SINT Committee Meeting

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

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

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, November 4, 1997

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[English]

The Chairman (Mr. Bob Speller (Haldimand—Norfolk—Brant, Lib.)): Colleagues, if we could begin, I would like to take this opportunity to welcome everyone here to these parliamentary hearings regarding the MAI. This subcommittee on trade is a subcommittee of the foreign affairs committee. We've been asked by the minister—and I appreciate that, Mr. Minister—to look at this very important topic of MAI.

I know you've indicated to us that you want us to report by Christmas, given the fact that you have ongoing negotiations, but negotiations particularly in January. I'm sure you're aware of the interest in this topic across the country. We've had a number of requests from different groups across the country, and we will be hearing from them primarily during the last two weeks of November. I would invite all of those who may be watching at home and wishing to submit a brief to do so. Up until that time, we're more than willing to take briefs from Canadians who don't have an opportunity to come to Ottawa to talk about this very topical subject.

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Colleagues, if you have particular questions regarding how the committee will be running, I'm wondering if we could save those questions until tomorrow. We'll have a further talk on witnesses then and will further develop the witness schedule over the next couple of weeks.

The minister is here until five o'clock. He has indicated that he wishes to make about a fifteen-minute presentation, at which time we will then ask questions. I'm asking that colleagues limit their questions to ten minutes each for both question and answer. That will allow us to get through this time period.

Mr. Minister, again, thank you for coming. I invite you to participate now.

Hon. Sergio Marchi (Minister for International Trade, Lib.): Thank you very much, Mr. Chairman, and good afternoon, colleagues. It's a pleasure to be able to take you up on the invitation. I'm very grateful that the committee has in fact seen fit to discuss MAI among a package of issues, with respect to providing some advice back to the government so that we can obviously utilize that information and advice in terms of mandate to our negotiators.

By way of introductions, with me is our chief negotiator on the MAI, Mr. Bill Dymond, someone you may have met, may have heard, or certainly will be meeting in the days and weeks to come. I'm grateful to him for being here with us in terms of this being the very first meeting.

Mr. Chair, I'm particularly pleased to be before you to discuss the multilateral agreement on investment, because this initiative is very much about establishing rules to ensure that international investment and trade continue to translate into jobs and prosperity for Canadians at home. Canada does very much better when transparent rules, and not the whim of some of the more powerful nations, govern the way business is done.

Indeed, some groups are already criticizing the potential agreement. They are using this deal on international investment to either attack or address free trade, globalization, open borders, and the participation of foreign-owned companies in our economy. We must and will listen to these Canadian voices, but at the very same time we must also weigh these voices against other voices and the Canadian reality, for we are a nation that relies heavily on trade. Our future well-being and that of our young Canadians is in large part tied to Canada's ability to compete in global markets, not in how fast we can run away from them. We will only be able to compete if there are clear rules that encourage foreigners to invest in our economy, and at the same time rules that protect Canadians—both corporate investors and average Canadians—when they invest around the globe.

In the MAI, this government is looking forward, not backwards, with a vision and a plan to secure our country's economic future. The MAI debate must therefore focus on the facts, not the myths. This is in partly why I asked your committee to look at this issue, Mr. Chair, and why I appreciate the chance to provide you with some of my views. More importantly, I look forward to the advice the committee will be able to provide to the government after it hears the views of other Canadians who will come before it in the weeks ahead.

In addressing you this afternoon, I'd like to briefly answer three basic questions on the MAI: What is it? Why do we need it? What are Canada's objectives in these negotiations?

First, I'll give you some answers to the question of what. The MAI has two overriding principles: one, non-discrimination between national and foreign investors; and two, the fair and equitable compensation from governments in the case of expropriation.

I would submit that the current patchwork of international rules does not serve Canada's best interests. Incredibly, there are over 1,300 bilateral investment agreements worldwide. Of these, Canada has already signed 24 deals and is currently negotiating another 33. In fact, when the minister of trade and foreign affairs from Uruguay came to visit us last week, one of his areas of interest—and one of ours—was the signing of a foreign investment protection agreement. It facilitates the trade on the ground by our respective business people in each of our economies.

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Because Canada is reliant on trade and investment for a good part of our economic well-being, it is clearly in our national interest to establish one set of clear multilateral rules with high standards that will promote investment in Canada and protect Canadian investments abroad.

I can also tell you what the MAI is not. It is not a charter of rights for multinational companies, nor does it spell the end of Canada's sovereignty. We will retain the right to enact laws in all of our areas, such as social policy and health care, and to have these laws apply equally to foreign-owned and domestic companies.

We will still be able to impose restrictions on foreign investment in sectors that we believe require a uniquely Canadian approach, such as Canadian culture. As in the NAFTA, Canada will not accept any general commitment to either freeze or phase out restrictions on foreign investment.

[Translation]

The MAI would also not force Canada to lower its labour or environment standards. In fact, it is intended to keep other countries from lowering theirs to attract investment away from Canada. Nor would the MAI remove regulations requiring foreign companies operating in Canada to hire Canadians first. The government will continue to be able to link the receipt of investment incentives to conditions like job creation.

[English]

Finally, the MAI would not make it easier for foreign-owned companies to sue governments. Under Canadian law, all companies, whether they be foreign or domestic, can already submit claims to Canadian courts if they believe they have been unfairly treated by any level of government. Therefore the MAI would only improve the protection of Canadian investors abroad.

Second, why do we need an MAI? When we begin to look at this question, the answer largely lies in the importance of international trade and investment to Canada. As you know, trade and investment are the twin engines of Canada's economic future, and the two are opposite sides of the same coin. One feeds the other.

Today, one in three Canadian jobs in all of our regions is based on trade and exports. That amounts to over 40% of our GDP tied to the production and promotion of our exports, almost 2.5 times the rate of any other G-7 nation. So clearly this must and needs to be a Canadian priority for the Government of Canada.

We're also at the same time reliant on foreign direct investment for capital. This investment, as you all know, plays a critical role in our economy, both nationally and regionally. It creates jobs, it brings in new technologies and new R and D, and it stimulates growth.

Last year foreign investment in Canada totalled some $180 billion, almost twice the increase over the last 10 years. This is central, because $1 billion of new foreign direct investment in Canada creates an estimated 45,000 new jobs over a five-year period, and we know what job priority one is at all of our doorsteps.

However, we cannot rest on our laurels either. A recent report by KPMG showed that Canada is one of the most competitive places in the world in which to invest and do business. Yet at the same time, our share of global investment, our market share, has slipped from 8.7% in 1985 to some 4.3% as of 1995. That means joining the right kind of MAI would also reinforce Canada's attractiveness as a first-class destination for that foreign investment, both today and, most important, in our future.

At the same time, Canadians are becoming more aggressive and more active as investors overseas. Investment by Canadians abroad totalled $171 billion last year, which represents an increase of almost 164% over the last 10 years.

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This investment does many things in addition to pushing and promoting the Canadian presence abroad. It improves Canadian companies' access to new markets, allows them to grow and become more competitive, and ultimately creates new jobs here at home and across the country.

An MAI that meets our interest as a country would therefore ensure protection for these investments and for individual and average Canadians who invest abroad through their mutual funds or RRSPs.

Nor should we forget that by participating in these negotiations, Canada is ensuring that we help shape the MAI, not only to meet our best interests from a foreign investment perspective, but also to reflect something about the shared values we all hold dear as Canadians.

This brings me to the third question: our objectives during these discussions.

[Translation]

Canada's participation in the MAI continues a proud tradition at the forefront of international rule-making. Given the importance of international trade to our economy, establishing rules and promoting freer trade makes sense. Canada was a founding member of the GATT and its successor, the World Trade Organization.

[English]

Canada does better in the WTO global framework for trade in goods and services. When there are rules, we have a better chance of prospering. Now we are seeking a similar framework for global rules on investment.

It is important that this committee realize that a successful MAI would not turn Canada's current investment rules on their head. Canadian negotiators have been tasked with simply replicating in an MAI the rules and exemptions Canada secured in NAFTA, namely: non-discriminatory treatment between foreign and domestic investors; that expropriations be done fairly and for a public purpose and be accompanied by the right compensation; access to an effective and impartial dispute settlement mechanism; and the fact that many sectors, such as Canadian culture, are not on the table.

[Translation]

Canada also hopes that these negotiations will help address issues such as the U.S. Helms-Burton Act. Canada, with the support of the European Union, has tabled proposals to curb unilateral, extraterritorial measures targeted at investment.

[English]

On environment and labour standards, I want to make it clear that the government will never accept an agreement that would limit our ability to protect the environment or maintain high labour standards, as we see fit. We are also pushing, as I mentioned to some of our colleagues in the House, for strong language in the agreement so that other countries do not lower their standards to attract investment.

In this regard the committee knows that both labour and environment are shared jurisdictions between the federal and provincial governments. As a result we are currently consulting with the provinces on these and other matters. We're also working with other countries and with interested Canadians, including NGOs, to balance the different viewpoints that exist around the table in a responsible fashion for the best kind of agreement possible.

I do not mean to be evasive, but at this stage it would be premature, given the shared jurisdictions and given the ongoing negotiations or consultations with provincial governments, for me to try to prejudge in a unilateral fashion the results of these consultations. However, I wish to underline again that the government's clear preference is that the rules be as strong as possible and go as far as possible.

Finally, let me emphasize that this government will listen to the views of Canadians. Since assuming the trade portfolio, I've made every effort to provide more information on MAI and not less, and to ensure that all views are heard and not dismissed. Public consultations have intensified, and this will continue.

Last week Canada supported the OECD releasing a draft working text of the MAI to the international non-governmental organizations, over 50 of them, that met with different officials and negotiators at the OECD. I am pleased, Mr. Chairman, to table this very same text with you today.

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In addition, I've communicated directly with concerned Canadians, whether it's the Council of Canadians, the Canadian Environmental Law Association or the Canadian Labour Congress. In fact, these groups have already met with our MAI negotiating team and further meetings are being planned.

I've also sent briefing packages on MAI to all members of Parliament and senators and made sure that opposition trade critics and political parties received full briefings on the issue. I also gave the same treatment to media representatives who were interested in obtaining more information on MAI.

Finally, your committee, Mr. Chairman, is now playing a vital role in ensuring that at this level Parliament continues to reach out to all Canadians on the MAI and provides government with the kind of advice that strengthens our position around that table both from a national interest perspective as well as influencing and shaping a better, not weaker, MAI.

In that regard I can assure you that the Government of Canada will only sign a deal at the end of the day that serves Canada's national interests. In this regard I look forward to hearing your views and responding to your concerns so that together we can make this agreement improve the economic prosperity and future of our country. I'm confident that this is a common goal all of us around this table share. Thank you.

The Chairman: Thank you, Minister. Thank you for that challenge. I would agree with you that there is a lot of information out there, whether it be information you've provided or over the Internet, or through leaked documents or whatever. We'll certainly review all that and give you our best recommendations prior to Christmas.

We'll turn now to questions. I would ask, colleagues, given the technical nature of the subject, that you speak slower and try not to use jargon. We are on television. I would just ask you to bear that in mind.

Mr. Penson.

Mr. Charlie Penson (Peace River, Ref.): Thank you, Mr. Chairman. I'd like to welcome the minister and our chief negotiator for the Multilateral Agreement on Investment to the table this afternoon.

I certainly share with you, Mr. Minister, some of the goals you've outlined and the need for a rules-based agreement in terms of investment. As you have already said, Canada is an exporter of investment capital. Many of our companies are in Chile and in many other places. We also have a need for foreign investment here at home.

I would agree with your analogy that investment and trade are the twin engines for growth in the economy, but I sometimes wonder why you had to keep the development under wraps for so long. It seems to me that you've caused yourself quite a bit of trouble in terms of misunderstanding of the agreement that wouldn't have been necessary if there would have been an open debate and if we would have consulted Canadians at an earlier stage. The negotiations regarding this agreement have been going on for some time. I believe there is some misunderstanding in terms of what's being negotiated here.

I wonder if maybe you could help our committee understand a little more clearly.... One of the main elements of the agreement, I believe, is going to be what we carve out in terms of our exemptions. I see that on your web site on the Internet you've talked about the fact that the MAI will not apply to Canada's telecommunications industry. We see that companies like Teleglobe are prepared to meet that competition head on, and they're anxious to have this 47% cap on foreign investment raised substantially. So I would ask as one of my questions why we are carving that out as an exemption if that's the case.

The other question I would have, Mr. Minister.... It's my understanding that Maude Barlow has a copy of the exemptions Canada plans to take in this agreement. Whether she does or not, maybe you can tell me if it's public knowledge, because I certainly haven't seen it. If those exemptions exist, would you table them with our committee here today or supply them to us so that we have a better understanding of what's involved? Specifically, could you give us an idea of what kind of exemption you're looking for in the cultural industry area and how broadly you would be defining cultural industries?

Mr. Sergio Marchi: You asked a number of things, Charlie.

First, on the whole consultation and information process.... When I came to this job I think I shared your view, in the sense that I think the negotiators and the Government of Canada, in negotiating confidentially with 28 other nations and at the same time consulting on many issues with the provinces, felt an onus to obviously respect the process that was laid down for the purposes of consultations with the provinces and negotiating with the 28 other countries. At the same time, that shouldn't stop us from sharing as much information as possible without offending the process we have obligated ourselves to. That's why I mentioned a number of things in my opening statement with respect to providing more information. I find that if you don't, notwithstanding the process both internationally and domestically, if you allow some of those myths simply to take hold, they will define the turf and define MAI.

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So it was at my call, if you will, that we wanted to release more information and not less, and at the same time respect the process both at the OECD as well as in our discussions with provincial counterparts.

In terms of the reservations list, I don't know what Ms. Barlow might have, but essentially it's very public knowledge that the reservations list we have in terms of a draft format is exactly the same reservations list that is found under the investment chapter in NAFTA. In that case, the list not only has been said to be our guiding list, but at the same time it is very much a public document.

On the telecommunications, I think it might be a reference, Charlie, to the fact that last year, through the WTO, we were able to negotiate a telecommunications package with the aid of Canada, as well as APEC, in terms of providing momentum. I suppose that having done this there is not really the appetite to once again open up that discussion.

If my chief negotiator wants to add anything more technically to the telecommunications question, I would invite him to do so.

Mr. Bill Dymond (Chief Negotiator, Multilateral Agreement on Investment): That deal in the WTO was a follow-on to the Uruguay negotiations. In order to make it work it involved a much larger group of countries than the 29 countries of the OECD. With the deal just concluded last April, as I recall, there's a feeling around the table that it's too soon to reopen it and probably too narrow a group of countries at this stage.

Mr. Charlie Penson: Just to follow up, Mr. Chairman, I've heard from some industries that are a little concerned that if Canada carves out culture as a broad exemption, as we have in NAFTA, with the convergence in the telecommunications industry there may be a problem in terms of potential investment, and even companies that may be operating in Canada right now may look at Canada as a poor place to continue operating if they are put under the cultural exemption.

As you know, there are some fast-moving changes taking place in the whole telecommunications area. I'd like to try to explore with you a little further just how broad this cultural exemption might be and if you're looking at including the telecommunications company under the cultural exemption.

Mr. Sergio Marchi: Again, I'll allow my negotiator to address some of the more technical aspects, but we said very clearly at the start of these negotiations back in 1995, and gave a very clear mandate to our negotiators, that in terms of replicating the investment chapter under NAFTA as a guiding framework that would guide our positions vis-à-vis the MAI, we were very clear that Canadian culture should be off the table and that we would seek an exemption, as we have under NAFTA. We feel this is a very defendable position in the sense that we feel we have a very unique and different approach to culture that would certainly justify taking this position.

Second, it is not only Canada that is taking this position on culture. In fact, there are a number of friends around that MAI table who share Canada's view of culture. So it is not only a uniquely Canadian position. It's one we feel comfortable with, and increasingly around that table there are many other countries that share this view.

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Third, we think it's compatible with obviously a unique approach to Canadian culture while at the same time moving with the world, as it rapidly is, on the telecommunications side. Our firms when you take a look at them—Nortel, for instance—are doing wonderfully around the world. As their markets begin to open up, I think those companies, as well as our markets, are being opened to the world.

So I don't think the two concepts are incompatible.

Mr. Charlie Penson: But, Mr. Minister—

The Chairman: You have one minute.

Mr. Charlie Penson: —I beg to differ with you. If you're suggesting to us that we are going to take the exact same exemptions we took under NAFTA, it seems to me it doesn't take into account what we've just talked about in this rapidly moving area of telecommunications.

I want to find out from you if that's what your government intends to do—carve out the exact same exemptions we have under NAFTA—or if you're going to be looking at narrowing those, not using such a broad brush, if you like.

Mr. Sergio Marchi: No. Our view would be that the exemption under NAFTA would be replicated under the MAI.

The Chairman: Thank you.

Ms. Bulte.

Ms. Sarmite Bulte (Parkdale—High Park, Lib.): Minister, one of the issues that has been raised quite often, and that you actually addressed in your opening remarks, was how the MAI was going to affect labour and also environmental standards.

In your opening remarks you also noted that you are consulting with NGOs on these issues. Most importantly—you also noted this—because these are areas of shared jurisdiction you're consulting with the provinces.

My question to you, Minister, is how are you going about consulting with the NGOs? How specifically are you going about consulting with the provinces?

Mr. Sergio Marchi: In terms of consultations, that's one of those double-edged swords. When people talk to you about environment and labour and want you to pronounce yourself clearly on an issue, and at the same time, I suppose, you get mildly criticized for not doing enough consultations, well, it's tough to have it both ways and to square the circle.

In terms of the consultations with the NGOs, Bill, our chief negotiator, has met with those. He has an addendum that he can certainly speak to in terms of not only provincial governments and the business community but also NGO groups.

Last week at the OECD more than 50 international NGO groups were invited to meet with not only OECD but also, again, individual negotiating teams. Bill held one of those meetings with those organizations.

Others are planned. I've certainly communicated with a number of NGO groups. I would imagine also that some of those organizations would probably be called as witnesses before your committee.

So there is no attempt to try to distance those organizations from offering input, advice, and constructive criticism on positions they think we might hold.

Second, on the provincial level, both on labour and environment, let me also say that all the provincial governments support Canada being at the MAI table. It's not a question that some provinces are saying you shouldn't be there and other provinces are saying you should. All provinces, because of the issue and because of the need for our voice to be at the table, are in agreement that Canada should be at the table. That's number one.

As well, we are very much engaged with them on both labour and environment. Those consultations certainly haven't finished. Given the shared jurisdictions, given the ongoing discussions, given that some of their governments have clearly not finalized their preferences one way or another on wording, and given that the wording and the negotiations in Paris are still fluid and evolving, it is something that is more than simply me pronouncing definitively one way or another.

So that track has to be allowed to continue. Those are very much in the process. In fact, the most recent meeting of my chief negotiator and his team with the provincial representatives was on October 15. So they're very recent.

Ms. Sarmite Bulte: Thank you very much.

The Chairman: Thank you.

Mr. Sauvageau.

[Translation]

Mr. Benoît Sauvageau (Repentigny, BQ): Mr. Minister, I would like to welcome you here before us. I wrote down a few questions and comments that I would like to share with you.

You have been questioned several times in the House concerning the exemption for culture as well as labour and the environment. I would like you to clarify a certain number of points.

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We all are aware that the Canadian government does not want the MAI to apply to culture. That is a fact, and it is fine. To this end, the negotiators must nevertheless agree on an exception clause pertaining to cultural industries. Our concerns are with this exception clause that would be included in the agreement.

During one of the information sessions organized by your department, we were told that in the opinion of the Canadian government the absolute minimum that would be acceptable would be an exemption clause similar to what is in NAFTA. It so happens, however, that the exception clause in NAFTA is very controversial, and perhaps even ineffective. Representatives from the cultural community want greater protection.

Here then, Mr. Minister, is my first question. Are you prepared to assure cultural industries that you will take into account their recommendations and go all the way in negotiating a general all-encompassing cultural exception clause that would be more precise than that which is included in NAFTA?

I come back now to the question that was asked in the House yesterday or the day before. We know that there are ongoing discussions relating to including in the agreement a specific clause aimed at discouraging or preventing the lowering of national labour and environment standards so as to attract investors to a country. There is a real danger that some of the signatory countries will attempt to lower their national labour and environment protection standards.

I now come to my second question. Are you in a position to assure us that our Canadian negotiators have received or will receive clear instructions from the government aimed at including in the agreement a clause that would more or less say the following: the parties to the agreement must not waive nor derogate from health, safety, environment protection or labour standards to encourage the establishment of foreign investors within their territory. This is found on page 49 or 50 of your first document, in other words option 2 for negotiators.

Further, more sanctions should be provided for cases of violation of this rule. It is all fine and dandy to say or to state in writing that the parties must not waive their standards, but we should provide for sanctions covering those cases where this would happen.

The greatest fears people have regarding this agreement relate to the reduction of social and environmental standards. Why would the Canadian government not want to reassure the people and make a commitment right away to protecting these standards?

I now move on to my third question. Last week, in the House, you refused to commit yourself to supporting the inclusion in the MAI of environmental and labour standards. Could you now explain to us your reasons? You are not going to be proposing parallel agreements—which would be quite original—pertaining to labour and the environment, because we all know that such parallel agreements would be rather useless. What we need are standards set out in the MAI.

And now for my fourth and final question, Mr. Minister. Even though you made a brief mention of them in your speech, could you tell us a little bit more about the initiatives taken by the Canadian negotiating team to counter the U.S. Helms-Burton law that has extraterritorial ramifications?

In closing, in case you do not have enough time to answer all of these questions, I will give you my notes so that you might answer the committee in writing later on.

Thank you, Mr. Minister.

[English]

Mr. Sergio Marchi: Thank you, Benoît.

On the first of your questions, the one on culture, I think our government and I have been very clear right from the outset in terms of the issue of culture. When we say we wish to replicate the chapter on investment in NAFTA, we mean just that. Indeed, the OECD has looked to the NAFTA model as one of its guiding frameworks.

If cultural groups believe that the chapter of exemption that is quite clear in the NAFTA is not good enough, I would certainly be open to hearing their views and any of their suggestions on what they mean by—in your words—“more complete”. We have been very categorical on that front. We have said that. The mandate has been given to negotiators, and our negotiators have made it abundantly clear around the MAI table. At the same time, Bill will be meeting with the cultural industries SAGIT on November 13, as he has with other cultural organizations, to give them this same reassurance.

Your second and third questions were related in the sense that you talked about labour, environmental, and health standards, and you talked about a clause. You then talked about parallel agreements on labour and environment.

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Again, we have taken positions that are supportive of stronger language. I know some people got a release of a copy of minutes from one meeting along the way, a meeting at which our negotiators hadn't pronounced themselves during that particular session. I think it's wrong to take that as meaning that somehow Canadian negotiators are indifferent, or that the Canadian government is about to sell down the road standards of both labour and environment. That's clearly not the case and is very much an unfair characterization by those who seek to do that. At meetings at the MAI, Canada is certainly not in the camp trying to lower the wording or lower the standards. We're clearly in the camp trying to strengthen the words and the engagement of labour and environment within the MAI.

At the same time, as I mentioned earlier, we're engaged—my department and ministers and negotiators—with our counterparts at the provincial level to also ascertain their positions on this. We recognize that there are shared jurisdictions and that Canada obviously works best when Canada works together. That's obviously been at the forefront of federal-provincial relations during the first and certainly in this, our second, mandate.

In terms of parallel agreements, I support the NAFTA model's labour and environmental side agreements. As former Minister of the Environment, I certainly heard from those who thought it could have been strengthened. On the other hand, there is no other international agreement that has parallel agreements like those two, no other agreement that allows labour and environmental organizations to come together to move the files on both of those issues. So I'm very supportive of that, and I think that probably would in fact be more the rule than the exception in terms of future trade agreements, because people the world over are seeking more assurance, not less.

In terms of your Helms-Burton question, again, you know that when it meets with officials and ministers from the United States the Canadian government never misses an opportunity to obviously repeat our discontent with that particular piece of legislation, which I think has also bred sons and daughters of Helms-Burton, whether it's Libya, Iran, or at the state level. We feel that while you can talk about the whole question of confiscation of property, the extraterritorial G-1 view of the world is not in keeping, I think, with the world moving in sync.

We're heartened that the Europeans and Americans are still talking somewhat in terms of the European threat to take the Americans to the WTO on their imposition of Helms-Burton. We're hopeful—realistic, but also hopeful—that across the MAI table the discussion that we are advancing in terms of Helms-Burton will find favour and friends so that we can perhaps realistically utilize the MAI to redress the whole nature of the Helms-Burton, which obviously we take great offence to.

The Chairman: Mr. Blaikie.

Mr. Bill Blaikie (Winnipeg—Transcona, NDP): Thank you, Mr. Chairman.

I suppose I'll begin by responding just briefly to the minister's statement on a philosophical or policy-based level. I think it's quite wrong for the minister to suggest that people who are critical of the MAI or of globalization, free trade, etc., are not somehow for a rules-based global economy. The question is not whether we have a rules-based global economy. The question is what kind of rules we have, in whose interests these rules are designed, whose interests are priority items on the table, and whose interests are very low on the agenda of these international negotiations.

In that respect, I would just want to make it absolutely clear as a critic of globalization, free trade, etc., and now of the MAI, that it's not a critique of a rules-based global economy; it's a critique of the nature of the particular rules that have been put in place and of the nature of the negotiations that are now going on, by which we find the rights and the needs of investors being held up as the global priority as against the rights and needs of peoples, communities, and environments as a secondary and sometimes quite marginal concern when it comes to these kinds of negotiations.

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You've said that the exemptions you're seeking are the ones that are there in NAFTA. It would be helpful, nonetheless, if as a committee we could be provided with a detailed description of what.... I'm sure it's not identical. You're not seeking exemptions that are identical to those provided for under the NAFTA.

So could we have a country list of specific exemptions you're seeking and the general exemptions you might be seeking, the nature of the country-specific exemptions you're seeking, whether they involve standstills or roll-backs.

I apologize for using all these technical terms, Mr. Chairman. Nevertheless, these are things we need to know if we're going to make an intelligent comment on the government's position.

We're not here to debate the MAI in the abstract. I can do that if that's what's required. But we're also here to give advice to the government in its negotiations. To do that we need to have some clear idea, the exact detail of what the government is seeking.

Having said that, Mr. Chairman, I want to ask the minister something again. I don't know whether it's for the fourth or fifth, or whatever...but I've asked him this in the House and I ask him now in committee. I understand the nature of negotiations, but I also understand that other governments have felt more free to say whether they were seeking—to use the language of trade negotiations—simply hortatory language with respect to labour and environmental language in the agreement.

I take that to be language to exhort people, but not to bind them, to do certain things. This is in the sense that whether or not they lived up to that language would be a matter for a dispute settlement process or not.

Some governments at the MAI table have said that they are in favour of a dispute settlement process. Other governments presumably have not. I don't see and I don't understand why, in spite of whatever consultations might be going on with the provinces, you can't say whether or not the Canadian government—either in consultation with the provinces, if the provinces are somehow a stumbling block on this, or at the MAI table, if the provinces aren't a stumbling block—wants a dispute settlement process with respect to labour and environmental standards or whether you want hortatory language.

I think we deserve an answer on this. Obviously you can take whatever position you like. Be prepared to defend it. We'll be prepared to put our case. But we need to know what the Government of Canada is actually doing with respect to this.

So I ask you the question: is it the Canadian government's position that language with respect to labour and environmental standards should be hortatory, or is it the Canadian government's position that they would like to see a dispute settlement process that would apply to a binding set of labour and environmental standards?

Mr. Sergio Marchi: Let me take your first question first, Bill, on the philosophical bent in terms of the critique. At no time did I say that those voices shouldn't be part of the debate. I think I went out of my way in the text to make sure that those voices need to be heard and not dismissed.

What I also said, though, is that we should listen to all the Canadian voices, look at the Canadian reality, and look at the facts and not the myths. I think many people have been commenting on the MAI very responsibly. Others are making shots in the dark that, quite frankly, are simply untrue.

So all I was trying to suggest is that if we are going to have a good debate, if we are going to provide the best advice to our negotiators, then obviously we need more of this kind of discussion and not some of the rhetoric, where you can almost blame the MAI on anything and everything, including global warming.

Second, in terms of the detailed list of exemptions, again, the basic model is the exemptions that we were able to obtain under the NAFTA chapter on investment. I'll allow my chief negotiator to go through that in as detailed a way as he can.

• 1620

On standstills and roll-backs, I made it very clear in my pronouncements and the negotiating team members are very clear on their mandate. As a general principle, we will not accept standstills and roll-backs applied across the board.

We did so in a number of places, for instance, in the NAFTA when it came to Air Canada. For a long time in this country we had the foreign ownership pegged at 25%. The moment Air Canada was privatized, they obviously needed an infusion of capital, so it was felt that at that point a standstill on a long-standing 25% was doable and attractive for Air Canada to acquire further capital. So we made an exemption there.

We didn't even talk about a roll-back on the 25%. We just decided to freeze a long-standing tradition vis-à-vis foreign ownership on Air Canada. So we have fought the general principle in terms of making all those exemptions applicable to standstills and roll-backs.

In terms of the last question you've asked me in the House, here again, I don't want to be seen to be evasive. My personal viewpoint is one thing, and the position of the Canadian government vis-à-vis ten provincial governments, as well as territories, is something that has not run its course and come to a conclusion.

The provinces certainly are far from pronouncing on a final position. Until their positions are in I would like to respect the joint, shared jurisdiction they enjoy under our constitution for both labour and the environment, and then in the end speak with one strong Canadian voice.

Bill, would you care to speak to the exemptions?

The Chairman: Mr. Dymond, since you're going to be here tomorrow, I wonder if you could speak to that issue tomorrow for us.

Bill, you have only one minute and ten seconds left in your time slot.

Mr. Bill Blaikie: Fair enough.

I'm just saying to the minister.... He says we need to deal with the facts; I'm saying, well what are the facts with respect to the—

Mr. Sergio Marchi: Mr. Dymond will give you those facts.

Mr. Bill Blaikie: Fair enough, but we also want to know what the facts were with respect to the government's position.

The government is taking positions on all kinds of other things in the MAI and they aren't being evasive about them. There are things in the general provisions of the MAI and with respect to other things the provinces are concerned about. These are about natural resources, government procurement, all.... These are things that affect the provinces, and there isn't the same reluctance.

Frankly, I think you are being evasive, even though you say you're not. We deserve to know what the government position is on this.

You've characterized the voices. You say we need to listen to those voices, but at the same time you stereotype them as people who want to run away. These are words you used. It's not a question of running away; it's a question of what is going to be dealt with at the table. I just think the committee needs to know specifically what the government is seeking general exemptions for, country-specific exemptions, etc.

I make my point, and I thought I saw Mr. Dymond shaking his head.

The Chairman: Can you say it in very short order?

Mr. Bill Blaikie: What the government is seeking is not identical to NAFTA; therefore, we can't just look at NAFTA. We need to know what the government is seeking in these negotiations. I would ask the minister to provide us with that kind of information.

The Chairman: Thank you, Mr. Blaikie.

Mr. Minister, there are 30 seconds left.

Mr. Sergio Marchi: I wouldn't put too much into how much my negotiator shakes his head on this or other questions, but if you wish, Mr. Chair, Mr. Dymond can go into it tomorrow or he can go into it today.

In terms of stereotyping, Bill, I think we should use those words very carefully. I'm not stereotyping anyone. If anyone is stereotyping...there's a lot of stereotyping going on about the MAI, but I believe everyone has a right to voice their opinions. Part of my wanting to open up the process is that I want to play more to fact than to fiction.

Second, when you talk about evasiveness, again, some countries—very few, three or four out of the 29—have pronounced themselves. We happen to be a federal state, and some countries that don't have the same set-up are obviously at greater liberty because they make the ultimate decisions themselves. We are not in that situation.

Labour and environment are two issues where there is as yet no consensus on the specifics within the provinces. I'm allowing them obviously to think through the positions. On other positions there has been greater progress made and therefore greater liberty to pronounce ourselves.

• 1625

So no one is doing an evasive dance. We are trying to respect what we are criticized for in the House a lot of the time, in terms of consulting our provincial ministers across the country. Once their verdict is in, we will obviously make the pronouncements at a time when we will know where the debate at the MAI table is going.

The Chairman: Thank you, Mr. Minister.

Because of the timeframe we are working under, I will turn it over to Mr. Nault now.

Mr. Robert Nault (Kenora—Rainy River, Lib.): Mr. Chairman, before I get started with the minister, I'm under the impression that you want us to save the more technical questions for Mr. Dymond tomorrow, as they relate to the negotiations and/or consultation with the provinces. Unless the minister is willing to delve into that...just where they're at is a very big part of this discussion. On the list I don't see that we are going to be inviting provinces to come and tell us what their position is. In fact, I would be very surprised if we ever got 10 provinces and territories to agree to anything with the federal government these days.

For the sake of that argument, could you tell me what you use as a numerical majority or the number that is significant enough to go with a position. Is it if eight out of 10 provinces are on side, then you go with the position? Is it seven? How do you deal with that in the international scene, just so people at home will understand? As you know, we end up getting into these jurisdictional arguments all the time about who's in charge of what in this country, and because we are a federation I think it's important that you put just how you're dealing with it on the table for us.

Mr. Sergio Marchi: Perhaps I'll allow Bill to speak to that.

Mr. Bill Dymond: Thank you, Minister.

Mr. Chairman, I obviously don't want to characterize the position of individual provinces. They can speak for themselves on it. We did have a full discussion of this issue at our meeting on October 15 in Toronto, but against a background whereby the discussion in Paris was far from over. We were in the middle of it, and indeed this will continue. I think the position of the provinces is in part informed by the fact that positions in many countries around the table on this critical issue are not known, because presumably they have not yet made up their minds.

I would characterize this by saying that there is probably one province that is very clearly in favour of a binding solution and one province that is very clearly opposed. I would say the majority of opinion, if not outright opposition, would be characterized as a distinct lack of enthusiasm for anything binding in this area and anything in that sense that will go beyond what we say in the NAFTA, which is a voluntary or hortatory expression on the question of standards.

I think it would be wrong, however, to say that we on our side, at the level I deal on, have all the returns in. I didn't press them for a final position at this stage. It's something clearly that we will have to do before we conclude these negotiations, and doubtless they will give us that at the right moment.

Mr. Robert Nault: The other question, Mr. Chairman, that I think we need to get on the record and sorted out.... Of course, a lot of us have spent many nights reading the North American Free Trade Agreement when we couldn't sleep. I brought it along with me because we talk about, as Charlie talked about earlier, the exemptions and the fact that Maude Barlow has them and, holy smokes, that makes her smarter than the rest of us. I have them too; they're right here.

I would like to know, is there something different going on at the MAI from what we did at NAFTA as it relates to the exemption, or are they the same? If they are the same, it is very easy to say, here they are; if you want to look at them, we'll talk about them in this committee and we will deal with it.

Is the wording the same? Have they been tabled already in Paris? Is that how you're dealing with this, or is there some other process different from what we've been led to believe on that particular issue, which is the exemptions? Of course, culture is a very big part of this discussion.

Mr. Sergio Marchi: No, there's not another process. The process is essentially the exemptions under NAFTA. There are clear, different words at this point around the MAI table that we are obviously trying to square, but by and large the exemptions from the NAFTA list are the very exemptions we've tabled at the MAI table.

Mr. Bill Dymond: That's exactly right. The substance of the reservations that we are seeking are the NAFTA reservations.

• 1630

Mr. Robert Nault: What about the wording?

Mr. Bill Dymond: The wording of course will be different. The wording will evolve as the text evolves, because reservations you take are reservations against obligations that are proposed for you.

We do not have the final wording yet. We will not have the final wording until the end of the day. We have done what all countries have done and put in a draft list against certain assumptions, subject to continuous modification as the negotiations proceed.

If I may add a point to that, Minister, there may be elements in the MAI that are finally negotiated that are not acceptable to the Government of Canada. We will reserve against them. We will take an exception. We will say these do not apply to Canada. That will be an exception that is not found in the NAFTA because we didn't need to.

It is a moving picture. But our benchmark for the exceptions, indeed our benchmark for our bottom lines, is the NAFTA. We are trying to replicate the NAFTA. If there are elements of the MAI that are fundamentally unacceptable to the Government of Canada, the obvious solution is to lodge the necessary exception.

Mr. Robert Nault: Mr. Chairman, is there time for one quick one?

The Chairman: Yes, there is.

Mr. Robert Nault: I understand this whole discussion about binding situations under the labour...and the jurisdictional issue we have with the provinces is ripe for that. I'm having a little more difficulty with the environment. I'm quite frankly surprised at countries around the world, including the United States and President Clinton, who is now talking about where he wants to go in getting tougher on the environment. Why don't we seem to have a stronger position as a Canadian society? If I can be so bold to suggest, Minister, I hope our government at least will be pushing very hard for the environmental side.

If it's the case that some of the provinces don't want to go along with us, I think we have a right as a society to know that, because that's the position of a federal state. Is it not our position to move that marker somewhat down the road as we go, especially on the environmental side? I put that to you as an ex-environment minister.

It seems to me we play that jurisdictional issue in the environment. It's not the same as on the labour side, where there are different labour codes and different labour standards all across the country. On the environment we have a pretty standard process all the way around.

Mr. Sergio Marchi: When Bill basically characterized our discussions with the provinces it was in relation to both labour and the environment. You're quite correct. I think when one province lined up on the binding side, one province was opposed to that, and the other provinces were somewhere in between and hadn't given us a final position...that was in relation to both labour and environment, with a stronger emphasis on both of those positions on labour, given the labour codes and the provincial jurisdiction.

You also have to recall that when the first ministers got together, one of the areas where they wanted to “harmonize” and produce a better result for Canadians across the country was the environment.

You have that tract where the federal and provincial governments are trying to do more with less by trying to see which piece of the environmental puzzle each government is responsible for and ensure the pieces don't fall between the cracks. As that tract is going on it becomes doubly important for us to obviously cross t's and dot i's with our provincial governments, as opposed to them seeing us taking off unilaterally.

Having said that, it has been clear that our negotiators have been pushing for stronger, not weaker, language and more engagement rather than less. Again, we're mindful of the provincial jurisdictions. As we've given you the score, there is much work that remains to be done in order to make that language even stronger.

We're certainly committed to both the labour and environmental standards. We're obviously wedded to respecting the provincial jurisdictions. At the end it is my hope that one Canadian voice, after due consultation, will be a strong one and not a weak one.

The Chairman: Thank you, Mr. Minister.

Mr. Brison.

Mr. Scott Brison (Kings—Hants, PC): Thank you, Mr. Chairman.

As you are aware, our party has consistently espoused the principles of and recognized the benefits of more liberalized trade. There are many areas of the MAI that we believe are very positive and will provide opportunities for Canadian business. However, we do have some reservations. We are supportive of the cultural exemption. I want to be unequivocal about that, because it does distinguish us from some other parties in that we are extremely supportive of a cultural exemption.

• 1635

With regard to the draft list of reservations—none of us is asking for the final list because we know it's not possible—we do need a draft list. This committee needs a draft list tabled in order for us to assess it and provide input as part of this process.

The U.S. has expressed as part of its reservations...the part of the list of proposed reservations that would exempt all states and localities from existing non-conforming measures in all sectors under MAI. In Canada there's a lot of concern with Canadians about provincial and municipal jurisdictional areas. Will there be similar exemptions in place for those areas?

The impact of MAI could be particularly important or damaging, for instance, to economic development activities, both federally and provincially. It may limit the ability for individual provinces or municipalities to provide incentives to companies in those areas. Has there been an impact analysis of the effects of MAI on existing federal, provincial, and municipal programs in Canada?

We can't very well enter into an agreement if we don't know how our existing programs will be impacted. That's very important.

I've had a couple of questions. The last one is relative to the U.S. participation in MAI. In the U.S. a lot of reservations have been expressed by the Western Governors Association, among others. There's a difficulty in the U.S. now because there's no guarantee that Clinton will be granted fast-track. If the U.S. does not ultimately support or sign MAI, will Canada be supportive or ratify MAI?

Those are several questions, and perhaps I may have time for another one. Thank you.

Mr. Sergio Marchi: Thank you, Scott. I appreciate your position of support for the liberalized trading strategy, as well as for your party's support on the cultural exemption. I think the more unanimity that exists on that score, the more reassurance the cultural community and individual Canadians will feel.

Second, on the draft list of the so-called reservations, as Bill and I have said repeatedly, clearly the benchmark for the exemptions are in the NAFTA chapter. I would suggest that tomorrow, Mr. Chair, Bill produce what is available in those public documents, the list of those reservations, and perhaps take some time to go through them individually.

I don't think we should be alarmed just yet. As I mentioned and as Bill has emphasized, at the current time the wording around the MAI table in reference to that benchmark may be different. We're obviously trying to square the circle. If we can't square the circle and we feel those words are harmful or damaging to our interests, we will take a reservation.

I think it would be helpful if we take those reservations in the investment chapter and have our negotiator go through them one by one so there is clear understanding around the table.

As for your last question, it's a good point in terms of the American position to take an exemption on states.

Mr. Scott Brison: I'm sorry to interrupt, but the second question is relative to an impact analysis.

Mr. Sergio Marchi: Yes, I'm getting to that.

It says they are taking an exemption for the states. As you will recall, both the states and our provinces were part of the NAFTA chapter, but at the same time many exemptions pertaining to states and provinces were carved out.

There have been some demands at the MAI table that all federal states ensure their states and provinces be part of and tied to whatever agreement comes under the MAI. We have not agreed to that. While all the provinces are in favour of being at the table, because they know the importance of investment to Canada and to the regions, we want to see where this debate goes. If they feel reassured about what is in the text of the MAI, that is one thing. If they do not, we too will be seeking an exemption. So we have argued against a blanket inclusion of states.

• 1640

We have not given the exemption yet. We are perfectly prepared to do so if, in the feeling of the provinces, an exemption should be pursued.

As for an impact study, I will allow the chief negotiator a comment on that. I have not been made aware of any impact analysis on federal-provincial programs, but I will allow the negotiator to address the point.

Last, on fast-track, my prediction is that Mr. Clinton will get fast-track. I think in the end the congress will see fit to give him fast-track. I do not want to enter into the speculative world as to whether he does or does not. We will find out on Friday, when there is a House vote. That is obviously one vote and we will have to wait for the Senate vote as well, but I am predicting they will get fast-track.

At any rate Canada is at the MAI table because it believes it should be a part of that discussion. Trade and investment are important to us above and beyond whatever happens in Washington later this week.

The Chairman: I wonder, Mr. Dymond, if you could do it very briefly, and then follow up tomorrow on it.

Mr. Bill Dymond: I can be very brief.

The Chairman: Colleagues, do you want him to follow up tomorrow?

Mr. Dymond.

Mr. Scott Brison: I have one further question.

The Chairman: Mr. Dymond will go first.

Mr. Bill Dymond: I can be very brief.

Since our benchmark position is the NAFTA, we want to replicate the NAFTA. We want the MAI to be in conformity with existing policies, existing legislation, existing practices, and from the beginning we have been conducting search and examination with all federal departments that have interest in the matters covered in the MAI to make sure that we are not exceeding what is done in the NAFTA. So whatever the impact, we see that impact already having been absorbed by the implementation of the NAFTA obligations.

Mr. Scott Brison: We keep referring to NAFTA. One of the benefits of negotiating an agreement now, several years down the road, is that we can recognize difficulties that may have occurred since then, as well as opportunities that have developed. But MAI expands on the scope of the investment to the chapter 11 section of NAFTA relative to investor states or the opportunities of investor state lawsuits.

There are three lawsuits now under chapter 11 against the Canadian government, including one against the Ethyl Corp. That one evolved as a result of Bill C-29, and you are familiar with it since you were Minister of the Environment at the time.

With the exponential increase with 29 participating countries, with an increase in the scope of the provisions for investor state lawsuits, is there not a huge risk to Canadians for a lot more of this type of activity?

Mr. Sergio Marchi: I made some remarks in my introduction that foreign companies based in Canada now have the option of seeking remedies through our courts for whatever injustices they think have accrued.

In terms of the Ethyl Corp., because it is before the tribunal as well as the courts, it would not be advisable for me to comment on it. But we believe whether there is an MAI or not that our laws, whether they are governing environment or labour, will be supreme.

For instance, there are two laws that did not make it through the last Parliament but are going to be reintroduced. One is the Canadian Environmental Protection Act. We will be seeking to strengthen the Canadian Environmental Protection Act whether we have an MAI or not. We will be seeking Canadian legislation on protecting endangered species whether we have an MAI or not. An MAI has no bearing on that.

We will make our laws as strong as Parliament and Canadians wish those laws to be made, and those laws will be respected by both domestic and foreign. What we are talking about is national treatment.

• 1645

The Chairman: Thank you, Mr. Minister.

Ms. Folco and Mr. Graham, you have five minutes each.

[Translation]

Ms. Raymonde Folco (Laval West, Lib.): Good afternoon, Mr. Minister.

I would, if I might, like to come back to something you mentioned in your opening remarks. You stated that the MAI does not spell the end of Canada's sovereignty. I come from Quebec and I am obviously very pleased to see that we are talking about sovereignty at another level. Our government was obviously driven to establish a clear position regarding sovereignty, more particularly for cultural industries, but for others as well.

However, in my riding, several voters have told me that they are afraid and worry that these agreements might hinder the government of Canada's autonomy and its ability to administer and to legislate.

Could you explain more precisely what you have in mind regarding the agreement so as to respect and reinforce Canada's sovereignty?

[English]

Mr. Sergio Marchi: Thank you, Raymonde.

Obviously concern has been voiced about MAI vis-à-vis sovereignty, and there was concern at the time of NAFTA and the FTA. When you look at the whole globalization march and when you talk to our respective constituents, you will always find a sense of apprehension. Despite the many advantages of globalization, the global economy, and the fact that the world is so interconnected today, there will always be that question of whether we are too dependent on others. Are the economies so intertwined that actions thousands of miles away impact on our stock markets or our economies? You will never find a perfect situation where globalization will eliminate all those reservations that people have.

At the same time I think those same constituents, when we talk about the interconnected world getting smaller, recognize that Canada has to be part of that interconnected world—not only because we want to be, but because we have to be. If you look at the size of our economy and of our country and you realize that 40% of our GDP is tied to exports, we have to be better than we were last year.

In our business you're as good as your last political speech, and in the business of trade and investment you're as good as your last deal. We've been making more deals but in some parts of the world we're losing market share. Why is that? We're losing it to competitors. Other countries are doing it better, smarter or quicker. Other countries may be offering more incentives or fewer incentives. So at the same time those Canadians proclaim those apprehensions, they say we clearly have to be part of that interconnected world for themselves and for future generations.

I think the responsibility of not only ministers but all of us is to try to maximize the assurances within that globalized world for those individuals. That's why it's important that we not only carefully consider those reservations and exemptions that protect the essence of who we are and what we are as a people, but at the same time make it abundantly clear that the sovereignty of our laws on our ground will certainly prevail.

The third element is that foreign investment is not only a one-way street, it's not only about inviting investment and R and D into Canada to create economic activity and provide jobs for your constituents and mine; it's also to provide sovereignty for Canadian investors who are investing almost as much externally as we're getting in direct investment from abroad. As Canadians become more aggressive about being part of that globalized world, they are also seeking sovereignty for their deals, particularly as we push more of our small and medium-sized firms to invest, whether it's in APEC or Europe or Latin America.

• 1650

Almost two-thirds of the Team Canada trip this January will be small and medium-sized firms. We're not only encouraging them to trade but also to invest in those economies as a maximum sign of their faith on a two-way relationship, which also creates jobs back here, whether it's Nortel in our backyard, Bombardier in Montreal, or McCain's in New Brunswick.

They're also telling us they'll invest and trade as long as we have the policy on trade right, which means safeguarding and protecting their investments. They also want sovereignty when they leave the country, and we have to give those reassurances. That's why I think the MAI is a greater protector of sovereignty than it is a threat to it.

The Chairman: Thank you, Mr. Minister.

Mr. Graham, you have three minutes.

Mr. Bill Graham (Toronto Centre—Rosedale, Lib.): Thank you, Mr. Chairman.

Mr. Minister, many of our constituents have echoed the comments of Ms. Folco. I'd like to congratulate you for at least bringing this matter before the committee in sufficient time that we can have some input to the negotiating process. I think this is a first in many ways for the committee process. Often we hear frustrations because we are told of things after they have taken place rather than before. I think this is an excellent step to ensure that we have an opportunity to have our input.

In the short time I have remaining I would like to test this issue of reciprocity of exemptions. If we enter exemptions, are they reciprocal? In other words, can other countries raise those against us, or does each country have their own reservations? That is my first question.

Second, to what extent does this agreement advance our case in the United States? The United States is our largest destination of foreign direct investment that you've referred to. Is this going to be a step beyond NAFTA? If not, how important is it to us? If it is, in what way is it a step beyond NAFTA? How will the Americans, with their reservations, manage to finesse us with all their state set-asides and reservations, particularly in the government procurement area where they make it very difficult for non-Americans to compete in their markets?

Third, Mr. Brison raised the expropriation issue. I've just looked at chapter 4 of the agreement on the expropriation test. It looks like the traditional international law test for expropriation, but there is the Ethyl case that's been raised. Can you assure us that this in no way gives foreign companies any greater rights in Canada than a Canadian investor would have in respect of an expropriation and that everybody will be operating at least on an equal footing? There's no suggestion that a foreigner coming in here will operate at a higher level of protection than Canadians would and therefore the law would be applied equally to all. I believe that has been your position up until now.

The Chairman: Thank you, Mr. Graham.

Mr. Minister, quickly.

Mr. Sergio Marchi: Thank you, Bill, in terms of the input. Our government will value that advice.

Mr. Chair, we asked for the input a little before Christmas because the negotiations will heat up between January and April of next year. April 1998 has been given as a deadline. I don't know if we'll come in before or after that, but that is the plan at the OECD. So it is advantageous if we can get advice, through this committee, from Canadians so that we can finalize the final mandate as we get into the January to April stretch.

Second, as we make exemptions and put those exemptions on the table, other countries and governments can do the same. In fact that's also part of the negotiating. Everyone else will be looking to see which exemptions you are putting, and clearly some will simply match tit for tat. Others will be very different in what they feel they should be exempting their countries from.

With regard to the United States, I have given an exemption in terms of their states participating in the MAI. Again, both the states and the provinces were part of the NAFTA deal. At the same time a long list of exemptions pertaining to both states and provinces was registered. We have said no in terms of a blanket inclusion of states on the assumption that Canada signs the MAI, and we have reserved the right to put on a reservation for our provinces just the way the Americans have.

• 1655

Finally, on expropriation, you're right, what we are clearly seeking—and this is one of the two objectives of our interest in the MAI—is that on the matter of expropriation there is national treatment. Clearly foreign companies will not have a leg up on domestic companies. What we seek for those foreign companies and what we seek for our Canadian investors abroad is equal treatment—not special treatment but equal, fair treatment under the law.

The Chairman: Thank you, Mr. Minister.

We'll have a final question from Mr. Penson.

Mr. Charlie Penson: Thank you, Mr. Chairman.

Mr. Minister, we know you came into this process part way through as minister, but I'm still having some problems with the idea that this negotiation has been allowed to be misinterpreted for a lack of information. Having read Hansard a little bit from 1992 when the free trade debate was going on, with of course the investment chapter that was there at the time, chapter 11, which you hope to move over to the OECD, I know you were quite critical of the government of the day because you had to read in the newspaper what was going on in terms of the negotiations.

I would ask two questions. First of all, what are you doing to address these concerns, particularly in B.C. where there seems to be quite a bit stirred up in terms of how it might negatively affect Canada?

I'd also like a commitment, in view of what you said in 1992, that you will continue to keep the public in Canada informed of the negotiations that take place from here on in. I understand you're going to be at the OECD in January. If there are any changes to our position, I think it would be incumbent upon you to make that public.

Mr. Sergio Marchi: Charlie, it's obviously fair to say that the negotiations started back in 1995. At the same time, it's also fair to say that only recently have those negotiations really intensified. That is to say, the preliminary work in the initial period was probably more on the margins and bringing in draft agreements and looking at NAFTA and other models. It's only recently that you see the debate coming to a head, if you will, and I think we are a long way off in terms of getting consensus on a number of those issues. That's why I think most of the outstanding issues clearly will be resolved between January and April. That's why I think the work of this committee is going to be important.

In terms of giving you the assurance of keeping you up to date on the MAI, I certainly intend to do that with you and my other trade critics. If I think there are major U-turns in terms of the MAI and negotiations, surely there will be ways of having Parliament informed of those as we go through it.

On intent to provide more information and not less, I think if in the early going we would have had more of the information that we provided recently, there would have been a greater comfort zone and a greater understanding of what are the issues on the table and at the same time what are the issues off the table.

That's water under the bridge. When I came in we obviously intended to try to provide that information, and clearly we're going to continue that as opposed to abandoning course. So I will try to keep you as informed as I possibly can, respecting of course the confidential nature of negotiating with 28 other countries and consulting with 10 provinces and 2 territories.

The Chairman: Thank you, Mr. Minister, for appearing today and being open and frank with us.

For tomorrow, I wonder if Mr. Dymond can bring some more draft reservations for members of the committee. We have one here now that's dated February 24, 1997. If there's a more up-to-date list of these, I wonder if you could bring those with you tomorrow.

So, colleagues, we'll have Mr. Dymond, the chief negotiator, here tomorrow to go through more of the technical questions.

Again, Mr. Minister, we'll do our best, given the circumstances, the time line we are set with. We look forward to working with you on this issue.

Mr. Blaikie has a point of order.

• 1700

Mr. Bill Blaikie: On a point of order, I think it would be useful, and I hope the minister would think so as well, that in the course of our deliberations we may want to have the minister back at some point to pursue some of these matters further with him. Obviously, a 10-minute conversation for any one of us isn't much when you consider the scope of the Multilateral Agreement on Investment.

So I would hope the minister would be open to returning at some point.

The Chairman: Mr. Blaikie, if need be, the committee will certainly talk about that. We have his able parliamentary secretary with us, who is also a member of this committee, who I'm sure will be able to funnel information through to us from the department on how the negotiations are going. If need be, we'll certainly ask for the minister to come back.

Colleagues, I will call for an adjournment until tomorrow.