FAIT Committee Meeting

37th PARLIAMENT, 2nd SESSION

Standing Committee on Foreign Affairs and International Trade

EVIDENCE

CONTENTS

Wednesday, April 9, 2003

¹

1530

The Chair (Mr. Bernard Patry (Pierrefonds—Dollard, Lib.))

Hon. Pierre Pettigrew (Minister for International Trade)

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1535

¹

1540

¹

1545

¹

1550

The Chair

Mr. John Duncan (Vancouver Island North, Canadian Alliance)

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1555

Mr. Pierre Pettigrew

Mr. John Duncan

º

1600

Mr. Pierre Pettigrew

Mr. John Duncan

Mr. Pierre Pettigrew

Mr. John Duncan

Mr. Pierre Pettigrew

Mr. John Duncan

Mr. Pierre Pettigrew

The Chair

Mr. Stéphane Bergeron (Verchères—Les-Patriotes, BQ)

Mr. John Duncan

The Chair

º

1605

Mr. John Duncan

The Chair

Mr. John Duncan

The Chair

Mr. Stéphane Bergeron

Mr. Pierre Pettigrew

Mr. Stéphane Bergeron

The Chair

Mr. Pierre Pettigrew

Mr. Stéphane Bergeron

Mr. Pierre Pettigrew

Mr. Stéphane Bergeron

º

1610

Mr. Pierre Pettigrew

Mr. Stéphane Bergeron

Mr. Pierre Pettigrew

Mr. Stéphane Bergeron

Mr. Pierre Pettigrew

Mr. Stéphane Bergeron

Mr. Pierre Pettigrew

Mr. Stéphane Bergeron

Mr. Pierre Pettigrew

The Chair

Ms. Aileen Carroll (Barrie—Simcoe—Bradford, Lib.)

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1615

Mr. Pierre Pettigrew

Ms. Aileen Carroll

Mr. Pierre Pettigrew

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1620

Ms. Aileen Carroll

Mr. Pierre Pettigrew

The Chair

Mr. Rick Casson (Lethbridge, Canadian Alliance)

Mr. Pierre Pettigrew

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1625

Mr. Rick Casson

Mr. Pierre Pettigrew

The Chair

Mr. Mark Eyking (Sydney—Victoria, Lib.)

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1630

Mr. Pierre Pettigrew

The Chair

Mr. Mark Eyking

Ms. Suzanne Vinet (Director General, Trade Policy II - Services, Investment and Intellectual Property Bureau, Department of Foreign Affairs and International Trade)

Mr. Mark Eyking

Ms. Suzanne Vinet

Mr. Mark Eyking

Ms. Suzanne Vinet

Mr. Mark Eyking

Ms. Suzanne Vinet

Mr. Mark Eyking

Mr. Pierre Pettigrew

The Chair

Mr. Mark Eyking

Mr. Pierre Pettigrew

The Chair

Ms. Francine Lalonde (Mercier, BQ)

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1635

Mr. Pierre Pettigrew

The Chair

Mr. Pierre Pettigrew

Ms. Francine Lalonde

Mr. Pierre Pettigrew

The Chair

Mrs. Karen Redman (Kitchener Centre, Lib.)

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1640

Mr. Pierre Pettigrew

Mrs. Karen Redman

Mr. Pierre Pettigrew

The Chair

Mr. Deepak Obhrai (Calgary East, Canadian Alliance)

Mr. Pierre Pettigrew

Mr. Deepak Obhrai

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1645

Mr. Pierre Pettigrew

Mr. Deepak Obhrai

Mr. Pierre Pettigrew

Mr. Deepak Obhrai

Mr. Pierre Pettigrew

The Chair

Mr. Lorne Nystrom (Regina—Qu'Appelle, NDP)

Mr. Pierre Pettigrew

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1650

Mr. John Duncan

Mr. Pierre Pettigrew

Mr. Lorne Nystrom

Mr. Pierre Pettigrew

Mr. Lorne Nystrom

Mr. Pierre Pettigrew

Mr. Lorne Nystrom

Mr. Pierre Pettigrew

Mr. Lorne Nystrom

Mr. Pierre Pettigrew

Mr. Lorne Nystrom

Mr. Pierre Pettigrew

Mr. Lorne Nystrom

Mr. Pierre Pettigrew

Mr. Lorne Nystrom

Mr. Pierre Pettigrew

Mr. Lorne Nystrom

Mr. Pierre Pettigrew

The Chair

Mr. John Duncan

Mr. Pierre Pettigrew

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1655

Mr. Leonard J. Edwards (Deputy Minister, International Trade, Department of Foreign Affairs and International Trade)

Mr. John Duncan

Mr. Pierre Pettigrew

The Chair

Mr. Stéphane Bergeron

Mr. Pierre Pettigrew

Mr. Stéphane Bergeron

Mr. Pierre Pettigrew

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1700

Mr. Stéphane Bergeron

Mr. Pierre Pettigrew

Mr. Stéphane Bergeron

Mr. Pierre Pettigrew

The Chair

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CANADA

Standing Committee on Foreign Affairs and International Trade

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NUMBER 030

l

2nd SESSION

l

37th PARLIAMENT

---

EVIDENCE

Wednesday, April 9, 2003

[Recorded by Electronic Apparatus]

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[English]

    The Chair (Mr. Bernard Patry (Pierrefonds—Dollard, Lib.)): We'll call the meeting to order.

    Pursuant to Standing Order 81(4) and the order of the House of February 26, 2003, we are dealing with the main estimates for the fiscal year ending March 31, 2004, that were deemed referred to the Standing Committee on Foreign Affairs and International Trade,

[Translation]

    Votes 1, 5, 10, 15, 20, 25, L30, L35, 40, 45, 50 and 55 under Foreign Affairs and International Trade.

    At this time, we'd like to welcome the Minister.

    Today, we undertake our study of the Main Estimates of Foreign Affairs and International Trade.

    Our first item of business is Vote 1 and I would now ask the Minister to begin his presentation.

[English]

the floor is yours.

[Translation]

    Hon. Pierre Pettigrew (Minister for International Trade): Thank you very much, Mr. Chairman. I am delighted of course to be here again this year to discuss Canada's international trade agenda.

    The past year has been one of significant success for Canada's economy. We are the world's fifth largest trading nation and as such, our economy grew more quickly in 2002 than that of any other G7 country. Canadian economic activity expanded 3.4 per cent in 2002, marking the 11th consecutive year of economic growth. And, Canada now leads the G7 countries in growth, in job creation and in debt reduction. We are expected to outperform all G7 countries in growth again in 2003.

    Our two-way trade in 2002 increased to almost two and a half billion dollars per day. In 2002, the Canadian economy created an astounding 560,000 jobs, with more than four of every five of those being full-time positions.

    As some of you know, this morning I released our annual report Opening Doors to the World: Canada's International Market Access Priorities - 2003. I'm sure you have all had the chance to read it carefully and will no doubt have some very relevant questions to ask me.

    Given the fundamental importance of trade to our economy, securing access to new markets is essential to our long-term prosperity. Today's document outlines our actions to reduce and eliminate trade barriers in key foreign markets and advance free and fair trade.

    The CIMAP report describes the range of initiatives the government will pursue in 2003 at the multilateral, regional and bilateral levels, and through the negotiation of new free trade agreements. It also highlights significant market-opening achievements in 2002, which will benefit Canadians and provide new opportunities for Canadian companies in world markets.

    Today, I'll be talking about our key trade policy and trade promotion priorities, but I encourage everyone to consult the report for more details.

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[English]

    With Canada's exports representing 43% of our GDP and with 85% of our goods and services going to the United States, our number one trade priority remains the management of this relationship. We are each other's biggest trading partner, with close to $2 billion in goods and services traded across the border each day of the year. Since the terrorist attacks of September 11, 2001, and the heightened concerns over security, managing this relationship has become of even greater importance.

    After the terrorist attacks the Government of Canada quickly joined the war on terrorism. Our soldiers in Afghanistan fought against al-Qaeda alongside the Americans. Canada will return to play a key role in the international security assistance force this summer, with a contribution of a battle group of almost 1,500 soldiers. We have also engaged in the war against terrorism through a series of policy initiatives aimed at both enhancing security in North America and strangling the financial networks that fund world-wide terrorism. One of the most important of these policy evolutions, the initiative to make the Canada-U.S. border more secure and efficient, reflected our recognition that public security and economic security are mutually reinforcing. This past December phase two of the 30-point action plan of the smart border declaration was implemented.

    As a result of the fact that Canada and some others chose not to be part of the coalition forces in Iraq, many have predicted dire consequences for bilateral relations between certain countries, including Canada and the United States. Some have also suggested that the concept of multilateralism is at stake. I want to give you my perspective.

    First, on the question of the fate or state of multilateralism, this is absolutely not a time to let the progress we have made in working together at the multilateral level slip through the cracks of current events. On the contrary, this is a time for building upon our success and strengthening our World Trade Organization partnerships. Canada, the United States, and our partners, including both developed and developing nations, must continue to work together towards economic prosperity and a brighter future for all.

    Some may look at the current geopolitical context and the state of the overall global economy and conclude that future prospects for the trading system and the multilateral institutions in general are dismal. With the end of the Cold War, it was assumed that developed countries could focus on economic prosperity rather than security issues. For a long time it seemed true, but unfortunately, it is not so today. The threat posed by weapons of mass destruction and the number of ongoing conflicts around the globe have ushered in an age where developed nations such as Canada and the United States must take steps to ensure the security of their citizens, homes, schools, and businesses, as well as their livelihoods.

    Pessimists predict increasing protectionism, and they focus on secure trade, rather than open trade. I say the two are not mutually exclusive. We can ensure that we can have both open trade and a secure trade environment. In fact, I and many others argue that binding the world together through increased trade and investment ties is one critical dimension of integration that will contribute to a more secure world for all countries.

    Second, on the question of Canada-U.S. relations, I reject the arguments of those who say Canada's trade relations with the United States will suffer as a result of the fact that we are not in Iraq. I am confident that this will be seen in the perspective in which it should. The Government of Canada has absolutely no illusions about the nature of the repressive and brutal regime of Saddam Hussein. We agree that this situation would not have arisen if Iraq had disarmed itself voluntarily, actively, and transparently. Canada, in fact, worked hard to support the United States in its pursuit of Security Council support.

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    This being so, Canada's position on this matter is best described as consistent with our traditional pro-multilateralism approach. It definitely is not anti-American in any way. While we understand that Americans are disappointed that we have not joined them in the war, we have confidence that our southern neighbours will keep in perspective the reason for our decision, our long history together, including as military partners in the defence of North America through NORAD, and our ongoing alliance in the fight against terrorism.

    Some in the business community were worried about the economy fallout. I have talked to the heads of all Canadian business associations to hear their views and reassure them. I have asked for feedback from Canadian companies on how their business relations have been affected. I have also talked with Ambassador Paul Cellucci. The reality is that our bilateral relationship with the United States is strong, it will endure. There have been disagreements in the past, and there will no doubt be more in the future, but the relationship is far stronger than critics suggest. It is built on a true friendship derived from the deep links between national governments, between states, provinces, and cities, between our institutions of learning and businesses, and above all, between our people.

    But given what is at stake, both our governments are fully aware that we cannot take a time-out in the relationship. Our strategy is to maintain the dialogue and advance our agenda at the political level. We will stress how positively we are working together on common goals around the world. The Deputy Prime Minister and the Canadian business community emphasized our common interests and common agenda with the United States during their recent trip to Washington. The Prime Minister did the same yesterday during the debate in the House.

    It is important to point out that Canada-U.S. relations, while excellent overall, still do involve disputes. Indeed, though the vast majority of our trade moves quite freely across the border each and every day of the year, a number of trade disputes continue to pose serious concern for Canada, softwood lumber, dairy, and wheat in particular. I can assure members of the committee that we will continue to aggressively defend our interests in these disputes through the WTO and the North American Free Trade Agreement, and we will continue to stand by the belief that we trade fairly through organizations like the Canadian Wheat Board.

    The cornerstone of our multilateral trade policy remains the World Trade Organization. The new WTO round was launched 16 months ago, and we are now five months away from the mid-term review, which will take place at the Cancun ministerial conference September 10-14. In 2002 we achieved progress in key areas, and we must continue if we are to succeed. Canada's core objectives in the WTO negotiations are clear.

    On agriculture we are seeking an ambitious outcome that continues the process of reforming world agricultural trade. Specifically, we are seeking the elimination of export subsidies, substantial reductions in distorted domestic support, and greater market access for Canadian farmers and Canadian producers. We also want to preserve Canada's ability to maintain orderly marketing systems, such as supply management and the Canadian Wheat Board. For Canada, getting the right deal on agriculture is critical. We are actively seeking an outcome that will level the international playing field, so that Canadian producers can compete fairly in the international marketplace.

    Other objectives include opening markets in key export sectors, such as services, where we tabled our initial offer on March 31, 2003, 10 days ago, and strengthening and clarifying the rules to limit the abuse by some countries in launching trade remedy actions against exporters. As you know, the services offers have been put on the website of our department, which was a first with transparency, and I was very proud that the United States and the European Union followed Canadian leadership and also tabled their offers in the services negotiations. So Canada continues to be in the lead with transparency efforts.

    With regard to the negotiations, I'm disappointed at the missed deadlines on key issues such as intellectual property rights, access to medicines, and agriculture modalities. However, I believe it's important not to overdramatize. The purpose of deadlines such as these is to focus minds, to get participants engaged, and to clarify positions. Measured against this objective, we have made substantial progress. We now have a much better understanding of where individual members stand and what their defensive and offensive interests are than we did six months ago. Canada continues to pursue a multilateral solution on access to medicines, but has joined other WTO members in declaring that we will not take action against measures taken by least-developed countries as they deal with public health crises such as HIV/AIDS or other epidemics.

    Much work lies ahead as we look forward to Cancun. The leadership and engagement of the European Union and the United States will be needed if these negotiations are to reach a satisfactory conclusion by our agreed deadline of January 1, 2005.

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[Translation]

    It is important to remember that at Doha we agreed to place the needs and interests of developing countries at the heart of this set of trade negotiations.

    While developing countries now have a greater voice in the WTO, they remain constrained by a lack of trade policy capacity. These limitations mean that for them, trade policy must be determined without full analysis of the impact of their trade obligations on sectoral interests, national interests, the middle class and the poor. Not surprisingly, with less capacity to fully analyze their impacts, their tendency during negotiations is to seek to minimize obligations and preserve policy flexibility.

    The Free Trade Area of the Americas is another key priority for Canada. The FTAA will build on Canada's existing trade ties in the region and our expanding links elsewhere in the Americas. Canada is pleased with the progress to date in the FTAA. In November 2002, the trade ministers of the Americas reaffirmed the commitment to conclude the negotiations by 2005 and to publish, for a second time, the draft text of the FTAA Agreement, demonstrating that the culture of transparency that Canada advocated has taken hold.

    There are almost as many challenges facing us on the trade development front as there are on the trade policy front. The international competition which our business community faces is fierce. Fortunately, Canada's Trade Commissioner Service—a key network of 530 officers located in 140 cities around the globe—continues to play a key role in helping its clients, mostly small and medium-sized businesses, succeed abroad.

    I should also note the good work that Investment Partnership Canada is doing to attract and maintain foreign investment. Canada's trade promotion efforts will also be enhanced by our increased representation in the US, which was announced first in the Speech from the Throne and later in the 2003 budget. The Enhanced Representation Initiative will increase our ability to advocate for Canadian interest, promote Canadian trade, attract investment and build strategic partnerships.

    In conclusion, I want to remind you that Canada's founding was based on a unique notion, namely that our citizenship was not based on traditional characteristics of other countries of the time. Most countries of the 1800s founded their nationhood on shared characteristics such as language, race or religion. Canada made a conscious decision to opt for a political citizenship, based on shared values that have very much shaped our country and made it a model example in this era of globalization.

    As such, while we became a country, we were, and continue to be, a nation like no other. As it turns out, however, our shared values and diversity helped form the basis for us to become very successful international traders. As work proceeds on bilateral, regional and multilateral trade agreements, as the volume of trade continues to grow, and as technology brings the global community ever closer, the trade policy and promotion experts in the Department of Foreign Affairs and International Trade are increasingly critical to Canada's economic prosperity. I am confident that the professionalism of these officials, combined with the creativity and energy of business people, will continue to ensure that Canadians build upon our reputation as a nation of traders.

    Thank you very much for your attention. Merci beaucoup. I should also say muchas gracias, as your reports are now printed in three languages.

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    The Chair: Fine then. Thank you very much, Minister. I would now like to introduce the three individuals who are here with you this afternoon.

[English]

From the Department of Foreign Affairs and International Trade we have Mr. Leonard J. Edwards, Deputy Minister for International Trade, Ms. Kathryn E. McCallion, Assistant Deputy Minister, corporate services, Passport and Consular Affairs,

[Translation]

    and Suzanne Vinet, Director General, Trade Policy II - Services, Investment and Intellectual Property Bureau.

    Welcome.

[English]

    Now we're going to have questions and answers. The first round is ten minutes, and the second round is five minutes.

    Mr. Duncan.

    Mr. John Duncan (Vancouver Island North, Canadian Alliance): Thank you very much, Mr. Chairman.

    I'd like to thank the minister for appearing on estimates. I have four questions. I don't think I'll get to all of them with answers in the 10 minutes, but I'll do my best.

    On page 4 of your document you talk about Canada's trade opportunities with the U.S. not suffering, and I would like to say I utterly reject that presumption. We have, for example, in Iraq a Canadian company that has already lost a contract opportunity, a company that had vital, good, and very successful experience in putting out oil fires in Kuwait after the Gulf War. They were denied the opportunity in the current circumstances. I would like to point out that the anti-American comments from the senior minister from British Columbia have been anything but helpful on the softwood dispute, which primarily affects British Columbia. We have the words of Richard Perle, a close advisor to President Bush, about where contracts for reconstruction in post-war Iraq will go. I didn't read anything in there to make me optimistic about Canada's situation.

    So I wonder what the minister is doing to ensure that Canadian companies have a role in post-war Iraq, after his government has successfully eroded our business opportunities in that circumstance.

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    Mr. Pierre Pettigrew: I will gladly answer this.

    The first part was a comment more than a question. Mr. Duncan expresses his disagreement with my view that from the trade point of view, the relationship is strong and vibrant. I have talked to all business leaders, many individual CEOs, I have talked to all business association leaders, and they're monitoring the situation very closely. There may have been an incident here and there, but altogether, Americans and Canadians have shown the maturity to continue this very constructive relationship that is important to both countries.

    Mr. Duncan raises softwood lumber. Mr. Aldonas, the number two to Don Evans, was in British Columbia two weeks ago now, and I will quote what he actually said on softwood lumber in Vancouver on March 26th: “There is a stronger degree of cooperation between the United States and Canadian governments than there has ever been before.” For 25 years there's been this dispute on softwood lumber, and frankly, when Mr. Aldonas says there is a stronger degree of cooperation between the United States and Canadian governments than there has ever been before, we must have been doing something right on that front. Indeed, on the substance of the issues, I must acknowledge the extraordinary contribution of Secretary of Commerce Don Evans, who allowed Mr. Aldonas to spend a great deal of time on that issue, and I want to thank Mr. Doug Waddell, who has been leading the charge on the Canadian front, on this degree of cooperation we are having with the United States. We intend to continue to work very well on that file for the greater benefit of all Canadian producers.

    On the reconstruction efforts, our government yesterday announced that we were going to invest $100 million in that. The Prime Minister said we would work with the United Nations, as we understood that the United States could not do it alone, and we will be participating in the reconstruction of Iraq with our friends and through the United Nations.

    Mr. John Duncan: Thank you. That was a little short on specifics, but I'm going to move to my next question.

    It relates to the issue of leadership on the steel file and the CITT safeguard decision, which has been sitting out there for nine months now. We clearly understand that the decision CITT made is an unworkable decision. My question is related to the fact that the U.S., after their safeguard action, exempted Canada and Mexico. Mexico reciprocated. They exempted us from the safeguard, their NAFTA partners. CITT failed in looking at the diversion issue. With the U.S. safeguards against steel from overseas, the issue is diversions from that marketplace to Canada. When they made their decision, instead of focusing on that, they brought the U.S. into the equation. We have an equitable market with the U.S. When one looks at the composition of the CITT board, which is appointed, it's obvious that it is largely ex-bureaucrats and people with academic credentials.

    Is the minister planning to do something about the formatting of CITT, and if not, does the minister have another avenue, such as going back to CITT and asking if they would possibly construct a separate safeguard addressing diversions only?

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    Mr. Pierre Pettigrew: This is a decision that in the end belongs to the Minister of Finance, who is responsible for the CITT, and I would invite you to continue your discussions with him.

    When you say that for nine months we've been sitting on a CITT decision, I can tell you that over these nine months our government has been very active. We have met with the industry, we have met with labour. The industry position itself has evolved in the last few weeks, but up to a few weeks ago they were very much in line with the approach we adopted. In the last few weeks there's been this business with Mr. Barry Lacombe and all that, and we're looking into it. You mentioned the United States safeguards action. I would bring to your attention the fact that the WTO has turned down the American action on steel. So it requires that we be vigilant in the way we work, but we intend to continue to work very closely with industry on this file, and we continue to believe in a wider global resolution to this, and the work we're doing at the OECD, for instance, will hopefully address the over-capacity. Still, over-capacity is a very important concern.

    Mr. John Duncan: There's been a long-standing consensus that the U.S. should be exempted from the steel safeguard.

    Mr. Pierre Pettigrew: Oh, yes.

    Mr. John Duncan: But CITT put you in an impossible position on that.

    Mr. Pierre Pettigrew: I'm glad you acknowledged that, because it is clear that that the industry wants the U.S. to be exempted, but they found some injury coming from there, so it creates a problem with our international trade obligations.

    Mr. John Duncan: Thank you.

    In March CD Howe reported that “Canada is grossly overrepresented in Europe, where Canadian interests and influence have steadily diminished over the past 40 years, ironically in inverse proportion to the intensity of diplomatic effort.” In trade policy their remarks are clearly appropriate. Canadian exports to the U.S. are more than ten times the value of our exports to the EU. Can the minister give us an estimate of the relative value of departmental resources going into expanding trade in Europe as compared to the U.S.?

    Mr. Pierre Pettigrew: I'm very pleased that you're raising this, because as you know, our Speech from the Throne announced what has now been locked in by the budget, increased presence in the United States. Indeed, we, along with partners in the government, Agriculture Canada in particular, Industry Canada, and we hope some others will join in, are going to increase our presence. We haven't announced yet the number of cities where we will be opening new consulates, but we will shortly, because that money is already identified. It's about $71 million a year more that we will be putting into expanding our presence in the United States, which is so important to us.

[Translation]

    The Chair: Thank you, Minister.

[English]

Just to let you know, that was one of the recommendations in our study on North American relations.

    Now we'll go to Monsieur Bergeron.

[Translation]

    Mr. Stéphane Bergeron (Verchères—Les-Patriotes, BQ): Thank you, Mr. Chairman.

[English]

    Mr. John Duncan: May I just ask for a--

    The Chair: He could give you a written answer if you want.

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    Mr. John Duncan: Yes.

    The Chair: Fine, he'll give you a written answer.

    Mr. John Duncan: That's what I'm asking for.

    The Chair: Fine. Thank you.

    Monsieur Bergeron.

[Translation]

    Mr. Stéphane Bergeron: Thank you, Mr. Chairman.

    Thank you, Minister, for coming here today. Very briefly, I'd like to focus on two of the questions raised by Mr. Duncan. First, with respect to the steel file, I note that you skilfully sidestepped the question of imports which, given that the Americans have closed off their market, ultimately end up on the Canadian market. You responded that we need to look at overcapacity in steel production from a more global perspective and consider what Canada could do to help resolve this problem.

    I admit, Minister, that I personally heard Government of Canada officials tell the Subcommittee on International Trade, Trade Disputes and Investment that our approach was quite simply to let Canadian businesses and steel plants shut down, that is to all intents and purposes, let them throw in the towel and go along with having products dumped on our market and impact our steel plants. This would be our way of helping to alleviate the problem of global overcapacity in this industry. I don't see this as a very practical solution, Minister. Now then, I'd like to...

    Mr. Pierre Pettigrew: I'd like you to give me some names.

    Mr. Stéphane Bergeron: I can do that, because this was a public meeting of the subcommittee. That won't be a problem.

    Minister, with respect to supply management, I put two questions to you today in the House of Commons. However, I realize that you have only 65 seconds to respond. Perhaps you can take a little more time here to tell us what you plan to do with the recommendations formulated by the task force created further to the Liberal caucus meeting last August in the Saguenay. Dairy producers in particular have been waiting a long time now for the government to act on this very sensitive issue. What do you plan to do with the report which, to my knowledge has been presented to you?

    The Chair: Minister.

    Mr. Pierre Pettigrew: It's not that I was short on time, it's just that a decision hasn't yet been made. We have received a number of recommendations from the task force comprised of officials from four different departments. This task force was struck following the Liberal caucus meeting last August in the Saguenay. The issues involved are very complex, as you know. Some will argue that the solution lies in changing the tariff line. I know that some members of your party view this as the simple solution, but tariff lines cannot be changed without there being consequences for our trading partners. These tariff lines were negotiated and agreed to at the time with the dairy industry. Changes may have occurred over time in recipes, resulting in percentage changes from 51 per cent to 49 per cent. Now, butter oil may be used more often in certain products not classified as dairy products. So then, if that creates a problem, we need to consider the impact on our market. That's what we're doing.

    Let me just say that the way we approach this problem can have economic, trade and legal ramifications.

    We received these recommendations several weeks ago. Mr. Vanclief and I had lunch together last week. We reviewed the recommendations and passed them on to our officials to see whether various options could be successfully combined. We're waiting for the proposals to be fine-tuned, so to speak.

    Mr. Stéphane Bergeron: Minister, I'd like to clarify my comment concerning the steel industry. Statements by Industry and International Trade officials , as well as those by Finance representatives, were not made to the Subcommittee on International Trade, Trade Disputes and Investment, but rather in conjunction with a briefing to members of the steel caucus. I just want to clarify that and I can give you the names of the officials who spoke at this briefing.

    Mr. Pierre Pettigrew: That does not reflect government policy.

    Mr. Stéphane Bergeron: That being said, Minister, I appreciate you're clarifying that for me because when I specifically asked about this, I was told that that was in fact the case.

    In your opening address, you stated that you reject the argument of those who maintain that Canada's trade relations with the United States will suffer as a result of our not being in Iraq. I have to say that the US didn't wait for Canada's decision as to whether or not to take part in the conflict in Iraq to play hard ball, so to speak, with Canada, particularly on the softwood lumber issue.

    I'd like to focus on the aid program, or alleged aid program put in place by the government as we move to the next phase. The message we are currently sending to Washington is this: we have no intention of supporting our industry and consequently, Washington can continue to drag out the battle in court for as long as possible, so long in fact that when we do win the battle at the WTO or NAFTA level, there won't be any real winners. The players will simply have vanished from the scene.

    Our businesses are suffering terribly from the protracted legal battle with the United States, and the government's apparent laissez-faire attitude seems to confirm that Washington is free to take this fight all the way to its ultimate conclusion.

    Minister, can we expect the government to announce phase two of its aid program in the near future?

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    Mr. Pierre Pettigrew: First of all, I don't understand the Bloc Québécois' position. I have consistently maintained from the very beginning that we should not rush headlong into anything because ultimately the courts would lend added weight to our position vis-à-vis Washington on this matter.

    The Government of Quebec agrees with me. British Columbia is also of the same mindset. On the contrary, I would say that the pressure is now on the Americans not to wait for the courts to hand down a ruling.

    Mr. Stéphane Bergeron: Minister, I'm not telling you to abandon our legal challenges. Quite the opposite, in fact. We are confident that ultimately, we will emerge victorious.

    Mr. Pierre Pettigrew: Then you do support our government's position...

    Mr. Stéphane Bergeron: On the court challenge issue.

    Mr. Pierre Pettigrew: ... on this international trade matter. Good.

    Mr. Stéphane Bergeron: That shouldn't come as any surprise, Minister. All I'm saying - and our position on this has been consistent as well - is that we have called on the government to support the industry in the interim, to support the workers affected by the softwood lumber dispute. The measures put forward by the government to date have not provided any real support, either to the industry or to the workers.

    Mr. Pierre Pettigrew: Just a minute. First, I think we need to look at the facts. I recall that I by-election was held recently in Saint-Fulgence and that one business resumed operations. That was either one month or six weeks ago. I as there when the company in Saint-Fulgence went back into production and 150 jobs were filled. I was very pleased with the outcome.

    In terms of human resources...my job is to defend my department's budget, so I won't talk about what Industry Canada or Human Resources Development are doing. I enjoyed my time in that portfolio, but...

    Mr. Stéphane Bergeron: I would point our, sir, that your government's aid program appears under Vote 10a, Foreign Affairs and International Trade. These are the particular budgetary items to which I'm referring.

    Mr. Pierre Pettigrew: No, you're referring to the government's aid programs for industry which appear under Human Resources Development.

    If you want to discuss our efforts on behalf of the associations, just let me say that we have freed up funds to assist those experiencing problems. The latter have been tremendous partners in this matter. We have indeed used these particular tools. As I stated earlier, Mr. Aldonas conceded that he has never before seen this kind of cooperation between Canadian and US government over the past 25 years.

    Right now, virtually all policy bulletins have been negotiated. I believe there is one minor detail still to be ironed out with Quebec, but things are looking very promising. We thought everything was settled last week but apparently, the Commerce Department identified a language problem involving one Quebec government program. The provincial government is now working on that problem.

    Conversely, we have a problem in so far as interim measures are concerned. How do we proceed from A to B or, in other words, how do we ensure that the provinces manage their forestry system in such a way that these tariffs can be eliminated? At issue is the $1.2 billion already collected by the US, as well as the eventual tariff rate, or tariff charged at the border, or whatever. Various solutions are possible.

    In the meantime, will four or six months go by before legislative measures are enacted? The BC government already has a good head start. It was elected to carry out this mandate, that is to clean house. In Quebec, the process was undertaken in the early 1990s, so there are not that many changes to be made. We're talking in terms of months, not years. Currently the Quebec government is following its own timetable. We'll see how things go when the National Assembly reconvenes.

    The Chair: Thank you, Minister.

    Ms. Carroll.

[English]

    Ms. Aileen Carroll (Barrie—Simcoe—Bradford, Lib.): Thank you, Mr. Chair.

    Welcome, Minister. it's a great opportunity to have you here.

    I just have two questions, one provided by our researcher, but one I would like to ask. I'm not sure you'll be able to answer it, as we await the government response to our excellent study of north-south integration. One of the recommendations we made was that cabinet should establish a committee on North American relations, so as to have at the top the kind of coordinated, comprehensive approach to north-south relations that I think is a theme running through our report. While I'm sure you're not able to say yea or nay, I wouldn't mind hearing what your views are on that.

    Second, you made mention of the progress to date with the FTAA. I have heard you speak publicly on the situation with chapter 11 in NAFTA and what would be the corresponding chapter in the FTAA, how it would be modified, if so. We talked at one time about the dilemmas caused by the dispute resolution hearings being very closed affairs. We had a success a couple of years ago, from my perspective, when the IISD achieved amicus curiae standing. They were not allowed to do anything other in writing, but still it was a prying open of those hearings and an increase in transparency. So where are we, as much as you're able to say, in those negotiations with FTAA?

º  (1615)  

    Mr. Pierre Pettigrew: I want to commend your very good work on that report. It is very useful, and we thank you for it. I was sensitive to the fact that you also released it, for the first time in our history, in Spanish. That was a very--

    Ms. Aileen Carroll: A big hit.

    Mr. Pierre Pettigrew: It was noticed by colleagues in Mexico. I was in Mexico a few weeks ago to meet with my colleagues Derbez, the new foreign minister, and Canales, the new minister of trade. I saw them both. They have appreciated the sensitivity the Parliament of Canada has demonstrated to them, so I want to congratulate you on this initiative that goes beyond bilingualism. I'm a great partisan of that. I like that very much.

    We have to look very closely at your report. My view is that Canadians are pleased with what we have. NAFTA is popular in Canada, more than in the United States and in Mexico. We have 30 working groups on it already making sure it remains contemporary and addresses the pragmatic issues and all of that. I don't think we should go too much into symbols when we talk about NAFTA. Some people have a grand scheme. I think what we have serves us very well. The 30 working groups or more we have may bring improvements. There is life in that agreement. NAFTA, at 10, is still a young document, not an old document. I hear people sometimes saying NAFTA is 10, we should move to something else, but I think NAFTA is just reaching maturity, and with the working groups, we're on the right track.

    Canadians are quite pragmatic about these things. I have stated a couple of times, before the Canada-U.S. Business Council in Toronto in October and in my speech at the United States Chamber of Commerce in January, that I believe we should do more on mutual recognition of one another's norms. We spend a lot of time on harmonization, and sometimes it creates difficulties and problems. Sometimes I think we should explore the concept of mutual recognition of one another's norms, to help us to facilitate economic integration in North America, while respecting each other's culture, identity, and ways of doing things.

    On chapter 11--and I'm very glad you raised this--I remember some phone calls exchanged between you and me during the election. It was during the election that I finally made the decision to allow the IISD to table its document. It was a difficult decision to make in a way, but with strong support like yours and that of our colleague Madam Catterall, we did that, and I'm very proud of it. I think Canada is leading the charge, as we did on the release of the negotiation text on the Free Trade Area of the Americas. The second version was so much easier than the first time, because people realized we all benefited from it. As a matter of fact, though there's a degree of criticism from some of our people who want to know what's going on, it's not that they're necessarily critics of us, they want to know what the stakes are. I think it's very good. I'm very pleased with that.

    We did not do the same thing with chapter 11. I think chapter 11 works well, but I believe it needed elements of transparency. I asked for that for two years as trade minister of Canada, and I could go nowhere with my colleagues in the United States and Mexico. But with Secretario Derbez and Ambassador Zoellick, we've been able to make that progress. At the trilateral commission in Washington on July 31 two years ago we were successful in bringing elements of transparency into chapter 11. I hope, when I chair the trilateral commission in Montreal.--has it been announced? Well, I just announced it--I hope it works now. I will be hosting the next trilateral commission sometime somewhere in Canada, and we're working on certain dates right now. My deputy minister, Mr. Edwards, has been working well on that front, and I want to thank him for that, with the deputies of the other trilateral ministers. I hope we will be able to make further progress, on expropriation clauses for instance, making sure it doesn't take definitions that would not be what we intended them to be when we signed NAFTA some years ago.

º  (1620)  

    So it is work in progress, but it is progressing, I think, in the right direction.

    Ms. Aileen Carroll: Thank you so much, Mr. Minister, for both those answers, but when it comes around again, could you just pull it across to the FTAA, as it's not my turn now, just to make comment on the corollaries you see?

    Mr. Pierre Pettigrew: Madame Lalonde, I am sure, will get there. If she has the opportunity, I am sure she will bring us there.

[Translation]

    The Chair: Thank you, Minister.

[English]

    Now it's going to be five minutes.

    Mr. Casson.

    Mr. Rick Casson (Lethbridge, Canadian Alliance): Thank you, Mr. Chairman, and thank you, Mr. Minister, for being here.

    In your comments on agriculture and the Doha round of the WTO you state that you were seeking an ambitious outcome, and I would agree that trying to go both ways here is very ambitious, looking for elimination of export subsidies, while saying you're going to protect orderly marketing systems, such as supply management.

    In 1999 a former deputy minister for international trade and chief negotiator in the Uruguay round appeared in front of the agriculture committee, and he said Canadian negotiators next time around will need instructions on whether we're going to fight the last war over again with respect to protecting the dairy and poultry industries or there are better places to spend our negotiating chips. He thought there were. He went on to say, “Similarly, it will be a challenge to achieve even greater reductions in agricultural export subsidies than they managed the last time around, and clearly this prospect would be enhanced if Canadian negotiators did not have their hands tied behind their backs because of the supply management problem.” I'd like you to comment on that statement.

    Also, the deficit in EU trade was $21 billion dollars. One of the major obstacles to Canadian exports to the EU is their discrimination against Canadian agricultural products. So maybe you could comment on what you're going to do with the European Union on agricultural products and the discrimination against them.

    Mr. Pierre Pettigrew: It is a very pertinent question. I do mean by ambitious that we want international trade rules to become a lot more liberal in agriculture. Our ambition is about that outcome, not having two things that are contradictory. I don't think they are. My view is that in Canada's interest, we must make sure export subsidies go, because they are direct distortions of international trade and distortions of markets. So export subsidies should go. We say production subsidies should go or be substantially reduced. Export subsidies are mostly what the European Union uses, and production subsidies, domestic subsidies, are mostly what the United States uses. We don't have their deep pockets, we don't do that to anything like that degree, you know that very well, and we're ambitious to make sure we make progress on that front.

    Supply management is not subsidized. We don't subsidize the five products of supply management. It is the orderly marketing we promote that serves our customers and our citizens very well, and we intend to maintain a system that has demonstrated its value. We believe the Doha development round--and that is the problem I had with the Harbinson modalities--can give better access to developing countries' products, for instance, in agriculture, with formulas other than the reduction of tariffs, which would have eliminated supply management. I believe, with in-tariff quotas, you can go further in a way that doesn't threaten your own domestic market and gives real access to the people you want to help in the developing countries, and this is the advice we're giving. I also have in my notes improvement in market access, but in a way that will really help the developing countries.

    On this front we aren't subsidizing. Supply management does not cost a cent to the Canadian taxpayer. Before we do it and turn to production subsidies, as other countries do, we should think about it very carefully, because I don't know where we'd get the money for doing that sort of thing and have the kind of fiscal regime we are very proud we have achieved in our country.

º  (1625)  

    Mr. Rick Casson: Then there's the European Union. One of the reasons we have such a huge trade deficit with the Europeans is the fact that they're protectionist when it comes to letting our agricultural products in. They have all kinds of barriers set up, as with beef.

    Mr. Pierre Pettigrew: Yes, that's a problem. Every time I meet my colleague the Commissioner for Trade of the European Commission, I draw his attention to it. That is a problem, that moratorium. They keep telling me they're working on it, but we are, indeed, getting impatient on that front. We do believe we should be able to have that access for durum wheat, for instance. With canola, we've lost $500 million of business there because of elements that are not scientifically based. We believe the best way to make progress is through the WTO round of negotiations, but on a bilateral basis, we continue to work with our allies, the United States and Argentina, for instance, and other countries that also are calling on the European Union to adopt better practices.

[Translation]

    The Chair: Thank you, sir. We will now go to Mr. Eyking, followed by Ms. Lalonde and Ms. Redman.

[English]

    Mr. Mark Eyking (Sydney—Victoria, Lib.): Thank you, Mr. Chair.

    Thank you for coming, Minister. With trade being such a big part of our economy, it's always a challenge.

    I'm also on the agriculture committee, and one of the big issues coming forward to us is this new U.S. law dealing with products requiring labelling of country and producer origin. Personally, I think it was a bit of a knee-jerk reaction after September 11, and it's a bit of a trade barrier. I don't think it was well thought through on either side of the border. American buyers are starting to find out it's a big inconvenience in the cost, with the terrorist threats and fears waning in the U.S. Do you think this law is going to see the light of day? What are we doing to fight it? And what is going to be the impact on the trade in agriculture?

º  (1630)  

    Mr. Pierre Pettigrew: Would you allow me, Mr. Chairman, to ask Madame Suzanne Vinet. She was at Agriculture Canada, and I was very glad when my deputy minister recruited her to come to International Trade to help us on the agriculture front.

[Translation]

    The Chair: Yes. Go ahead, Ms. Vinet.

[English]

    Mr. Mark Eyking: Do you want me to ask the questions again?

    I don't need my preamble, you know what it's all about. Is this law going to see the light of day, do you think? What are we doing to fight it, because it's going to have a big impact? And if it happens, how big is the impact on our trade?

    Ms. Suzanne Vinet (Director General, Trade Policy II - Services, Investment and Intellectual Property Bureau, Department of Foreign Affairs and International Trade): You're referring to country of origin labelling?

    Mr. Mark Eyking: Right.

    Ms. Suzanne Vinet: It's still a voluntary measure, and so what we've been doing is a lot of advocacy and representation and working very closely with the industry making sure it remains voluntary. We're going to keep on monitoring the implementation and making sure it doesn't cause any problems, and we're going to try to resist any attempt from Congress to make this a permanent and mandatory measure. Meanwhile we're going to keep on assessing whether they're implementing this voluntary measure consistently with their trade obligations, and in February they should be outside their trade obligations. Obviously, we will consider what kind of action we could be taking there.

    As to the impact on the industry, there have been different analyses. Obviously, it has some impact on the processing sector, but since the voluntary measure has been introduced, there have been some mitigating measures taken by the industry with regard to the implementation. I don't have the numbers on the actual economic impacts, and we could follow up with the specifics on that, but the work that's been done between the industry and government here in Canada, in collaboration with some of the industry in the United States that was also not especially happy with that voluntary measure, has helped to make sure at least the trade has not been affected in the longer term. There were some impacts in the shorter term, but I'm not aware that there have been significant impacts over the longer term.

    Mr. Mark Eyking: And you don't think it will go through Congress?

    Ms. Suzanne Vinet: We're going to do everything we can to prevent it from becoming mandatory.

    Mr. Mark Eyking: What's your sense so far?

    Ms. Suzanne Vinet: So far we've been fairly successful in keeping it as a voluntary measure, and we're going to keep on working in that direction.

    Mr. Mark Eyking: Okay.

[Translation]

    Mr. Pierre Pettigrew: I was taking my union-prescribed break.

    The Chair: No problem.

[English]

    Do you have a comment?

    Mr. Mark Eyking: It is a big concern in the agriculture industry. We find that it could be a trade barrier and could cause a lot of problems with our producers and our farmers. So it's something we have to keep abreast of.

    Mr. Pierre Pettigrew: We're inviting the Americans to be consistent with what we're doing with the European Union as well, saying we have to respect science-based elements and all that, and that works well in Washington.

[Translation]

    The Chair: Thank you.

    Go ahead, Ms. Lalonde.

    Ms. Francine Lalonde (Mercier, BQ): Thank you for coming, Minister. Marc Lortie was a speaker at an excellent symposium held two weeks ago at UQAM. Much to my surprise, he said that neither Canada nor the United States was interested in what he called the Grand Bargain, namely the FTAA, given the current attitude of our neighbour to the south.

    I've taken a quick look at your report Opening Doors to the World: Canada's International Market Access Priorities - 2003. You maintain in the report that concluding such an accord continues to be your objective. Could one possible alternative strategy be the pursuit of bilateral agreements which we would allow us to wait until the US is in a better mood? Might this also be the strategy pursued by the US? Without further ado, what are your intentions as far as the FTAA is concerned?

    On page 32 of your report, you note that the NAFTA investment chapter was the basis for the investment provisions in the Canada-Chile Free Trade Agreement and most of Canada's FIPAS, or foreign investment protection and promotion agreements. We've always maintained that that was the case, but the report states it very clearly. I'd like to know where you stand on this matter.

    Mr. Lortie talked about rules, standards, electronic trade, energy, transportation rules and so forth. I'm curious as to the areas that are currently the focus of negotiations with the US. It would be interesting to have that information, particularly since you have concluded an agreement with Mr. Lamy - one similar to a free trade agreement. As I understand it, Canada and the European Union are trying to reach an agreement on standards for areas of greatest disagreement between European, Quebec and Canadian businesses.

    Finally, I'd like to focus on GMOs. Does Canada's position preclude us from developing closer ties with European nations?

º  (1635)  

    Mr. Pierre Pettigrew: There are a number of issues to consider and some are fairly complex.

    The Chair: You have two and a half minutes.

    Mr. Pierre Pettigrew: I haven't seen Marc Lortie's presentation, so I can't...

    Ms. Francine Lalonde: It was excellent.

    Mr. Pierre Pettigrew: I'm pleased to hear that. My government's position is that the World Trade Organization is the cornerstone of Canada's trade policy. Our country remains committed to multilateralism. The second most important round of negotiations involves the FTAA, which covers the 34 countries of the Americas. However, this does not preclude our reaching other agreements as we have done with Chile and Costa Rica. This is a very important issue to us. My friend Bob Zoellick is always telling me that in his opinion, the United States are on the same page. The FTAA, which they currently co-chair along with Brazil, remains a top priority, along with Doha, of course.

    With respect to Chapter 11 of the NAFTA, I have always maintained that if we had to do things over again, we would do them a little differently. We would look to our experiences over the past decade with Chapter 11, which works well, and we would take steps to ensure that the points clarified at the trilateral meeting in Washington in 2001, and those points to be hopefully addressed this fall in Montreal, would be integrated into a revised Chapter 11. We are proud of this approach which has served as a basis for change. We feel that it has served people well. There haven't yet been any problems, but some caution is in order. We want to ensure that our fears and concerns do not materialize.

    Regarding the agreement concluded with Mr. Lamy, I was delighted that we undertook at the Canada-European Union Summit to present to our leaders at the meeting planned for December—not the next summit scheduled for Greece in June, but the one after that—a novel trade agreement proposal that promotes expanded investment and trade with Europe, the first agreement of its kind for the 21st century. Unlike traditional free trade agreements where the focus is on tariffs, here the emphasis would be on borders...

    They're signalling to me that my time is up.

[English]

    The Chair: Mrs. Redman.

    Mrs. Karen Redman (Kitchener Centre, Lib.): Thank you, Mr. Chair.

    Mr. Minister, thank you very much for coming.

    I'm on the Prime Minister's task force on women entrepreneurs, and we had a briefing from your department. I know many things are being done well, but one of the challenges for small and medium-sized businesses, which, as you know, produce something like 83% of the jobs and are being created by women twice as quickly as by men, is the fact that Team Canada initiatives and things like that are really out of their snack bracket. When I look through the costing and the estimates of your department, I know there's been some far more extensive outreach than just putting up things on websites. I'm wondering if you can talk a little about how you're letting Canadian business know the kinds of services that your department is able to provide.

º  (1640)  

    Mr. Pierre Pettigrew: One decision I made when I became trade minister, almost four years ago now, was precisely to spend more time reaching out to Canadians to promote the services of our government. I will be doing some of that next week and the week after during the parliamentary break around Easter. I will be going to Halifax, I'm going to Prince Edward Island, I'm going to Moncton, New Brunswick. The following week I'm doing some in the province of Quebec. I went to Regina last parliamentary break, and I've been to a few Ontario cities, doing precisely that all the time, making sure our extraordinary trade commission service is better known, 530 people who are very well integrated into the business community. My department has created, as I announced in November, a virtual trade commissioner. Beyond those 530, we have a virtual trade commissioner now that people can call up very easily, and the follow-up is easy to make. So we are, I think, reaching out to Canadians as never before. I spend a lot of time travelling across Canada and going to chambers of commerce and business groups explaining what those services are. But you are right, we must always do more of that.

    Mrs. Karen Redman: There are some real success stories. As our task force has travelled across Canada, we've seen some amazing ways that your department is facilitating bilateral trade missions. I think back to the days of Sergio Marchi and the first women's trade commission that went to Washington. Aileen Carroll and I were both on that with our colleague Sarmite Bulte, and it created real connections.

    I commend your work. I also want to reinforce the fact that you're looking at the efficacy of your programming. I think it's really important that you measure what you're doing. I see that's built into your plan, and I think it's terrific.

    Mr. Pierre Pettigrew: Thank you very much.

    The Chair: Mr. Obhrai.

    Mr. Deepak Obhrai (Calgary East, Canadian Alliance): Thank you, Mr. Chairman.

    Minister, I know you well. You're a very optimistic man, and I see that reflected in your report. As you gave your report, I saw the tremendous amount of time you put in defending the position we have with the U.S.A., which tends to tell me that you are indeed worried about our relationship with the U.S.A. Otherwise, you wouldn't have spent so much time on it.

    Mr. Pierre Pettigrew: I attend question period every day, and I see you spending too much of your time saying things are going so badly.

    Mr. Deepak Obhrai: Never mind, let's go to the other question, the main question here. This is to do with agricultural subsidies. It is becoming critically important. Up to now we were worried about agricultural subsidies because they affected Canada and everybody else, but now new players have come into place, especially, as you mentioned, the developing world, with aid and everything. For 80% of the developing world, trade is in agriculture. Yet the development round in Doha, which recognized that, has a problem, as France has now stated quite clearly that they will not remove agricultural subsidies till 2013. They don't mind giving aid, which, of course, is nonsense, because total aid to third world countries is very low and the subsidies are very high. The problem I'm see coming with France's position is that since the last Doha round deadline passed without coming to an agreement on agriculture, now it will be left to you and the ministers to address that in Cancun.

    I am not an optimistic man like you. I think the Doha round will collapse if France continues saying it will not do anything on its agriculture until 2013. I understand the G-8 meeting that is going to take place in France is going to bring up this issue. Do you want to tell us what exactly your position is going to be, considering that you've got such a strong resistance?

º  (1645)  

    Mr. Pierre Pettigrew: The European Union has a margin of manoeuvre it has obtained from the countries that we believe will need to be widened. At this moment France is not interested in doing that, but that's their policy, it's their matter to resolve it. The European Union, from every conversation I've had and every statement I've heard from Pascal Lamy, is one of the strongest supporters of this Doha round. They are very ambitious about trade liberalization. They are very ambitious about the development round. Europeans are sincere about that. My view is that Europeans will evolve when they realize how important it is for the developing countries to develop international trade rules on agriculture. They will contribute to it, because they do want that round concluded by 2005, they're committed to it. When the time comes, I hope they develop the appropriate margins of manoeuvre and the flexibility to allow that round to work and to function. It is quite clear, in my view, that there will need to be something in international trade rules for agriculture that has not been covered very well up to now by the multilateral system.

    Mr. Deepak Obhrai: So you're discounting France's saying it won't do it till 2013?

    Mr. Pierre Pettigrew: I'm saying the European Union has work to do on the margins it has at this moment in agriculture. I know lately there have been some statements coming from one country or the other. I don't want to single out any country, but in my view, the European Union will have to obtain some flexibility, some margins of manoeuvre if we want to make progress. Every indication I've received from my European colleagues is that they sincerely want this. France is a country that on agriculture has specific positions, but it is also a country that means very well on the development side of things. Hopefully, they will hear the message from the whole planet.

    Mr. Deepak Obhrai: So you don't think the Doha round will collapse?

    Mr. Pierre Pettigrew: I am one who will work very hard, and I represent a country and a government that is very dedicated to its success.

    The Chair: Thank you.

    Mr. Nystrom.

    Mr. Lorne Nystrom (Regina—Qu'Appelle, NDP): Thank you, Mr. Chair.

    Minister, it's good to see you here today.

    I wanted to ask you three questions about the steel industry. A lot of us had the steel workers doing some lobbying this week in our offices, with the support of the industry. They're concerned about the depressed prices. Some companies are close to collapsing, I understand. I want to ask you why the government hasn't moved quickly in bringing in some tariffs on steel. The Americans moved about a year ago, and apparently, our government has been very slow off the mark. What's the reason for that?

    Mr. Pierre Pettigrew: We went to the CITT only weeks after the Americans went.

º  (1650)  

    Mr. John Duncan: It was 24 hours.

    Mr. Pierre Pettigrew: That quickly? How effective of us.

    The report we received in August was the subject of very close consultations with the industry. I know they've been around in the last few days expressing a view that has been evolving since August. Let's be clear, the government has been sitting with the steel industry. We are well aware of the difficulty it is going through at this moment with global over-capacity and what could be happening to Canada, given the fact that the United States market has been closed.

    What the Americans have done has now been declared illegal by the WTO. So before doing something that has just been rejected by the WTO, you will understand that our government needs to think about it. We need to measure our options. It will be the Minister of Finance, who has responsibility for these matters, who makes the decision. I'll be part of it, of course, and I will work with my colleague the Minister of Finance. But for many months the steel industry was very happy with our having received the CITT action and was waiting. That was done in close consultation with them. I was part of those consultations.

    Mr. Lorne Nystrom: Can you tell us why the responsibility for this file has been shuffling from minister to minister? This is one thing they raised this morning.

    Mr. Pierre Pettigrew: No, it's not being shuffled around at all.

    Mr. Lorne Nystrom: I understand first it was Paul Martin, then it was you, then it was John McCallum for a while, and then it's down to John Manley.

    Mr. Pierre Pettigrew: I'm the Minister for International Trade. I have my responsibilities as Minister for International Trade, and that is very important to me. I've been following for a long time the OECD process, and I've discussed with my counterparts in the United States what they intend to do. But the responsibility for tariffs in this country and the responsibility for safeguards action of the CITT belongs to the Minister of Finance. That's always been the case, it's not been changed at all. I don't know since when this has been the case, I'm much too young to tell you, but as long as I've known it, it's been the Minister of Finance who has responsibility for the CITT and tariff lines.

    Mr. Lorne Nystrom: I don't know why you say much too young, but--

    Mr. Pierre Pettigrew: What I mean is that even from my private sector years, I've always known it to be the finance minister who has that job.

    Mr. Lorne Nystrom: When do you expect a decision to be made on it?

    Mr. Pierre Pettigrew: You'll have to ask the Minister of Finance.

    Mr. Lorne Nystrom: He was asked that in the House today.

    Mr. Pierre Pettigrew: And he gave you his answer.

    Mr. Lorne Nystrom: Yes. It was not a very forthcoming answer.

    Mr. Pierre Pettigrew: The Minister of Finance has that responsibility. When he seeks my advice, I give him my advice. We work very well together.

    Mr. Lorne Nystrom: With the CITT, can you tell us why you haven't amended the appointment process so that there's a representative from the workers on the board of the CITT?

    Mr. Pierre Pettigrew: You should ask the Minister of Finance. The representative from the official opposition has raised it as well. Frankly, I don't know.

    Mr. Lorne Nystrom: What is your position on that? Would you recommend that to the minister?

    Mr. Pierre Pettigrew: I trust my colleague the Minister of Finance to make the appropriate decisions, much as he trusts me on my responsibilities..

    The Chair: Mr. Duncan, just a short one, please.

    Mr. John Duncan: Thank you, Mr. Chair.

    I understand the EDC annual report was tabled in the House today. I've had a quick look at it. It's called “Message to the Shareholder”, and I assume the Canadian taxpayer is still the shareholder. If you go to page 65, you'll see we've got impaired loans receivable, allowance for losses, provision for credit losses, for a total of about $7 billion. In the interest of clear and concise accounting, I would suggest that on the allowance for losses, the $4 billion number is less information than we would see from a publically traded company declaring its losses and the EDC is hiding behind the Privacy Act. There's no reason, when a loan is written off, the entity cannot be named. I'd like to request that specifically.

    Second, I'd like to ask the minister if he could provide a breakdown of EDC financing by country of origin for financial transactions and by province of origin for the initiating corporation. I know you can't do that at this moment, but I'm wondering if I could once again ask for that to be a response in writing.

    Mr. Pierre Pettigrew: I don't know if it is feasible, but I'll ask them. As you know, EDC is an arm's-length institution, and I am sure all opposition parties are happy that it is at arm's length from the government, so there's no political interference in the process. I will look into the possibility of answering your question more specifically.

    Indeed, the Canadian government is the shareholder. As far as taxpayers are concerned, I would like to remind you that in 50 years the Government of Canada has invested only $1 billion for EDC's corporate account. So the Canadian taxpayer has put in $1 billion in 50 years. It now has a portfolio of over $50 billion, because we've left the money in EDC, we've never taken any of the profits. EDC is profitable and making money for the Canadian taxpayer, but we leave it there to help other exporters to do better in the markets. We, as a government, don't make money with it. We make sure the Minister of Finance continues to allow that.

    I'll turn to the deputy on the more specific question you had, because Mr. Len Edwards represents the shareholder on the board of EDC.

º  (1655)  

    Mr. Leonard J. Edwards (Deputy Minister, International Trade, Department of Foreign Affairs and International Trade): I don't have the document in front of me, so I can't turn to page 65 and see exactly what you're referring to. I'd be pleased to do that and get an answer back to you.

    Mr. John Duncan: Why can't you identify who the loan was made to? Once it's written off, the private sector would identify it in their shareholder report, they would demand it. So why would EDC hide behind the Privacy Act, when private companies don't hide behind it? Indeed, the public regulatory mechanism requires that kind of information to be put out there. That's my question. It's very simple, it's the principle involved.

    Mr. Pierre Pettigrew: But I don't think banks do it either. When the banks table their reports at the end of the year, they won't tell you where they made losses. They'll give you their balance sheets and say, we've lost some accounts. It happens in the private sector too.

[Translation]

    The Chair: Thank you very much, Minister, for coming here today. Thank you as well, Mr. Edwards, Ms. McCallion and Ms. Vinet.

    There are no further questions and it is now 5 p.m.

[English]

    I just want to let you know we're waiting to see you again. The government is going to table its response on North American relations by May 14, and we want to be sure you can come before the committee regarding these recommendations.

    If you want, I'll allow Monsieur Bergeron a very quick question.

[Translation]

    Mr. Stéphane Bergeron: I also see some of these qualities in you. Minister, earlier, you deftly handled the question about the aid program for the softwood lumber industry by diverting our attention to the reopening of the plant in Saint-Fulgence, which as we know, was temporarily closed. You tried to have us believe that the plant was reopened as a result of the aid program.

    My question...

    Mr. Pierre Pettigrew: If the plant is open, it doesn't need any aid.

    Mr. Stéphane Bergeron: That may be true, but as you know, other plants are in need of assistance, Minister. When can we expect to see phase two of the government's program that you spoke of?

    Mr. Pierre Pettigrew: First of all, you need to understand one thing. The number of closures in the United States is twice as high as in Canada. That's a fact.

    We also need to be realistic. To implement an aid program to deal with situations that have other root causes...What I'm saying is that Human Resources Development has been vigilant and has taken a proactive approach in dealing with communities that have been especially hard hit. Industry Canada also relies on specialized tools to do its work.

    We have freed up funds for industry associations. This had never been done before and some argued that I was setting a precedent. However, I felt that it was worth it because we were dealing with an extraordinary situation and these associations were making an effort from an information standpoint.

    Industry is very happy. If we provide some funding to associations, then they are off the hook. We have initiated some measures in keeping with international rules which do not leave us open to charges of subsidizing our industries or of imposing countervailing duties. I know that my colleagues, the Minister of Industry and the Minister of Human Resources Development, are monitoring the situation closely.

»  (1700)  

    Mr. Stéphane Bergeron: And when can we expect phase two to be launched? You did mention that there would be an announcement at some point.

    Mr. Pierre Pettigrew: I did?

    Mr. Stéphane Bergeron: The government did say that a second phase would be announced at some point down the road.

    Mr. Pierre Pettigrew: When you get around to discussing the budget votes of the minister who made that announcement, then you can ask him that question.

    As far as my responsibilities are concerned, tremendous progress was made on the international trade front in January and February. I expect to resolve the one small outstanding problem with Quebec in the next few days. As far as transition measures are concerned, I hope to be able to bring the parties closer together so that an agreement can be reached. Together with forestry policy bulletins, this agreement would provide a long-term solution to the problem. That's what matters to me.

    The Chair: Thank you very much, Minister.

[English]

    Once again, thank you very much.

[Translation]

    The meeting is adjourned.