EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, September 26, 1996

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[English]

The Chairman: I call this special session of the committee to order to welcome on your behalf the Political State Secretary for the Ministry for Foreign Affairs from Hungary, Dr. Szent-Iványi.

Dr. Ivanyi, welcome and thank you very much for joining us this morning for a brief information session. I'm sure the members will have had a chance to look at your CV and recognize the fact that you're an eminent university professor, which around here gives great credibility to a person, as you can imagine. My colleagues are somewhat harsher in their judgment on that, but we know you come from the European tradition, where such things are respected.

Perhaps you would be good enough to give us a few minutes of your reflections and then I know the members would like to ask you a few questions, if you have time.

Dr. István Szent-Iványi (Political State Secretary, Ministry for Foreign Affairs, Republic of Hungary): Mr. Chairman and ladies and gentlemen, first of all I would like to thank you for your kind invitation. I am very privileged and more than pleased to be here to give a very short introduction. If you wish, we can have a discussion or commentaries and remarks.

The Chairman: That would be wonderful.

Dr. Szent-Iványi: I came from Hungary, a country that has undergone very strong and radical transformations since 1989. Since then Hungary has strengthened and consolidated the basic institutions of democracy, the rule of law and constitution, and a multi-party system.

The Hungarian economy has radically changed. With these basic principles and methods Hungary is a free, open, and liberalized economy and is a major recipient of foreign investments from western Europe and North America. My country gets almost half of the total sum of foreign investment in central and eastern Europe. There is a large amount of investment from the United States and to a lesser extent, but an important extent, from your country, Canada.

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Hungary has a major objective to be a part of the family of the western democratic nations. That means Hungary would like to be a full-fledged member of the European Union and NATO. One of the missions of my visit here is to promote and strengthen the Hungarian objective to reach NATO membership in the first wave, in the first round, hopefully by 1999. I would like to ask for your assistance and support to promote that process.

We see a procedure and a timetable that is acceptable to my government and as far as I know to the other concerned countries. That means that the NATO council should decide on the procedure and timetable and the major conditions this December. Next spring they should decide on the concrete countries that are accepted or invited - that is the correct word - in the first group of nations. My firm belief and conviction is that Hungary should belong to that group.

Hungary is an active partner. Hungary is a prepared country, which has made many efforts in favour of NATO enlargement. As you know, Hungary is a very active partner in IFOR in Bosnia. Hungary has offered the logistical routes and the supplying routes for the whole operation and Hungary is an open, cooperative country.

I know that many of you have already visited Hungary and many of you have contacts with Hungarians. We highly appreciate the ethnic Hungarian community here in your country. We know that's an important community and we know that you have personal experience with them. Let me thank you for your hospitality when you gave and offered and provided opportunities for the refugee Hungarians who escaped my country in history.

Thank you very much, Mr. Chairman. That was my short introduction.

The Chairman: Thank you very much, Minister. I know the members would like to ask you a few questions or share some observations with you.

Mr. Bergeron. Could you keep it to four or five minutes, please?

[Translation]

Mr. Bergeron (Verchères): Good morning sir. I am pleased to welcome you to Canada's Parliament. I had the opportunity in 1985 to make a brief visit to your magnificent country when it was still under socialist rule. On this side of the Atlantic, we are very pleased to see Hungary move increasingly toward democracy and a market economy and to be in a position to join European institutions and eventually NATO.

There is much talk these days around the world of the impact of political instability on economic development. Hungary, as we know, overcame a number of hurdles on the road to democracy, even before the iron curtain was lifted. The transition from a planned economy to a market economy and from a rather authoritarian regime to a democratic system of government has not always been a smooth one. There have indeed been a number of hurdles.

Could you share with us how your country views its chances for economic success despite the upheavals that it has undergone?

Mr. Szent-Iv«nyi: Thank you very much for your kind words. I am sorry, but I will answer your question in English since I am more proficient in English than in French.

[English]

As far as the economic hurdles are concerned, Hungary has passed a large part of it. That means we have almost completed a very radical privatization. There is a new competitive economy emerging in Hungary. Most of this involves technologies, capitals, and even market opportunities.

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As you know, Hungary could divert two-thirds of the foreign trade from the former original market, from the so-called east market - the Soviet market and all the other countries - into the western markets. They could divert most of them to the most sophisticated and advanced market of the European Union. That's good enough, but it is true that there are some difficulties.

There are two major difficulties with the Hungarian economy. First, there is a lack of equilibrium with the state budget. We have inherited a relatively high state budget; most of it comes from the burden of the past. That means the Hungarian communist regime has collected a very huge foreign debt. As you know, it's about $22 billion or $23 billion U.S. There is also a large amount of internal debt, which has caused a lot of problems for the economy. Second, there is a lack of equilibrium with foreign trade. Last year we had an almost $2 billion U.S. trade deficit with our foreign trade partners. But the tendencies are reassuring and promising.

This year we will have less than a 4% state budget deficit in comparison to the GDP. That's a relatively good performance, and if we get out from the debt service it should mean that Hungary will have a surplus in the state budget. That's almost rare and no one can really.... But first we have a high burden we have to repay.

The tendency is that foreign trade is going in a good direction. Many of the nations have strong competition. The new, emerging industries and new birth industries, such as the automotive industries and high technologies...the Hungarian productions are competitive enough and are able to find a place on the earth.

Thank you very much.

Mr. Bergeron: Merci.

The Chairman: Mr. Assadourian.

Mr. Assadourian (Don Valley North): First of all, welcome to Canada.

I have two quick questions. First, I would like to discuss trade between Canada and Hungary - what we trade, how much we trade. The other question relates to every nation in eastern Europe wanting to join NATO. I'm sure each and every one of those nations has its own particular reasons for wanting to join NATO. Would you elaborate on your own reason for wanting to join NATO? Thank you.

Dr. Szent-Iványi: As far as the first question is concerned, unfortunately the volume of the trade between Hungary and Canada is very limited. Hungarian imports from Canada, in the last year, were $42 million U.S. It's really nothing, and Hungarian exports are even less at $21 million.

The major part of Hungarian exports to Canada are raw materials, semi-finished products, spare parts, agricultural products, and clothes. Canadian export agricultural products, spare parts and some of the industrial products are important; that's more or less the composition of the bilateral trade. We are very much interested in improving on that trade, and one of the goals of my coming was to influence the Canadian economy and the Hungarian economy to take part in it.

Mr. Assadourian told me, and he is right, that Canadian investment in Hungary is about $200 million U.S. The major investment is the second terminal of the Budapest airport, Ferihegy. It's being constructed by Huang & Danczkay, which is the same enterprise that constructed the Ottawa airport. The construction will start this year. The whole construction is a major construction in Budapest.

As for the reason for and objective of Hungary entering NATO, Hungary would like to join NATO for reasons of integration. The major and first reason is for integration. The Hungarian government and Hungarian people share the basic values and norms of Canada, the United States, and western European countries. They would like to join the family, which is committed to and engaged in safeguarding and protecting these rights and liberties and values. That's the major reason.

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The second important reason is that we would like to contribute to the stabilization of central and eastern Europe. We are firmly confident that NATO enlargement will massively contribute to the stability and consolidation of democracy and peace and security in central and eastern Europe.

Third, we cannot deny that the future is not completely predictable in that region of Europe, and everyone needs some long-term insurance for possible - but hopefully not coming - bad weather.

The Chairman: Thank you very much.

Mr. Flis.

Mr. Flis (Parkdale - High Park): Mr. Minister, welcome to our country. I've been in your country several times, and thanks to your ambassador we have first-hand information about what's going on in your country. We appreciate this close cooperation.

We know that Hungarians are living in neighbouring countries - many of them are of course in Canada - close to Hungary. We hear that some countries have passed legislation that may be a threat to the Hungarian language and culture outside Hungary. What are your negotiations with these countries? What success are you having? Is this still a problem, or has it been resolved?

Dr. Szent-Iványi: Thank you very much for your question, sir.

The problems of minorities and minority rights cannot be resolved overnight in central and eastern Europe. It's a heritage of the long-term past. Hungary makes lots of efforts to resolve the problems in a peaceful way based on dialogue and on accord and on agreement. That's why Hungary signed a basic treaty with Ukraine, Slovenia, Croatia, and Slovakia. Just a few days ago we signed an agreement with Romania as well.

The major problems are in Slovakia, in Romania, and in Yugoslavia or that part of Serbia. As you know, there are some constant efforts to restrict and to diminish and decrease the acquired and reached level of minority rights. Frankly speaking, the situation had improved radically in 1989-90. At that time the Hungarian minorities had reached the basic level of their human and minority rights, but since then there has been a process to restrict and reverse that situation.

In Slovakia and in Romania there are many laws and decrees referring to those rights. Hungary signed an agreement to maintain at least the acquired level of those minority rights: to enjoy the basic rights to use the mother tongue in education, in the judiciary, and in administration. That's all we'd like, to provide opportunities to maintain their national and cultural identity, which is important, and to provide the opportunity to have close contact with Hungary, Hungarian parties, organizations, and so on. If we can reach that objective in the short term and mid-term, that would be positive and promising. We hope very much that these agreements can help us.

If you look at the situation in southern Tyrol, you can see that the conflicts and tensions were resolved in a relatively long process, in three decades. We do not expect an overnight solution, but we expect a slow but obvious and constant step forward and progress.

Thank you.

The Chairman: Thank you, Mr. Flis.

Welcome to our committee, Mr. Telegdi, in your capacity as an honorary ambassador on behalf of the Hungarian nation among us.

Mr. Telegdi (Waterloo): I am here representing my constituent John English.

Welcome, minister, and let me assure you that I find university professors to be great constituents. I have very many of them in the Waterloo riding.

Could you elaborate for the committee on what kinds of steps Hungary has taken to protect minority rights within Hungary and what the various minorities in Hungary are?

Dr. Szent-Iványi: Thank you.

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The Hungarian Parliament passed a very progressive law in 1993, the law on ethnic and national minorities. That's the first legislation in central Europe and this region that provided collective rights for all ethnic minorities. It provided a different sort of autonomy for ethnic minorities, and also provided an ombudsman system. That means there is an office of ombudsman for minorities, who can intervene, even in a parliamentary action that concerns minority rights and minority interests. That means the ombudsman can even veto a law, and send it back to the Parliament, can supervise, and so on.

We do have 13 ethnic minorities, according to the law. According to the law, every minority may have more than a thousand members in the country. If they declare themselves as belonging to any sort of minority, they will be considered a minority. Thirteen autonomous bodies have been set up.

The major autonomous body and major minority is the Roma, or the gypsy minority, in the country. The second is the Germans. There are, more or less, 100,000 Germans. The Roma population is 300,000 to 400,000.

The third group is the Slovaks. Then there are the Croats, Serbs, Romanians, and so on. The smallest minorities make up 100,000 to 200,000 persons, like Armenians, Greeks and Poles. They have only a few thousand people in my country. All of them have a national community, national autonomy.

The major minorities have their own schooling system, and they have the right to access the Hungarian budget. The Hungarian budget should give them opportunities to maintain their cultural and ethnic identities.

The Hungarian law on ethnic minorities is seen by the Council of Europe, the major European organization dealing with minority rights, as one of the most progressive pieces of legislation on that issue.

Thank you very much.

The Chairman: Thank you, sir.

Madam Debien.

[Translation]

Mrs. Debien (Laval-Est): The Standing Committee on Foreign Affairs and International Trade recently set up a subcommittee on sustainable human development, and one of the first orders of business of the subcommittee is to focus its attention on the situation of children in the world, in particular on issues such as child labour, the exploitation of children and all of its attendant problems.

As we know, and this has been reported recently in the newspapers, Hungary is currently grappling with serious problems such as infanticide, the marketing of babies and the illegal adoption of infants by foreigners. The situation of orphans and abandoned children, for the most part of Gypsy origin, has become desperate.

I would like to know what steps your government has taken to address this problem. I know that in Budapest, there is a home for abandoned children. I also know that you have tightened up your adoption laws. However, illegal transactions are also being carried out on the Internet involving the adoption of foreign children. A Canadian of Hungarian origin was recently charged for illegally sheltering children.

Could you briefly describe for us the situation of these children in your country?

[English]

Dr. Szent-Iványi: Thank you very much, madam.

You referred to a very serious problem in Hungary. It's not only a Hungarian problem; it's a general problem in central and eastern Europe. And even if we are going eastward, the problem is even worse and worse.

[Translation]

Mrs. Debien: But you can speak about the situation in Hungary, can you not?

Mr. Szent-Iv«nyi: Yes, I can.

[English]

As you know, the Hungarian government is going to strengthen that force to protect the children. There are many problems - you are completely right - and you have listed all the problems: child abuse, child trafficking, illegal adoption.

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As you indicated, there was a famous and strong case in Hungary, involving a lady from Los Angeles, as far as I know, Marianne Gati, who traded children. They are capitalizing and making benefits from the low level of living standards and the real social problems in my country.

The Hungarian government is going to set up and pass through Parliament the protection of children. The police have started an action against all kinds of child abuse, because that started to show some signs of child prostitution, and so on. It is really a very sad and disturbing story for all of us.

We would like to improve the situation of orphans. The problem is that the Hungarian society is getting to be more and more a very competitive society where the children who have really great handicaps in their lives cannot very easily adjust and adapt to that. Really this needs state support.

All in all, we are not satisfied with the situation in my country, but we are aware of the difficulties. We do our best to improve and to set aside all the problems that are more or less the side effects of a great radical transformation. This transformation is one of the biggest ones in the history of my nation, or the biggest one. It belongs to two or three major transitions. As you know, complete economic, political and social backgrounds and arrangements have changed, turned over, and there are many negative side effects, including those you indicated here, madam.

Thank you.

The Chairman: Thank you, Minister.

We have one more person - Mr. Dupuy - and then I think we'll perhaps just have to wrap up and move on to the FEMA review. Mr. Dupuy.

Mr. Dupuy (Laval West): Monsieur le ministre, you live next door to a very troubled part of the world, the Balkans. I had the good fortune of being in Budapest two years ago and of talking to many of your colleagues. I was very much impressed by the understanding and the insight they had about Balkan affairs.

I would very much welcome your feelings about prospects for stability in the Balkans, and also a sense of Hungary's foreign policy vis-à-vis that part of the world. Are you seeking partnerships? Do you see prospects for improvement of relations?

And above all, do you see possibilities for the most troubled area of the Balkans to emerge from the period of tension and tragedy they've experienced over the past few years?

Dr. Szent-Iványi: Thank you very much. You know, Hungary is very much interested in stability and peace in the Balkans, and we closely follow the whole situation now.

Frankly speaking here before the right honourable members of the Canadian Parliament, I believe the situation is not completely reassuring now. There are some countries that emerged and are going in that best direction, like Slovenia, which is a prosperous country, and a country that is progressing very much. There are some parts - and mostly I would indicate here Bosnia and Serbia, or Yugoslavia - with an unpredictable future and some unresolved and pending issues.

As you know, the ballot and election in Bosnia is good and acceptable, a small step, but a good step, in the right direction. But it couldn't really resolve all the question marks we have at this point.

We don't know whether the internal cohesion of the country is strong enough to put together the three nations. There are many problems, and we do fear very much that in a case of disengagement of the western countries, or IFOR, the whole situation could collapse and the problem could start again.

As far as Serbia is concerned, Serbia is not a nation state. About two-thirds of the population belong to the Serbian nationalities, and almost one-third are different from that. Major minorities are the Albanians in Kosovo, still a completely pending and unresolved issue. And there are 400,000 ethnic Hungarians. There are many other nations.

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Serbia should give some reassurance to and protection for ethnic minorities, because in other cases, new clashes or problems can be at stake or at risk.

Of course everyone is interested in avoiding that internal destabilization of the country. It would be very nice to give assistance and give advice on the direction of good legislation on minority rights.

To summarize what I am saying here, the problems are imminent, and there are many problem areas, but we do very much hope that the western engagement - the engagement of your government, the Hungarian government and many others - the constant engagement and the commitment and contribution can ease and moderate the situation as it is now. Thank you.

The Chairman: Minister, I think we really are shortly going to have to adjourn our meeting with you, because we have another study of some upcoming legislation.

I wonder if I might just ask one last question about NATO expansion, because this will be the subject matter of this committee study this fall.

For a country that is outside Europe, Canada's interest obviously is to ensure stability. That's always been the basis of our participation in NATO and would favour Hungary's admission to NATO, for the reasons you gave.

On the other side, we hear there may be a risk of creating instability, and that it may be creating a form of threat to the countries of the former Soviet Union, who would see it as an expansion if it excludes them, and something that is directed towards them. What is your answer to that, and how should be address that issue?

Dr. Szent-Iványi: Mr. Chairman, the Hungarian government has a clear and obvious answer to that: NATO enlargement is not against anyone. It is in favour or in protection of something, for something that means stability and cooperation.

NATO and all the major NATO countries, including the applicant countries, would like to have a good cooperative partnership and relationship with Russia. We are not opposing that Partnership for Peace plus or any other proposal offered and provided by the Russian leadership. But the Russian leadership should understand that they cannot have any droit de regard or veto right. They cannot blockade and they cannot undermine NATO enlargement.

NATO enlargement is lying in the basic interest of Russia - I'm sure of that - because Russia needs some stability at its western border or neighbouring countries. That can be very important.

If I were a Russian politician, I would be aware of the fact that the real challenges are not coming from the west, but from the other direction. If they should meet the other challenges, it is much better to have a safe partner in the background in the west than a hostile and tense....

Thank you.

The Chairman: Thank you very much, Minister. On behalf of the committee, I'd like to thank you and the ambassador for being with us this morning. As you appreciated, many of us have had the opportunity of travelling to your wonderful country, and enjoyed ourselves there. Many of us here in Canada have either relatives or many friends who come from Hungary.

When you go, I'd like to just leave with you a copy of our recent report. You can see the type of work this committee does. This is a report on small and medium-sized business and the export market.

We have a chapter in there on the way links will be developed by small and medium-sized businesses through the cultural and linguistic links that we have because of the many - for example - Hungarians in Canada. We expect that in the future we will be developing strong economic links with your country, and I'm sure we'll see the two-way trade figures going up, rather than down.

We wish you very well in your visit here in Canada. I understand you're going to Toronto tomorrow. That's a very wise decision on your behalf, if I may say, and I wish you well on that trip, and Godspeed. We hope to have a chance one day to visit you in Hungary. Thank you very much for coming, sir.

Dr. Szent-Iványi: Mr. Chairman, thank you very much for your kind invitation.

The Chairman: Thank you.

We're adjourned until we start the study of the Foreign Extraterritorial Measures Act.

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[Translation]

Mr. Bergeron: Before we adjourn, I would like to discuss a concern I have about Tuesday's morning scheduled meeting on Iraq.

The Chairman: Of course. Can we first say goodbye to the minister and then deal with this matter?

[English]

Members, we only have the minister here for a short period of time, but before we ask the minister to speak to us about the Foreign Extraterritorial Measures Act....

[Translation]

Mr. Bergeron, I believe you had a brief point of order.

Mr. Bergeron: Once again, I am concerned about transparency and the co-operation we are receiving from the Department of Foreign Affairs and International Trade. I am referring to the scheduled Tuesday morning meeting on Iraq. Because the departmental expert was supposedly ill, this meeting with the official, a person by the name of Mr. Lavertu, according to our sources, was called off.

To begin with, we are surprised that no one in Mr. Lavertu's entourage is capable of taking his place and relating to us the department's views on Iraq. The impression is that no one in the department is capable of doing so. However, of greater concern is the fact that after checking into the matter, it seems that Mr. Lavertu was not ill at all, but actually at work in the department.

We are extremely concerned about this lack of transparency on the part of departmental officials in their dealings with the Standing Committee on Foreign Affairs and International Trade.

I wanted to bring this matter to your attention and to ask you to investigate and get some explanations from the parliamentary secretary who, unfortunately, is not here with us this morning. I want to ask our colleagues on the government side how they can accept to have the wool pulled over their eyes by departmental officials. This has occurred on several occasions and I would like it to stop.

The Chairman: I have taken note of your comments, Mr. Bergeron.

I knew that Mr. Lavertu was unavailable that morning, but I didn't realize that it was due to illness. I will do my best to look into the matter and I will report back to the committee.

Thank you for your comments.

We will now proceed to consider Bill C-54, an Act to amend the Foreign Extraterritorial Measures Act. With us for a brief 45- minute period is the Minister...

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[English]

The clerk advises me I should read the order of reference. It is therefore ordered that Bill C-54, an act to amend the Foreign Extraterritorial Measures Act, be now read a second time and referred to the Standing Committee on Foreign Affairs and International Trade. That is the order of the House under which we are proceeding.

I would ask the minister if he could give us a brief outline of his intentions as to the purposes of the amendments. Then we could have some questions, perhaps, Minister, if you have some time. Then we'll proceed to hearing from the officials on the details of the bill.

Hon. Arthur C. Eggleton (Minister for International Trade): I'd be happy to do that, Mr. Chairman. Thank you very much for inviting me this morning.

I'm here with a number of officials: Gilles Lauzon, Joanne Osendarp, Ray Boomgardt and Ross Snyder, from the department.

If I could be excused in about half an hour, I would appreciate that, because I do have another meeting that I have to get to at that time.

Mr. Chairman, the actions taken by the United States in passing the Helms-Burton law compelled Canada to seek to strengthen the provisions of the Foreign Extraterritorial Measures Act. This is certainly one piece of legislation that we would not be pressing but for that very fact.

Despite American action that argues to the contrary, Canadians believe that the freedom to maintain our own foreign policy in trading relationships is a fundamental principle that must be respected.

Helms-Burton is wrong on many levels. First, it is objectionable because it attempts to enforce a uniformity of approach in international relations and to deny the freedom to other nations to make up their own minds and implement their own policies.

[Translation]

Both Canada and the United States are trading nations, not only with each other, but with the world.

[English]

Americans have always played a key role in promoting and supporting freer trade around the world. Americans know that trade is bringing the world together as never before. It is also evident that freer trade and a clearer system of rules to enforce it are important and obtainable objectives.

However, we have recently seen disturbing indications that the American commitment to freer trade may be flagging. First, there was the isolationist rhetoric of the American presidential primaries. Now we are being subjected to legislation in the Helms-Burton act and of course more recently with respect to Iran-Libya.

Those of us in the global trading community who are committed to tearing down barriers and opening up opportunities cannot be selective in our approach. We cannot defend the principle and then defy it in practice.

Canada and the United States share a common objective in Cuba in terms of the advancement of democracy, economic reforms and respect for human rights. The differences in our views are the best way to achieve those results.

The Americans believe in isolating Cuba. We prefer engagement. We believe that a policy of engagement and dialogue will encourage a peaceful transition in Cuba to a country with full respect for human rights, a generally representative government and an open economy.

The second aspect of this legislation that is troubling is its effect on both friend and foe alike. Helms-Burton has taken a U.S.-Cuba problem and made it a much broader international trade and investment issue.

Two sections of the act are particularly offensive. Title III allows U.S. citizens with claims on expropriated property in Cuba to sue foreign nations, such as Canadians, in United States courts. If the company has no assets in the United States that it can seize upon, an American who obtained such a judgment could try to come to the Canadian judicial system and ask the courts here to enforce the ruling and seize assets in Canada.

Two months ago President Clinton suspended this right to sue for six months. But this is only a temporary measure that would have to be renewed every six months, and the president can change his mind and end the suspension at any time. As long as the Helms-Burton act is on the books, the threat of lawsuits against Canadian companies exists.

Title IV of the act allows the U.S. government to deny entry to executives of companies that the U.S. State Department deems to be, as it says, trafficking in expropriated property subject to a U.S. claim. This ban extends also to the families, children and agents of these executives.

Helms-Burton is also regressive in other ways. At a time when our hemisphere is coming together as never before, Helms-Burton seeks not to integrate, but to isolate.

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There are initiatives such as the Miami summit in 1994. What's flowing out of that is the proposition of a free trade area of the Americas. We have the chance with these to bring this hemisphere into a new relationship, one built on openness and the free exchange of ideas, individuals, and products. Helms-Burton runs counter to this movement and erects barriers, creates resentment, and introduces tension in international trade and relations.

Finally, Helms-Burton is unacceptable because it flouts long-established international legal practices for settling disputes between nations regarding claims by foreign investors who may have had their property expropriated. These established practices have served the world well in the past. By choosing to ignore them now, Helms-Burton sets a dangerous precedent.

[Translation]

We believe the amendments before this House are an appropriate response to these issues.

[English]

The amendments we are proposing will strengthen FEMA in two ways. They will permit the Attorney General to block any attempt by a foreign claimant to enforce in Canada a judgment under a law such as Helms-Burton, and they will give Canadians recourse to Canadian courts if awards are made against them in American courts. In other words, Canadians can apply in our courts to recover or claw back from the American claimant an amount equivalent to that awarded against them by the American court.

For example, a U.S. national could win a suit under Helms-Burton against a Canadian in an American court. If the Canadian has no assets in the United States, the U.S. national would have to ask a Canadian court to enforce the judgment. The Attorney General of Canada would be able to issue an order blocking this process under the amendments we propose. If the U.S. court ordered the Canadian to pay damages, he or she could sue the American in the Canadian courts to recoup the full amount of the award. This amount plus costs in both countries would be applied against the American assets in Canada.

One of the problems we have encountered in the past is the refusal by Canadian companies to comply with FEMA because the penalties from the foreign country are higher than those extracted by our own law. It was simply less expensive for a Canadian company to violate the Canadian law.

In order to increase the chances of compliance, we are increasing financial penalties under the act from a maximum of $10,000 to $1.5 million. This increase will bring the financial penalties imposed under FEMA into line with penalties under equivalent U.S. legislation as well as with penalties imposed under other Canadian legislation, such as the Environmental Protection Act and the Competition Act.

The amendments would allow the Attorney General to place other foreign laws that are objectionable on the list under FEMA. This listing is intended to give the government greater flexibility in dealing with such situations and would provide for a quicker response time in defending Canadian interests in the face of offensive foreign laws.

All of the amendments we are proposing are moderate and are defensive in nature. We hope they'll never have to be employed. They are a reactive antidote to be used if needed, but it is vital that they be available to Canadian companies in order to provide them with the tools to help protect themselves should this ever be required.

Thank you, Mr. Chairman.

The Chairman: Thank you very much, Minister, for your brief comments, leaving time for questions.

[Translation]

Mr. Sauvageau.

Mr. Sauvageau (Terrebonne): Thank you, sir, for coming here this morning. We have several questions for you. I will move through them quickly since we don't have a great deal of time.

Firstly, as you know, all parties, that is the Bloc Québécois, the Reform Party and your party, are opposed to the Helms-Burton Act. However, our objections are somewhat different insofar as the time frames and methods of action are concerned.

I have three questions for you. Given the fact that since July 19 last, the government has had the opportunity to set up a special panel to settle trade disputes under NAFTA, is there any reason why the Canadian government has not resorted sooner to this course of action?

Secondly, the ins and outs of Helms-Burton were common knowledge the day after the law was announced. Why did you wait so long to amend Bill C-54? In other words, why did you wait until Mr. Clinton said he was suspending Helms-Burton before deciding to take some action?

Can the fact the OAS legal committee has ruled that Helms-Burton violates international law be used in the upcoming action?

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Thirdly, why has Title IV of Helms-Burton, which is already in effect, been suspended?

[English]

Mr. Eggleton: I appreciate the all-party support that has been received for opposition to Helms-Burton. I trust that will also prevail in terms of support for the FEMA amendments.

With respect to NAFTA, the dispute settlement panel you talked about, we are in a position now - we have been since late July - to launch a NAFTA panel. We're in the NAFTA process. We've gone through two stages of it, a consultation stage and a meeting of the commissioners - I think that's what it's referred to - that's the three of us for the three countries that have responsibility for NAFTA. We can launch that at any time.

We still have the matter under consideration and we are consulting with our allies in Mexico and in the European Union.

We're also mindful that it's U.S. election time. We would not be deferring for their sake on that matter, but if at all that's a factor in terms of our own sake. It is one of the things we're considering, as well as the fact that after that election in January, and perhaps even more important, will be another date of determination for the President of the United States with respect to title III.

We're looking at all of those factors and determining what is the best time to play that card, so to speak. But we are no less vigorous in our opposition to Helms-Burton. It's just a matter of when it is the appropriate time to consider that panel and to finalize our decision on the matter. We have that under active consideration, considering all those other factors I've noted, and there is no timeframe in which to exercise that decision.

With respect to Bill C-54, and why did we wait to act, first of all we had to see what the final provisions of the Helms-Burton law were. We found that out last spring. We then set about drafting the legislation you have before you and here it is in the fall. I think it's been moving at a pretty good pace. But as I said a few moments ago, it may never have to be used.

It's going to be in place long before there's any need for it to be used. The earliest any court could receive any claims under title III of Helms-Burton would be next January if the president lifted that suspension of court action. Then, of course, court action would pursue and goodness knows how long that might take or whether anything would ever be successful under it. It could be months, it could be years before the FEMA amendments would actually be triggered.

I think we've moved at a very reasonable pace in accordance with the flow of information, bearing in mind also the summer recess and getting the matter into the House and to this committee very quickly this fall, very early on in the session. I hope we never have to use it, but it will be ready well in advance of any need to use it.

The OAS position is one we have been part of. We have certainly expressed our opposition to Helms-Burton at the OAS as we have in other forums as well. That process is continuing at the OAS and we'll continue to support it in that direction, even though the Americans have of course tried to convince the OAS it shouldn't be dealing with this matter. We don't agree with that, and neither do the other countries of the OAS.

[Translation]

Mr. Sauvageau: You have forgotten about Title IV. As for the excuse that it was the summer recess, perhaps you could find another one, because you took advantage of this time to conclude an agreement with Israel.

[English]

Mr. Eggleton: He's right.

[Translation]

Mr. Sauvageau: We had asked for information, but our request was denied.

[English]

Mr. Eggleton: The House was.

.0930

[Translation]

Mr. Sauvageau: What about Title IV?

[English]

Mr. Eggleton: Title IV is all tied up with title III in terms of the NAFTA. It's a challenge that covers both of those. So I've given my answer with respect to NAFTA. Again I'm saying we're moving expeditiously on this whole matter of C-54. It wasn't a question of anybody being on vacation this summer other than the House wasn't meeting. So it was not possible to put the legislation before the House until the fall.

The Chairman: Mr. Penson.

Mr. Penson (Peace River): Thank you, Mr. Chairman, and welcome, Minister, to the committee.

I'd like to say at the outset that the Reform Party is in support of Bill C-54, although we do think it's a bit of a stopgap measure in this dispute. Our preference certainly would have been to have this matter settled by a NAFTA panel. I understand you've started the process.

Our concern is that every time we approach the brink with the United States and don't go to the ultimate dispute resolution we are setting a precedent. We did it with wheat in the case of accepting export caps about two and a half years ago. We've done it with softwood lumber.

I'm concerned we are not using a process Canada fought very hard to establish. That is that we determine the outcome of these kinds of disputes by a NAFTA panel or in the case of GATT at the World Trade Organization. That, it seems to me, is the best place to resolve this issue.

Minister, you've already said the President of the United States has given us a six-month exemption. That may be extended, it may not. But the clock is ticking in terms of what's happening on these disputes that continue to accrue. Liabilities continue to accrue. I'm concerned about that.

Clearly the U.S.-Cuba dispute is one for them to settle themselves, and we don't support them applying any resolution of that outside of their country. I think it is a threat to our sovereignty. It offends us in the Reform Party that the United States would be trying to apply their law outside of their country. That dispute should be settled among themselves.

It seems to me that Bill C-54 certainly addresses some of the issues of how to resolve this but it doesn't go far enough. That's the one issue I would like you to comment on. The other of course is the one I have a little trouble with in this act, that is, section 9, the recovery of costs. I'm just wondering how that can be done effectively. Do you have a list of companies or do you think there is an effective way a Canadian company that was hit can recover costs by suing? Is there any real possibility of this? How do you see that?

Mr. Eggleton: First of all, thank you for your support.

Bill C-54 addresses the FEMA amendments. It does not address the question of a dispute panel under NAFTA. That's a separate but complementary process. As I indicated earlier, we will play that card at the right time. We have not backed off from that process at all. It's just a question that we haven't yet triggered the panel into process.

We are still before NAFTA. We still have the issue before NAFTA. We have not pulled back from that at all. At the appropriate time we'll deal with that decision with respect to the next step, which is the panel process.

I might add that we are not at all reluctant to use the dispute settlement panel process. In the case of the one in the WTO, we and the Americans use it more than anybody. We of course in the case of the NAFTA panel on supply management are coming to a conclusion on that particular case very soon.

On the question of costs, yes, costs would be included. In fact we're quite prepared to include consequential damages as well in terms of any economic loss that may be occurring as a result of a seizure of property in the United States. That would, I believe, require a further amendment to the proposed legislation. But I think it's a reasonable point that costs including consequential damages could in fact be recovered.

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Mr. Penson: Do you have any evidence of U.S. companies that may sue Canadian companies for damages that have assets in Canada that could therefore be recovered by those Canadian companies?

Mr. Eggleton: That was one of the first questions I asked when we were drafting this legislation. I said it's fine that we try to protect the Canadian companies in this way, if we ever have to - hopefully we won't - but it depends on whether they have assets here. We actually looked at a number of Americans who could sue Canadians who have had assets that are under dispute with respect to Helms-Burton, and a number of them do have assets in Canada. So it could apply.

I do note, though, that a lot of the corporations, particularly in the United States, have not supported Helms-Burton. They say they would rather do what the Canadians and others have done and go and deal with the Cubans, go and settle these claims. Go through a dispute settlement mechanism with third parties if you need to, but settle these claims with the Cubans; don't try to take it away from somewhere else and face this kind of retaliatory measure. I think that's what a lot of corporations in the United States would much prefer.

So it does involve costs. It does involve consequential damages and we think there are a number of firms it could apply to here in Canada. Obviously if they don't have assets in Canada, it doesn't.

Mr. Penson: I guess that was our basic question with regard to how effective this legislation would be, and if that's the case there, it seems to me that's covered.

Mr. Eggleton: It doesn't cover everything. There are obviously a lot of circumstances it wouldn't cover.

Mr. Penson: Yes, but I was wondering whether there were any companies that would have assets or if this was just window dressing.

Mr. Eggleton: Yes, there are.

Mr. Penson: Mr. Chairman, I guess my final comment would be that I would encourage the minister and the department to try to get a final resolution of this. It seems to me that the Americans react to weakness or strength, and I don't think we should show weakness by not challenging them on these kinds of issues.

We see it again in the dispute that's starting to simmer over wheat going into the United States. It's a very big Canadian crop and there's a possibility of increased exports. They're making noises that they're going to put export caps on wheat again, and it seems to me that if we had resolved this at a NAFTA panel two or two and a half years ago, we wouldn't be going through this process again. So I encourage the minister to use the process we have and fight from strength.

Mr. Eggleton: Absolutely.

The Chairman: Mr. Flis.

Mr. Flis: I'm very pleased to hear that all three parties are supporting this bill, so hopefully it will get speedy passage.

I'm a little disappointed with the partisan kind of politics from the Bloc Québécois member, Mr. Minister. He knows this bill is the first order of business in the House of Commons. He knows this is the first order of business before this committee. To be accusing the minister or the department of foot-dragging or delaying is uncalled for. I want to set the record straight.

Mr. Minister, my question is regarding the Canadian companies who are doing business there. I was there about a year ago opening an international trade fair. There were 26 Canadian companies, 14 from Quebec. Do we know that the Canadian companies that are doing business there are actually trafficking in expropriated properties right now? Can that be divulged or is it known?

Mr. Eggleton: That phrase, of course, is a Jesse Helms special. I totally reject the idea that any of our Canadian companies are trafficking in confiscated property. Governments expropriate property all the time, whether they're in democracies or in other kinds of government.

What they do have is a responsibility to compensate the people they expropriate the property or the business from. I think the companies in the United States, the Americans who have had property expropriated in Cuba, have a right to have compensation for it. If the American government would only allow them to go after it, as others have, then this matter could be settled. Instead of going after the Cubans to get the settlement for this expropriated property or trafficking in confiscated properties, as Jesse Helms prefers to call it, they're coming after us. That's totally wrong.

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Are there companies? Well, obviously the Americans think Sherritt International is one of them, because they put them on the title IV list. Are there any others? Well, they haven't put anybody else on the title IV list, have they? I'm not aware of whether anybody is going to be added on or not. At this moment I'm not aware of anybody being investigated in that connection. So by the appearance of their definitions, it looks to be one. However, that's to this point in time, and that may change. Who knows?

I think whatever property Sherritt, say, is operating on, the company or citizen in the United States should be going after the Cubans for compensation, not going after Sherritt.

Mr. Flis: Will this legislation protect Canadians in similar situations in other countries, such as Iran, Libya, etc.?

Mr. Eggleton: It's intended to do that, yes. The piece of legislation that would be an extraterritorial measure offensive to Canada and that would be covered by the amendments to this act would be declared such by the Attorney General. That includes Helms-Burton and whatever other acts fall into this category as well, where there could be property seized and clawbacks or blocking measures used here in Canada.

Also, of course, it would be for companies in terms of the penalties, which are now increased, for abiding by a foreign piece of legislation.

The Chairman: You mentioned European countries in your opening remarks, and I know the foreign representative of the commission, certainly on Britain, has made very strong comments about the bill. Are there any European companies that have been put on the title IV list, to your knowledge, and could you quickly tell us whether the Europeans are actually introducing legislation of this type?

Mr. Eggleton: I'm not aware of any European companies. There's one Mexican company.

Ms Joanne Osendarp (Trade Policy Analyst, Investment and Trade Policy Division, Department of Foreign Affairs and International Trade): I can answer that, actually. The state department sent out a number of advisory letters back in June, and those advisory letters included one European company, but since then, those advisory letters have been followed by notification letters. No notification letters have been sent to any European companies, only to the company the minister referred to and also to one Mexican company.

The Chairman: When he was here, the President of Mexico made a strong statement in the House about the issue, and I presume you're getting strong support from the Mexican government on it.

Mr. Eggleton: Absolutely, and they also are proceeding with anti-dump legislation. European countries have it under consideration as well.

This matter will be discussed in a number of forums over the coming months, so the pressure will continue to be on the United States with respect to this matter. There's not going to be any letting up of this, because there are also discussions about a multilateral agreement on investment through the OECD and there will be discussions in the World Trade Organization meeting in Singapore. The vigorous opposition to this is going to be continuing in a number of arenas.

The Chairman: Mr. Mills, did you want to make a quick comment? The minister has to go.

Mr. Mills (Red Deer): I just had a very brief question, if I might ask it.

You mentioned the U.S. would like to see the democratization of Cuba, but their approach is to isolate and thus stagnate and then take over. Ours is one of involvement. We say that and we basically agree with that philosophy.

It's been so long now. What are we doing to actually help move Cuba toward a democracy? In reality we have to face that Fidel Castro is a dictator who operates with a number of human rights abuses, etc. What are we actually doing other than saying we're going to help democratize Cuba? Are we achieving something?

Mr. Eggleton: Well, I think we are. We have a fairly extensive agenda with respect to involvement in areas of human rights organizations and individuals in Cuba with respect to that matter. Also, on economic reforms, I'm going to ask my staff to give a little bit more of the chapter and verse of it.

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The Chairman: I wonder if your staff could reserve that. You have about two minutes. So maybe we could get that reaction to Mr. Mills if that's all right. Mr. Sauvageau had a very quick question. Then I understand you have to go.

[Translation]

You have about two minutes remaining, Mr. Sauvageau.

Mr. Sauvageau: Earlier on, during our first exchange, you stated that Bill C-54 not only resolved the problem with respect to Title III, but that of Title IV, a provision of the law which has not been suspended. I mentioned Title IV to you.

[English]

Mr. Eggleton: No, I was talking about the NAFTA panel. Bill C-54 just deals with title III claims. Title IV, though, is also part of the NAFTA challenge as well as discussions in other forums about Helms-Burton. But title IV is not a part of Bill C-54.

[Translation]

Mr. Sauvageau: What does the Canadian government intend to do to counter Title IV of Helms-Burton, a provision which is still in effect and which has not been suspended by the U.S. government? Are you going to wait until a commission is set up to look into this matter or are you going to act quickly?

[English]

Mr. Eggleton: That is part of our consideration within the NAFTA challenge. It is a violation of NAFTA in terms of the free flow of people for business purposes between our two countries. So that is part of the consideration of our NAFTA challenge. It is part of a case we presented in our NAFTA challenge in terms of our consultations to this point in time. When we make a decision about the panel, that would also be a part of it and it will also be part of the discussion we conduct in other forums with respect to investment.

The Chairman: Thank you very much, Minister, for coming to give us the introduction to the act.

We will next hear from your officials and we can follow up on the points. The first point we'll follow up is on Mr. Mills' question about democratization and the role the Canadian government is taking in encouraging that in Cuba. Then we'll move on to the bill itself.

I would suggest, members, that we take a five-minute break now to let the minister leave. Also we have a couple of matters to discuss, a sort of housekeeping. We'll reconvene at 9:55 a.m. Thank you very much.

Mr. Eggleton: Thank you.

The Chairman: Thank you, Mr. Eggleton.

.0947

.1008

The Chairman: I apologize to the members that the break took somewhat longer than originally planned. We were dealing with a procedural matter, which I think we've satisfactorily resolved. I thank all the members for their cooperation in that respect.

We're now going to proceed to clause-by-clause study of the bill. But before we do, Mr. Mills wanted an answer to his question concerning the democratization process in Cuba and what the Canadian government is doing towards that.

Then we have with us today Professor John Kirk, from Dalhousie University, and Mr. Robert Muse, who is an attorney from Washington, D.C. So before we move into clause-by-clause, I'll ask those gentlemen to give their comments on the bill. Then we will give everybody an opportunity to ask questions and then we'll move to clause-by-clause.

Mr. Mills: The reason I asked that is, of course, that the minister used it in his introduction. We used that over and over again. I think it is all behind this whole thing. So I think it's worthy of getting an answer at least. What's happening? Are we getting anywhere?

Mr. Ross Snyder (Deputy Director, Caribbean and Central American Relations Division, Department of Foreign Affairs and International Trade): In response to that, I'd perhaps preface it very briefly by saying what we are doing in Cuba, in terms of human rights and democratization, is very similar to the approach of a number of other countries, particularly European countries. They have followed what we call a process of dialogue and engagement, which in the case of human rights and democratization is also a process of encouraging and urging.

.1010

We have regular discussions with the Cubans at all levels, both here and in Havana. In all of these discussions we do regularly raise issues of human rights and democratization, urging the Cuban government to abide by internationally accepted standards and obligations.

Our concerns on Cuba really focus very much on civil and political rights in terms of human rights. We have taken the view that Cuba has done a great deal that is positive on social and economic rights, that there's not a systematic recent history of such offences to the basic person as torture and summary execution. But there are some very real and very serious constraints in such civil and political rights areas as freedom from arbitrary detention, freedom of expression, freedom of association.

So we do raise these issues regularly and bilaterally with the Cuban government. It was a major issue on the agenda, for example, when the Cuban foreign minister visited Canada last year. It's an issue when we've met with other ministers who have come to Canada. It's an issue when Canadian officials have gone to Cuba; for example, the visit of Mrs. Stewart in 1994.

We've also had a continuing process of contact with dissidents and human rights groups in Cuba. We've gone to dissident trials. We've met with dissidents quite regularly, both in the embassy and other places, to demonstrate our support for freedom of expression and association.

We are also trying to encourage an opening up in the system in Cuba through, I guess one would say, more positive measures. For example, we provide support for local grassroots organizations through our Canada Fund for local initiatives that's administered by the Canadian embassy in Cuba. We also have provided through CIDA's partnership branch support to Canadian non-governmental organizations who are establishing partnerships with their counterparts in Cuba. We are also engaged with the Cuban government in looking at ways of modernizing their economic policy institutions.

So there are a variety of ways in which we certainly encourage and, as I said earlier, urge improvement in human rights and democratization in Cuba.

We could also mention, of course, the fairly extensive series of parliamentary exchanges that have taken place. A number of parliamentarians, including some here, have visited Cuba. Their counterparts have come back. The two Speakers, Speaker Parent and the president of the Cuban Assembly, have exchanged visits and have had many long conversations.

Beyond that, in the international scene we've certainly made our concerns very strongly felt in the UN system through support of resolutions critical of human rights performance in Cuba. We have also made quite public our condemnation of such actions as the shooting down of the two aircraft in February and the harassment of human rights groups that took place earlier this year in Cuba.

In terms of results, it is a slow process in Cuba. In the area of political and civil rights it is a very tight system and progress can be slow. There were some results in 1995 through the actions and the dialogue of such countries as Canada and some European countries. A number of political prisoners were released. The Cuban government did agree to the visit of a number of international human rights groups and they did ratify the UN convention against torture.

These are significant steps for Cuba, probably small steps overall, but we think they resulted from this kind of process of engagement and dialogue. It has been more difficult this year. A series of events earlier in the year have made the atmosphere more difficult. But certainly we continue the dialogue with the Cuban government and are looking for opportunities to encourage reform wherever we can.

We think that isolating Cuba, taking a confrontational approach, has tended to reinforce an inward turning in Cuba, reinforce the kind of militant nationalism we think is unhealthy. So even though, as I say, the results have not been spectacular, I think it has kept the process going at a certain level.

.1015

Mr. Mills: My only follow-up would be, again, that I can't help but think of my own experience there. You mentioned parliamentarians. You know, unfortunately a lot of parliamentarian trips tend to talk to the right people and hear the right things.

I can't help but remember going to a jail and -

An hon. member: Oh!

Mr. Mills: - seeing Cubans working, cutting cane 18 hours a day, and being dragged back to their cells and thrown in, many of them per cell. Those are the things I don't think too many parliamentarians experienced. That's the kind of thing that's happening there. Often when we put forward these bills, we are righteous and say we are doing so much. I think we need to admit there are a lot of problems there.

There is not freedom of expression. It is a dictatorship. I don't believe the American method is the right one. But are we doing the right thing either by kind of closing our eyes? I trust from what you said that we're not doing that. But to have it on the agenda is not good enough. We have to be moving forward. My experience there was 15 years ago. The problems - I don't see a lot of change.

My concern is that we need to work with the Americans to solve the problems. If we positively approach the Americans and say this is our end result - a democratization of Cuba - we would not have a Helms-Burton bill to worry about. Confrontation between us and the Americans is not the answer either, in our solution.

Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Mills.

Contrary to some of the recent debates in the House, I take it you are not necessarily a believer in retribution when it comes to criminal sanctions but are a believer in rehabilitation. I'm encouraged by this different perspective -

Mr. Penson: For political prisoners.

The Chairman: Oh, for political prisoners.

Mr. Morrison (Swift Current - Maple Creek - Assiniboia): In Quebec.

The Chairman: I see. We're straying well beyond the purview of this committee into the justice committee.

Thank you very much.

We have the fortune of having both Professor Kirk and Mr. Muse with us. Mr. Muse has come from Washington. I've had the opportunity of hearing you before, sir, on another panel. I know you're a scholar, familiar with this law. I wonder if you could perhaps start. Then we'll ask Mr. Kirk to make a statement. Then I'm sure the members will have some questions of you before we move to clause-by-clause for the bill.

Thank you very much for coming up to be with us today.

Mr. Robert L. Muse (Attorney at Law, Mansfield and Muse, Washington, D.C.): Thank you very much for having me.

I want to begin this morning with a newspaper article from the Miami Herald, dated September 21, last Friday, that, for reasons I'm going to attempt to explain, I think is both significant and troubling.

The Miami Herald reports:

The State Department...has a problem.

``The phones aren't ringing,'' one official complained on Friday.

Although the 5,911 original claims certified by the U.S. government are amply documented, officials said they welcome information from U.S. citizens about other properties confiscated under the Cuban Revolution.

The information will be used to enforce Title IV of the Helms-Burton Act, which denies U.S. visas to foreigners ``trafficking'' in stolen property.

Quite helpfully, telephone numbers and fax numbers are supplied.

When they talk about ``other properties'' they're soliciting information about in order to enforce title IV exclusion of foreign nationals who invest in or trade with the products of such properties, they are talking about Cuban American properties, so-called, claim properties. Those were properties owned by Cubans at the time they were expropriated by the Cuban government, for the most part in the early 1960s.

The question is, what is wrong with the United States supporting via title IV and also by means of title III - its lawsuit provisions of Helms-Burton - the claims of non-citizens at the time of foreign property expropriations?

The second question of concern to you is what is the likely effect of such support by the United States on Canadian citizens?

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The answer to the first question, what is wrong with such support, is that it violates a fundamental principle of public international law, the nationality of claims principle. That principle can be stated in the following terms: if international law is to apply to a governmental taking of property, the person from whom the property was taken at the time of taking must occupy the status of an alien with respect to the government that took the property.

I recognize that's an awkward formulation, but as we go deeper into it I think the common sense that underlies the conception will be obvious.

When a government takes the property of its own citizens in the form of imminent domain proceedings, that is not a question of international law. Some examples would be in constructing highways, agrarian reform programs in the case of Latin America, or even the now distinctly out of fashion nationalization programs of a previous era as implemented by the Cuban government in the early 1960s, for example. It is impermissible for United States government to be enacting legislation that sanctions the behaviour of third-country nationals such as Canada with respect to those properties.

The reason it matters is the sheer volume of claims that will arise from that sector, from Cuban citizens at the time their properties were expropriated in Cuba. The total number of certified claims from U.S. companies at the time of expropriation, some of whom I represent, is a little less than 6,000. There are only a few hundred corporate claims of any significance whatever, claims that were over $1 million in value at the time of expropriation in 1960.

When I say ``certified claimants'', I'm talking again about U.S. companies at the time of expropriation whose claims were certified by the Foreign Claims Settlement Commission of the United States, a subdepartment of the justice department. The top ten U.S. corporate claimants comprise an electric company, a phone company, two oil refineries, one nickel mine, and five sugar producers. They are worth over $1 billion out of the total $1.6 billion in U.S. corporate claims.

Remember, we didn't ask for Helms-Burton, but even if we were to avail ourselves of it, the impact on Canadian nationals would be limited for the most part. There are not that many of those claims. I would suggest that the question with respect to that group of claimants is what the United States has done to resolve that issue. It does exist on a plane of international law. We've discussed that in the past. But what has the United States done to date to resolve that outstanding international legal issue and what is it prepared to do in future?

With respect to the second group, the Cuban Americans who, alarmingly, the United States government is now soliciting claims from, that has a far greater potential impact on Canada and its citizens than the claims of the certified claimants.

Between 1959 and 1980, 800,000 Cubans settled in the United States. About 200,000 more have arrived in the past 15 years, giving a total of about 1 million. For the most part, Cubans who have migrated to the United States have been naturalized and are able either to file a title III lawsuit, should that provision be implemented, or to avail themselves of the phone numbers provided in the Miami Herald and attempt to exclude any foreign nationals who are in any way involved in their properties.

I won't go into the methodology, but about a year ago I wrote a letter to the congressional budget office estimating that if title III were enacted, 300,000 to 400,000 Cuban American lawsuits would be filed.

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I testified before the U.S. Senate on July 30 this year, just a couple of months ago, and complained to the chairman at the western hemisphere subcommittee, Senator Paul Coverdell of Georgia, that nearly one year later I had not received a response to that letter. The ranking Democratic senator, Chris Dodd of Connecticut, complained that he had not received a response to his letter complaining that I had not received a response to my letter.

As yet we have seen no rebuttal of that figure of 300,000 to 400,000 lawsuits. Each of those potential title III litigants is a potential complainant under title III against your nationals.

One thing I should say parenthetically is that given the passage of time, most of the original owners of property at the time of expropriation are now dead. Most of the property takings were about 35 years ago. It's their descendants in south Florida who will be filing these claims. The geometric increase in numbers of the Cuban American population accounts in part for the number of lawsuits to be expected.

I have a couple of quick comments on the purposes of titles III and IV as they affect Canada. Titles III and IV had their origins in a concept called the pressure cooker effect. That is that you squeeze Cuba so hard via an embargo that eventually you collapse the current government as well as the economy and social and political institutions on the island. That is what it's for. The title III lawsuits and title IV exclusions aim at cutting off hard currency to the island to produce that ultimate collapse.

Once the collapse has been effected, Helms-Burton has over 20 specific requirements for what would then constitute a democratic government in Cuba. Among those requirements are such things as the cessation by the Government of Cuba of interference with U.S. government sponsored radio and TV signals and a constitutional provision ensuring the right to private property. I would note that Canada, when you drafted your bill of rights not long ago, following debate did not include a property clause among your fundamental rights, but nevertheless the United States has now legislated that for Cuba.

Finally, among the many of these requirements is an interesting one in light of the recent issue of Ross Perot participating in the presidential debates in the United States, if any of you have followed that. Helms-Burton requires that foreign supervised elections be held ``with the participation of multiple independent political parties that have full access to the media on an equal basis'' and so on.

So that's where you find yourselves. As a country, your sovereign prerogative to pursue an independent foreign policy with respect to Cuba is intercepted by Helms-Burton. The only way you can pursue a foreign policy of economic engagement with the island, for example, is via your private sector, either investing or trading with Cuba. Titles III and IV are meant to make that so economically injurious to your private sector as to dissuade you from any involvements with Cuba.

Going back to the issue of the Cuban Americans again, I emphasize this because they are the architects of the act and the chief impact is going to be felt both in title IV, which is now in effect, and in title III potentially. In a hearing on June 14 before the U.S. Senate, a Cuban American attorney from south Florida testified that ``Inclusion of Cuban Americans [in Title III]...is imperative to accomplish the foreign policy goals [of the Helms-Burton legislation]. According to Mr. Sanchez, certified claimants ``represent at most 5 percent of the productive properties in Cuba''. Mr. Sanchez went on to say: ``Including the Cuban Americans provides a much greater coverage of property and therefore creates a more limited pool for potential investments in Cuba. By limiting the scope of properties available for investment, this bill would discourage foreign investment in Cuba. By limiting foreign investment in Cuba the bill detrimentally impacts upon the regime's chances to prolong its stay in power and therefore the foreign policy objective is accomplished.''

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To conclude with the nationality of claims principle, we could speak for hours on the various legal implications of the bill. Again, that is the one that for a nation to support in any form the claims of an individual with respect to a foreign property loss, the individual has to have been their citizen at the time of injury. That is established international law, long adhered to by the United States.

When they put an ad - essentially an ad, with phone numbers and fax lines - in the Miami Herald inviting Cuban Americans to lodge claims to properties for title IV purposes, that is the law they're violating. It is knowing and deliberate. I've spent 18 months of my life banging this drum. There is no lack of information about the impermissibility of extending these rights to Cuban Americans.

A couple of court cases very quickly, and I'll conclude in about a minute. In the Palacio case, a United States federal district court case, involving the claims of Cuban owners of cigar manufacturing enterprises in Cuba, the U.S. court said:

Confiscations by a state of the property of its own nationals, no matter how flagrant and regardless of whether compensation has been provided, do not constitute violations of international law.

The court of appeals for the fifth circuit said only a couple of years ago in a case de Sanchez v. Banco Central de Nicaragua:

...international law delineates minimum standards for the protection only of aliens; it does not purport to interfere with the relations between a nation and its own citizens.

I could go on and cite numerous instances of U.S. authority, which would only serve to make the point that the nationality of claims principle is settled - it's not subject to dispute or controversy in international law - and the United States has always followed it, as has Canada, for example, when it enacted its claims program with respect to Cuba back in 1971.

In a communique of the Department of External Affairs, Ottawa, January 14, 1971, Canada said:

In accordance with well-established international rules and practice in this field, the Canadian Government will be able to take into consideration only claims in respect of property which belongs to persons who were Canadian citizens at the time the property was nationalized or otherwise taken.

I think I'll conclude with the observation that Canada has adhered to international law with respect to the nationality of claims principle. I think you're perfectly entitled to expect no less of the United States.

Thank you.

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

Perhaps, Mr. Kirk, you could join Mr. Muse, then we'll open it up for questions.

Professor John Kirk (Department of Latin American Studies, Dalhousie University: Perhaps it would be useful if I were to outline initially what my expertise is and where my expertise does not lie.

I am a professor of Latin American studies and specialize in contemporary Cuba, a country I've visited 40 times over the past 20 years. I have written and edited, I think, seven books on Cuba. I've just finished a book on Canadian-Cuban relations and have been studying the subject for the past five or six years.

I've also worked with several Canadian companies, mainly from Nova Scotia, New Brunswick and Ontario, that either have investments in Cuba or are exporting to Cuba. I accompanied Premier Savage on two successful business delegations with business people in 1994 and this year.

I am not a lawyer. I have absolutely no legal expertise. So my comments would be null and void, negligible, on that point. But for the purpose of my research I have been tracking earlier blocking legislation and wanted to share with you some observations on that. I would also like to maybe provide a framework for understanding Canadian-Cuban relations, the essential dynamic at play, and where they are going at the moment.

I'd like to begin, however, by clarifying a point Ross Snyder made. I believe there has been limited improvement in the human rights record of Cuba - to go back to your question - but I believe the U.S. position is clearly non-productive and the hypocrisy of the position can be seen in the policy of engagement the United States has towards China and Vietnam.

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To me, it is absolutely bizarre that the United States would try to hit Cuba over the head with a blunt instrument, whereas in China and Vietnam it talks engagement. It is basic hypocrisy.

Let me explain my reactions to the bill, first. I read through the rather difficult prose for a Latin American studies professor and came up with a general reaction, which is that it makes sense, but I would like to share one caveat with you. The predecessor designed to stop the Cuban democracy act, the Torricelli bill, in 1992, also looked pretty good. The blocking legislation provided limited penalties. It was symbolic more than anything. But the penalties were, I think, up to $8,500 and up to five years in jail.

Speaking on October 13, 1992, the then Minister of Justice, Kim Campbell, said that the bill was intended to protect the primacy of Canadian trade law and policy. If left unchallenged, the measure passed by the Congress on October 5, 1992, would be an unacceptable intrusion of U.S. law into Canada and could adversely affect significant Canadian interests in relation to international trade or commerce. Canadian companies would carry out business under the laws and regulations of Canada, not those of a foreign country.

Fighting words, indeed. Unfortunately, in reality many U.S.-based companies at the time simply ignored the legislation. I've seen estimates as low as 12 and as high as 20 companies that listened to their head office in the U.S. and ignored Canadian legislation. A process of self-censorship ensued.

The names most commonly cited are Eli-Lilly, Pepsi-Cola, Red Lobster, Heinz and American Express. The cases were passed along, I understand, to the Department of External Affairs at the time, which then passed them on to the Department of Justice. It appears they got lost in the bureaucracy. The American Express case, I believe, was the last one that was being examined.

In synthesis at the time, we engaged in nationalistic chest-thumping. But it was not accompanied by any political will to support the government's clearly stated policy. Moreover, Canadian exports...from those countries simply dried up. They ceased. It was very difficult legally to sue these companies because they censured themselves. I understand documentation was passed to the Canadian government to show how head office had instructed the Canadian subsidiary to disregard Canadian law. But again it was lost in the shuffle.

I make this point because loopholes should be closed. A rigorous campaign of notifying Canadian manufacturers and exporters should be developed and an example should be made of violators of Cuban law. I make the central point, then, that this legislation in an earlier version was tried and I think failed dismally. It's important, therefore, that this time it be applied rigorously.

I also wanted to share with you the reaction of the clients whom I represent and the companies whose executives I've interviewed and their reaction to Helms-Burton. It seems to me there are two variables. First of all is how exposed the companies are to the United States and what their long- or short-term goals are.

As a result, some larger companies with investments in the United States have decided to wait. Two major national banks that had been keen and expressed an interest in helping Canadian investments in and exports to Cuba have held back. Most medium and small-sized companies, however, have continued to invest and export. They see a niche market, have little to fear from U.S. retaliation, and want to get established before the expected normalization of relations with the United States occurs.

The same is true around the world. It's important to bear in mind that Canadian policy toward Cuba is not exceptional. Very often we take Jesse Helms too seriously and believe we are appeasers. We believe perhaps there is a grain of truth that our policy is different.

In actual fact, our policy is no different from those of most European countries, Latin American countries. Just last week the ASEAN countries denounced the Helms-Burton legislation. They joined the CARICOM countries, the Rio group, the OAS, as was mentioned earlier, as well as the European Union.

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So Canadian foreign policy and trade policy towards Cuba is normal foreign policy. It is the same as practised by everybody else apart from the United States.

The impact of Helms-Burton has also been rather limited. Two months ago the vice-president Carlos Lage announced there were 25 new joint ventures in Cuba that have been signed since the passing of the Helms-Burton legislation.

I'd like to give a rough outline of Canadian-Cuban relations and how they are today. I was fortunate, over the past five years, to have access to diplomats in Havana and in Ottawa, to see the archives at Foreign Affairs and International Trade and the same in Havana. Again, I can't emphasize enough that our relationship with Cuba is a normal relationship. It is not particularly warm; it is a normal relationship.

Canada does not like some aspects of the Cuban system, and I believe, as Mr. Snyder mentioned, representations have been made at the highest level in Havana to express concern at the human rights situation in Cuba. However, we believe a policy of engagement, of rapprochement, and not of isolation, is the way to go; hence, the Canadian government trade mission to China and to Indonesia, countries with, I would put it to you, far worse human rights records than Cuba.

I would also indicate that trade relations are working. I left some trade figures with the clerk. If you take a look at them you will see, quite significantly, that between 1990, when the demise of the Soviet Union took place, and 1995, basically bilateral trade increased 100%. If you look in more recent years, 1994 to 1995, Canadian exports to Cuba went from $114 million to $274 million.

Imports from Cuba to Canada increased significantly too, by 65%, from $194 million to $320 million. If we look at the first quarter of this year to try to gauge the impact of the U.S. legislation, our imports from Cuba to Canada have increased significantly. They have doubled. Canadian exports to Cuba have increased 32% again. So I would put it to you that our policy of engagement is successful, it is solid and it is shared by the international community.

I would, however, like to conclude by reminding you of the loophole that was exploited last time around. I think it's important that not happen again.

I've also left a cartoon for you that, as you are going through the clauses word by word, will hopefully help you to look at the lighter aspects of this legislation and the Canadian response, which I think is admirable indeed.

Thank you very much.

[Translation]

Mr. Sauvageau: Thank you for your presentation. My questions are directed in particular to Mr. Kirk of Dalhousie University. However, if Mr. Muse would care to answer, that's fine too.

You spoke earlier of the existing loopholes in the act and you mentioned the case of American Express. As we well know, and I raised the question in the House on June 18 last, the Department of Foreign Affairs and International Trade had in it possession letters stating that the Canadian subsidiary of American Express was following the orders of head office in connection with its activities in Cuba.

Isn't Minister Eggleton's proposed amendment to the legislation nothing more than window dressing or will it really strengthen the legislation? The existing legislation has not been invoked in ten years, although the opportunity to do has presented itself. Do we really want to make the legislation enforceable this time around?

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I also have another comment, but it concerns Mr. Morrison. Concerning his inappropriate remarks about Quebec, I would like to paraphrase a passage from the New Testament for his benefit: "Forgive him, for he knows not what he says". Thank you.

[English]

Prof. Kirk: I began my comments by saying my legal training was absolutely none. So a caveat to my caveat, I am not qualified to give an opinion as to whether the loophole can be filled. It seems to me, from a superficial reading, that the measure this time around, the measures or the penalties are far greater. The question, therefore, is whether there is the political will this time around.

At the very least, being able to put this on the table and give it as an indication of the potential penalties would indicate to me that now, as opposed to in 1992, the government is taking it far more seriously. If we look at the track record of the Canadian government as well, compared to the previous government, I think the whole policy towards Cuba has been far more constructive, far more helpful and, I would argue, far more sensible.

So perhaps given the fact that Washington has clearly locked horns with Ottawa and expressed its frustration with the policy this government, I believe correctly, has enunciated, maybe the symbolism, the track record, the enhanced penalties would be sufficient as an antidote, to use Mr. Eggleton's phrase, to show that this time we mean business. I hope so, because if we don't, it is pointless to have the legislation. It has to be applied.

The Chairman: Mr. Penson.

Mr. Penson: My question is for Mr. Muse and has to do with the point you made about the one million exiled Cubans living in United States and the possibility of up to 300,000 or 400,000 claims that may be brought forward. You said in your presentation that should be of concern to Canadians.

I'm not quite sure what you meant by that. Are Canadian companies operating on land or in businesses that these exiled Cubans or their relatives had formerly operated? What is the potential for a problem for us that is beyond what already exists?

Mr. Muse: I think it's impossible for foreign companies to do business in Cuba without operating on properties that would be subject to claims in Miami. There are several reasons for it.

The demographic profile of the Cubans leaving Cuba in the years 1959, principally, to 1964 was that they were the upper strata of Cuban society. In essence, they owned most of the island, most of the productive enterprises on the island. Helms-Burton, by the way parenthetically, between the shooting down of the small planes on February 24 and the conference that produced the final version of Helms-Burton, excised an important word that had existed up to that point.

For a suit to be brought with respect to confiscated property in Cuba, it had to be being used in a commercial capacity. Now - this is perhaps getting beyond the scope of your question - virtually any property in Cuba, schools, hospitals, military installations, undeveloped coastal properties, are all now subject to suit by Cuban Americans residing in Miami. So what it presents to the world is a no-go investment zone.

I would further add that many of the suits that will be brought are going to be ideologically motivated. They're going to have a purpose of harassing and dissuading foreign investment from the island. Helms-Burton puts it off limits to Canadians as well as Europeans, Latin Americans and others. It's what it intends to do. So that is why I suggest it ought to be a source of concern to Canadians.

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Mr. Penson: So it would deal more with the potential for future investment as opposed to Canadian companies that are currently operating in Cuba.

Mr. Muse: I understand a suit has already been filed in Florida by a Cuban American against Sherritt, or Sherritt subsidiaries in the United States, claiming trafficking. It's rather complex. Even though title III is in suspense, a common lawsuit has been filed. That's illustrative of the fact that virtually every property in Cuba is potentially subject to a claim by a Cuban American.

Mr. Penson: Okay.

The Chairman: Then perhaps without getting too deeply into the niceties, Mr. Muse, my understanding is that one of the great problems, apart from the fact that the bill is extending to people who were not Americans at the time the expropriation took place, is this extraordinarily broad definition of trafficking.

It's such that in fact anyone who.... If I were to purchase a widget made in a widget plant that was once owned by somebody who was once Cuban and now is American, I could be chased under this law for having purchased this property because I'm trafficking. That would apply to intellectual property, patents, every form of any kind of property. As you say, agricultural property where one built a hotel on something that once used to be a farm - all of this would be covered by this rather broad definition of what is trafficking in the bill.

Mr. Muse: Or anything that is produced on so-called confiscated property. One thing I should say -

The Chairman: You mean if you bought Cuban rum from somebody and it was made from cane that was once owned by a private person, who has now gone to the United States, you'd be trafficking even as a Canadian citizen.

Mr. Muse: That's right. In the words of the statute, you're benefiting from this expropriated property.

I want to clarify that I'm not here to denigrate or belittle the claims of Cuban Americans. Those properties were taken under a variety of statutes and programs. What I would say is that the claims of the Cuban Americans do not exist on an international legal plane. They must some day be resolved in Cuba, as recently happened in the case of Nicaragua, where Sandinista expropriations were resolved through a bond scheme arising from selling one of the state monopolies.

The Chairman: I see no further questions. So I'd just like to thank both of you very much. You've clarified some of the both technical and philosophical issues behind the bill and we appreciate your testimony very much.

We will now move to the clause-by-clause determination. I don't think we'll have to keep our guests, but the officials will of course stay so we can ask any questions about the clause-by-clause.

The way I intend to proceed, members, would be that since we've heard various evidence I won't ask the officials to comment on each clause. I will just call the clause, and if any member has any question they'd like to ask about that clause, we can pose the questions. But I hadn't thought we'd have a discussion about each clause.

Clauses 1 to 5 inclusive agreed to

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On clause 6

The Chairman: Perhaps I could quickly speak to the officials about clause 6 as it relates to the enforcement of the act, arising out of Professor Kirk's comments. Obviously this strengthens the penalty provisions a great deal, and I take what Professor Kirk said very seriously. But clearly, if we're going to fine companies $1.5 million, this is a matter of criminal proceedings, so there will be the problem of proving beyond a reasonable doubt in a Canadian court of law that an offence has been committed, and that's just the nature of our legal system.

So as much as we'd like to deal with this, we certainly can't operate outside the normal parameters of the Canadian legal system in doing it. But I presume that from the point of view of the justice officials and others, this is the most effective way we can deal with this under our judicial system, as we operate. Would that be a fair assumption?

Mr. Gilles Lauzon (General Counsel, Department of Justice): Thank you very much, Mr. Chairman.

Yes, I think this is a long overdue overhaul of the penalties to generate more respect for the Canadian orders. These penalties would apply to orders issued by the Attorney General. In January of last year, we tightened up the orders considerably to enhance their coverage.

There were some indications before that services, as opposed to transactions relating to goods, were not covered, and therefore a number of companies were sort of sliding between the cracks under the existing orders. That's one measure we've taken, but there is this much more fundamental measure of the increase in the penalties, which we think would considerably enhance the chances of obtaining compliance with our order.

I think it was quite clear to us in conversations we had with lawyers representing different companies, who were always acting on an anonymous basis, not revealing who their clients were but letting us know that when the company had to choose between a $10,000 fine in Canada and a $1 million U.S. fine in the United States, the decision was rather simple.

We've matched the American fines here pretty well. The American $1 million fine is equal to quite a bit more than $1 million Canadian, so we've set the fine at $1.5 million Canadian. This allows us to up the American fine just a little bit to enhance compliance. These are maximum fines, of course, and we are at liberty to impose a lesser fine. But these are the fines that will stick in people's minds when they know what they're exposed to by breaching an order issued by the Attorney General.

The Chairman: You didn't think it was appropriate to put a fine in U.S. dollars in your statute?

Mr. Lauzon: Not in a Canadian statute, sir.

The Chairman: Just to follow up on that, will these penalty provisions be extended to the other provisions of the act that relate to anti-trust orders and other forms, or will they remain for the moment in the previous status? The act has been there for a long time, dealing with other forms of extraterritorial measures in the United States, whether they're export controls or others. Are we extending the provisions to all of those?

Mr. Lauzon: No, we're not extending the provisions. These penalties continue to apply to breaches of section 5 and section 3, which are the orders that the Attorney General issues not to comply with U.S. legislation.

When you get into the rules relating to the anti-trust field, that's more of a civil type of remedy. You get anti-trust, and what we're proposing to extend to Helms-Burton will give Canadians a civil remedy. So there's not really very much room for a penal approach there.

We're giving Canadians the right to go to a court, or at least to come to us and ask us to tell the courts not to enforce foreign judgments, and also to get authority to claw back in Canada. So we've chosen a civil approach there.

The Chairman: Thank you very much.

Mr. Penson.

Mr. Penson: In that same area, I have a point of information. If a Canadian company that is operating in Cuba and also operating in the United States, with assets in Canada and the United States, does not comply with the United States law, it's hit with a $1 million U.S. fine. If it does comply, it's hit with $1.5 million Canadian. Is that right?

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Mr. Lauzon: Yes, at least in theory that's right.

Mr. Penson: It's a choice between being hit with a bat or a brick, in other words.

Mr. Lauzon: In a nutshell, that's right. I think there are some nuances you can put on that, though. First of all, the authorities on both sides of the border would have to have enough evidence to prosecute. That's one caveat. But it is possible that in the American proceedings they could use the Canadian legislation as some sort of shield in a defence in a prosecution in the United States.

This isn't a guaranteed shield. There is some room in case law for making that sort of argument. For instance, we can't give Canadians the assurance that they would get off scott-free in the United States. That's not the way it works. But there is a possibility of an argument based on that to lessen their exposure.

Mr. Penson: The intent of proposed section 9 to help them recover that offsetting cost...let's see, how does this work? If that company in the United States has assets in Canada, it would be able to recover some of that? Or is that different?

Mr. Lauzon: I don't think so, because proposed section 9 deals with the case where you're sued by a private U.S. party, and then you can get it back. Here, the fine would be levied by the U.S. government.

The Chairman: Thank you very much.

Clauses 6 and 7 agreed to

On clause 8

Mr. Flis: Mr. Chairman, on clause 8, the schedule is new and refers to the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act, 1996. I wonder if I could just have a few details on that.

The Chairman: Is that in reference to the schedule?

Mr. Flis: Yes.

The Chairman: That is the Helms-Burton bill, as I understand it. We've all been brainwashed into calling this legislation the Helms-Burton bill.

Mr. Flis: Yes, we have everything that's in Helms-Burton.

Mr. Lauzon: It includes the entire Helms-Burton bill.

Mr. Flis: Were there amendments to the Helms-Burton bill, etc., as it was going through Congress?

Mr. Lauzon: It includes the entire Helms-Burton bill as finally enacted by Congress, with all its amendments.

Mr. Flis: Thank you.

Clause 8 agreed to

On clause 9 - Coming into force

Mr. Penson: Is it my understanding that clause 9 will be subject to some amendments at report stage? Is there some discussion on that?

The Chairman: It wouldn't be clause 9. I think there is some suggestion that it might be possible to make some amendments, with all parties in concurrence, at report stage. If that's possible, we'll certainly be consulting with you on that.

Mr. Penson: We'd like advance notice on that. Thank you.

Clause 9 agreed to

The Chairman: Shall the schedule carry?

Some hon. members: Agreed.

The Chairman: Shall the title carry?

Some hon. members: Agreed.

[Translation]

The Chairman: Should I refer the bill to the House?

Some members: Yes.

[English]

The Chairman: I will inform the members of the committee as to when the bill will be reported in the House, and then we will probably proceed very quickly to its adoption. Thank you very much.

Thank you, witnesses, for your help this morning.

We're adjourned until Tuesday at 9:30 a.m.

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