have to come back to Parliament for more tools—to take a look at the content.

I don't know if you would feel comfortable answering this, or if it's right for me to be asking this. If it's not, I'm sure you're not going to say anything. At any rate, would you agree with my position that if the CRTC has tools at its disposal with respect to foreign ownership that it deems to be effective, and indeed are effective relative to content carriage, the issue of foreign ownership is really neither here nor there? In other words, who owns the enterprise is really not all that significant.

But I don't want to put words in your mouth, and I don't want to put you in a bad position.

Mr. Konrad von Finckenstein: No, I understand. These are two very different issues. One is foreign ownership restrictions. In our view, any restrictions, foreign ownership or anything limiting ownership, will have an impact on competition. Therefore, looking at it purely from a point of view of competition, if you have no restriction of ownership, you will have maximum investment in that industry, and hopefully, if the markets work, you have maximum competition.

In terms of diversity of voices, many times we have been asked to intervene or do something because people feel that there's over-concentration in a media or in several media, and so on. That is not one of our jobs. We look at the economic consequences. We really don't look at values. Do you value the diversity of voices? Do you think it should be maintained? I happen to believe that personally, of course, but it's not part of my job to do that as Commissioner of Competition.

The CRTC has clear responsibility to maintain and encourage Canadian culture. Canadian culture is based on a democratic system. A democratic system works to its optimum when you have diversity of voices. So it seems to me it's a natural adjunct to include it in the mandate, to encourage, of course, the Canadian culture, to encourage diversity of voices.

In regard to media concentration, there's a convergence that we have seen. The coming together of a lot of media of different sorts into one, to some quarters, poses dangerous issues of concentration. We are suggesting that it is an issue that should be addressed. In my view, I think it falls under the CRTC mandate. The way to address it is, in effect, to establish rules as to what kind of content will you permit and what not, and apply them. Other countries have done it very clearly. It is, however, an issue of cultural, social policy. It's not an issue of economic policy, so it doesn't fall into our mandate.

Â (1235)

Mr. Jim Abbott: Thank you.

The Chair: Ms. Lill, and then Mr. Harvard.

Ms. Wendy Lill: Thank you.

First of all, I'd like to comment on the fact that you have a very strident position around foreign ownership and the benefits of foreign ownership. I wonder, isn't it your job to uphold the position of the federal government, which is to limit foreign ownership? It seems inappropriate for you to have the position that you do. I'd like a comment on that.

The follow-up is in regard to when you talk about the importance of...you can examine the economic effects of cross-media ownership. That is within your jurisdiction.

We have certainly heard over and over again that local and regional advertisers are being shut out from local markets due to the new dynamics around ownership. Is there something you can do about that, and will you do something about it?

Mr. Konrad von Finckenstein: First of all, as to the first question, I'm glad you asked me. I want to clarify that. I do not speak for the government. By statute, I have a mandate to advocate competition. It's right in my act. It says in section 125, to put forward a competition position.

That doesn't mean I don't realize there are other concerns. It may very well be that competition will be attenuated in order to achieve other goals that the government and you, as legislators, consider to be of superior value. There's no question about that. All I'm saying, speaking purely as the Commissioner of Competition, is that if you look at competition economically, if you don't have any restriction, if you lift ownership restrictions, it's going to lead to better competition. Is that a price one wants to pay or not? That's for you and for the government to decide as to when we have ownership restrictions or whether we have other restrictions.

The second question to ask oneself, obviously, is whether ownership is the best tool to use for the cause you want to resolve. Can you achieve the same thing by licensing? If you can, why not do licensing, for instance, thereby achieving the cultural goals that you want but without detriment to competition? That is the balancing and weighing that you have to do.

My job is to put it forward, to make it quite clear, that if you put ownership restrictions on something you will limit competition. That's my position as Commissioner of Competition. I'm not speaking for the government, but the way it has been set up in the legislation itself is that, in effect, this office has been vested with a responsibility to espouse competition ideas and policies.

The Chair: Ms. Lill's second question....

Mr. Konrad von Finckenstein: Yes, on cross-media ownership.

As I said, when we look at mergers we look at the effect primarily on advertising. I'm surprised about the testimony you've had, because when we look at those, we try to make very sure that the sort of freezing out of market power that you suggest businesses have testified to, does not happen.

Obviously, we can be wrong, and we may well have been wrong, but that's one of our principle concerns, to make sure that cross-media ownership does not allow people to have market power to assert leverage and to force players into positions they don't want to take.

Ms. Wendy Lill: You are not hearing that ad rates are so high that local advertisers can't afford them? You're not getting those kinds of complaints?

Mr. Konrad von Finckenstein: I have not received complaints of that nature, and in the various mergers that we have examined and have approved, advertisers that we have consulted have not suggested that this merger, if approved, would lead to such a concentration that it would impact on the advertising market.

Â (1240)

Ms. Wendy Lill: If it did, and if you started getting those kinds of complaints--

Mr. Konrad von Finckenstein: Then we'd have to make an assessment of whether it is a substantial lessening. If it is, we have the tools to deal with and may ultimately go to court to block it if we could not work out another arrangement.

The Chair: Mr. Harvard.

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

Mr. von Finckenstein, I basically accept your view that if you put limits on ownership, then you're putting limits on competition. I accept that. I could also say, though, that given this position, which I appreciate, when it comes to the question of foreign ownership and how we have to deal with it as a heritage committee, considering more issues than only economics, you really don't have any advice for us.

Mr. Konrad von Finckenstein: No, I wouldn't put it that way. As I just said to Ms. Lill, I would think you should look at other alternatives that have a less drastic--

Mr. John Harvard: I agree, but that wouldn't come from you, though, because you have only one point of view, which is unlimited--

Mr. Konrad von Finckenstein: No, no, just a second. I said you should look at the tools and see which tool can get the effect you want, whatever the effect may be. If you can get it with something other than foreign ownership restriction, then I would suggest you use that other tool. It is obviously your decision. All I am doing is giving you the advice. But it seems to me that it's my job to promote competition and suggest that you try to find the least intrusive tool, find the tool that least distorts competition.

Mr. John Harvard: I don't really disagree with that, but I'm saying that I think when we are trying to confront this issue, we have to look elsewhere for any particular advice. That's not to diminish what you're saying.

Let me deal with a couple of things, though. At the top of page 8 you say--and Mr. Abbott has already referenced this--there is no distinction between the carriage of telephone signals and the carriage of broadcasting signals. That's a pretty black and white statement.

Is it not true that one can draw distinctions between the two? For example, is the capacity of the carriage of broadcast signals equal to that of the capacity of the carriers of telephone signals? I would suggest that the capacity of broadcast carriers is somewhat limited.

Mr. Konrad von Finckenstein: Well, yes, at this point in time it clearly.... What I'm saying here is what they are both doing is bringing a signal to your house. Let's say it's high-speed Internet access. It's brought to you either through a digital telephone line or a cable. It is the same signal that allows you to go wherever you want to go. And we're only speaking about the carriage here, we're not talking about content at all. If we're talking about what they are doing, what a broadcast distribution undertaking does in that instance, or what a telephone company does in that instance, it is to carry a signal to your door and they should therefore be subject to the same rule, only as carriers.

Mr. John Harvard: But I would have thought that when it comes to the broadcast carriers, they might have a couple of hundred signals or something like that nowadays. What do they have? Whereas the telephone carriers, how many do they have?

Mr. Konrad von Finckenstein: I'm way out of my depth here. I'm not an engineer and I don't know. What I'm talking about is the conceptual type of carrying and what we're dealing with here is framework legislation to establish the capacity. Whether they can actually do it, whether they will do the investment or not is obviously their own individual decision.

All I'm saying is the framework should not distinguish whether they bring that signal to you by virtue of a cable or a telephone line.

Mr. John Harvard: Okay.

I know there's been concern around here not only for your body but also for the CRTC. Do you feel you have the proper resources to do the kind of job you have to do? It's a pretty complex job. Do you have the resources?

Mr. Konrad von Finckenstein: Unfortunately, no, I don't feel I have the proper resources. I mean, we are underresourced. I think it's no secret. The industry committee of the House of Commons gave a report earlier this year that suggested we are underresourced. The Organization for Economic Co-operation and Development in Paris did a major review of our system and suggested we are underresourced. We benchmarked ourselves against and compared ourselves with the other countries. We hired an outside consultant, Charles Rivers and Associates, to do that, to determine how we are funded vis-à-vis the U.S., vis-à-vis the U.K., vis-à-vis France, etc., and we are at the bottom of the line.

So, yes, clearly we need more resources. Unfortunately, I know it's not in your hands, and I'm not here for anything other than answering your questions. But it is a situation where we have more tasks than we can address, especially given we are now talking about mergers. One area of our activity that now consumes enormous resources is illicit telemarketing. It is spreading like a plague and is very sophisticated. It's very difficult and very expensive to fight it.

Â (1245)

The Chair: Do you have the report, Mr. von Finckenstein, the one you just referred to?

Mr. Konrad von Finckenstein: Do you mean the House of Commons report?

The Chair: No, you mentioned another one.

Mr. Konrad von Finckenstein: Oh, the Charles Rivers and Associates report. Yes, Mr. Chairman, I will gladly send it to you.

The Chair: Yes, it would be very interesting.

Mr. John Harvard: Just as a final question, you said you were concerned about the issues of economic concentration. Given the kind of cross-media ownership we have in the country, would you say that model meets the test of competition as you understand it?

Mr. Konrad von Finckenstein: It meets it in terms of the Competition Act. Obviously, when there is a concentration happening.... The way out act works is that we don't have a mandate to positively undo something to create more competition. We're to preserve the status quo, make sure nothing else becomes more anti-competitive. And in terms of my advocacy role, in which I'm here now, it is to encourage competition and encourage the adoption of measures that are pro-competitive.

And in the media industry, we obviously exercise our powers when it comes to mergers and we try to prevent uncompetitive mergers. But this is only looking at it from the economic point of view. You're obviously looking it from a much broader point of view, looking at it from the cultural and social impact, etc., and that's why I suggested here that there should be clear rules as to what your expectations are.

Mr. John Harvard: Thank you.

The Chair: Thank you very much, Mr. von Finckenstein, for appearing at short notice. We really appreciate it very much. It has been extremely useful to us. Thank you.

The meeting is adjourned.