FAIT Committee Meeting

STANDING COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE

COMITÉ PERMANENT DES AFFAIRES ÉTRANGÈRES ET DU COMMERCE INTERNATIONAL

EVIDENCE

[Recorded by Electronic Apparatus]

Monday, March 22, 1999

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[Translation]

The Acting Chairman (Mr. Bernard Patry (Pierrefonds—Dollard, Lib.)): Good morning, colleagues. Welcome to Quebec City.

This is the 104th meeting of the Standing Committee on Foreign Affairs and International Trade. Pursuant to Standing Order 108(2), we will be examining Canada's trade objectives and the agenda of the World Trade Organization, as well as Canada's priority interests in the process to create the Free Trade Area of the Americas.

We have the privilege once again to welcome Professor Ivan Bernier of the faculty of law of Laval University, who will speak to us this morning about the World Trade Organization as a forum for particular sectors. Mr. Bernier is appearing as an individual witness. Welcome, Mr. Bernier.

Mr. Ivan Bernier (Professor, Faculty of Law, Laval University; Individual Witness): Thank you, Mr. Chairman. I would like to welcome the members to Quebec City.

I will be speaking about the WTO as a forum, but I would first like to remind you of my interest in this issue of the WTO and trade negotiations. This interest obviously comes from the fact that I have been teaching this subject matter for nearly 30 years, and there have been great developments in this area since the 1960s.

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My students right now have a tremendous interest in these issues. They increasingly understand the importance of international economic relations and the fact that borders are losing some of their importance from an economic standpoint. They have open views about the future. They take a critical approach and ask serious questions about globalization, but they generally see the future lying in that direction.

That said, I would first like to talk about the organization as a forum. The negotiations that will start in the year 2000 are the next step in a long process going back to 1947-48, but we need to be aware of the special aspects of the negotiating process since the WTO's creation.

Where the membership of the organization is concerned, it is important to keep in mind that the WTO has become truly multilateral in the broadest sense. There are around 134 or 135 members, and most states that are not yet members have asked to join. It is therefore a major international forum; I would not say that it is comparable to the United Nations, but it is certainly on the same scale.

What remains is to bring in the other member states of the former Soviet Union which have become independent and also, perhaps even more importantly, China. Negotiations to bring China into the WTO began in 1986, and for the last few years people have been announcing that China would be joining within months. This is still a difficult issue, involving in particular the United States and China, which are both great powers in their own way.

If China's entry takes place this year or next year, it will necessarily have an impact on future negotiations. China carries weight with other developing countries and will no doubt defend ideas that are not necessarily shared by western countries. It should be kept in mind that there might be a different dynamic that develops because of that.

We know that most developing countries that would previously have opted to work within the United Nations Conference on Trade and Employment have now joined the WTO. They will be trying to exercise collective influence from within and, if they have China's support, that will change things somewhat.

The other thing that might affect and change the way the negotiations go is the need that has been talked about often over the past six to eight months to open up the WTO, to make it more transparent, in order to make room for non-governmental organizations and what is called civil society.

The World Trade Organization has made opening up to the outside world one of its objectives. It now has a policy with respect to non-governmental organizations and civil society, and there is a good chance that that will substantially alter the negotiating process.

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In this context, Canada will have to do a lot more persuading than was necessary before. Others will have to be convinced of the merit and necessity of the type of development fostered by the WTO. Canada can rightly point out that since 1947, first with GATT and now with the WTO, the legal framework for international trade that has been developed has been favourable to this country and to all countries. The basic idea was to put in place a system of law for international trade rather than a system based only on economic power and market forces. Canada has had a significant influence and has been able to assert its interests adequately, and it must continue to negotiate and put forward its views in this framework.

There are also some problems worth noting. First is the steady trend toward a broadening of the WTO's scope of concern. In the last round of negotiations, the traditional areas under GATT were expanded to include intellectual property, some investment aspects and services. The forthcoming agenda may include topics such as competition and investment, to mention just two areas.

This plethora of new issues dealt with under the WTO and the signing of agreements in these various areas mean that there is now the risk that the agreements and commitments may contradict each other. A well-known example is the inconsistency between the GATT and the General Agreement on Trade in services, the GATS. Most recently, this conflict was highlighted in the banana dispute which you have all heard about and the magazine issue which Canada is directly involved in in the present.

In these disputes, the problem has arisen of trying to determine whether national initiatives involved services or goods, and the decision made often surprised the governments concerned. Having worked on these services issue, for example, I think that it is inevitable that we will see more and more of this type of dispute. Clear rules in this respect will need to be developed in the upcoming negotiations.

Dispute resolution is another important aspect that absolutely needs to be discussed because it has taken on greater importance with the creation of the WTO. Since January 1, 1995, no fewer than 160 complaints have been made to the WTO, which is practically more than the number of complaints made between 1947 and 1994. Since some of those complaints are brought by a number of countries, the same issue can come up with different parties involved, but the total number of disputes now before the WTO is high and the pace does not seem to be slowing down.

Just this week, it was announced that Canada might bring a complaint to the WTO against the United States on the transporting of animals. This is the latest issue. It is worth noting that Canada currently has eight or nine complaints before the WTO. We are realizing the genuine importance of the dispute settlement mechanism. It is important to look at the results that have been obtained since implementation of the dispute settlement understanding adopted in 1994.

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One thing that stands out is that the dispute settlement process has increasingly been brought into the legal field. From 1947 right up to 1970 or 1980, the process left considerable room for the political aspect and negotiation. Gradually, in particular in the early 1970 and the 1980, the legal aspect became more important. With the new dispute settlement mechanism that we have now, it is clear that the legal is the dominant aspect, but this raises certain problems.

First of all, nearly all the rulings made by special groups are appealed. At the appeal stage, rulings are much more legal in nature than those made by special groups, since they are made by judges with professional law experience, who have sat as judges for many years and who clearly are making their rulings basically and exclusively according to law, as it should be.

When the time comes to implement these rulings, there are difficulties that arise. Given the very limited scope for negotiation and political initiatives, states on a losing end generally try to implement the ruling by analyzing it in order to see what is possible. Rulings generally specify what is incompatible with WTO law. Parties whose interventions or legislation have been deemed to be incompatible will increasingly try to find a solution that is compatible, so that we are left with implementation measures that often seek to attain the same objectives as those that have been ruled against, but the new measures are compatible with WTO requirements.

This is exactly what is happening with the magazines. Canada is convinced that its legislation meets the requirements of the World Trade Organization and NAFTA and that it can therefore take legitimate action to attain its objectives. The United States are seeking to achieve the same objectives as Canada, only in a different form. A similar analysis can be made, to a certain extent, in the banana export case.

I think that we will be increasingly faced with this type of problem. There may be a need for clarification or initiatives by negotiators to set out exactly what should be resolved at the political level, through negotiation or through legal means.

For the moment, negotiation is used only in implementing the ruling, and we are aware of the outcome of that. There are threats of reprisals, counter threats of more reprisals, and no real attempt to determine whether the new measures that have been adopted are themselves legally compliant. There is really a problem there that I feel needs to be clarified.

There are also peripheral problems. There are problems that the Secretary General of the WTO describes himself as being peripheral, as being problems that the WTO cannot resolve on its own. These include labour issues and social clauses that people would like to see put into international trade agreements.

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There are also problems with respect to the environment and WTO rulings in this area and potential conflicts between environmental agreements and trade agreements. These are increasingly significant difficulties that the WTO is faced with. Last week the World Trade Organization organized a conference specifically to deal with these environmental issues.

I think that in the field of labour, social issues, environment and culture, clarification is needed. I would suggest that the Canadian government make a special effort to open a debate around the issue of relations between WTO law and law coming under other international organizations.

In the labour field, for example, one might look at relations between the International Labour Organization and the WTO; in the environmental field, relations between the WTO and environmental organizations. With respect to culture, the future of relations between the WTO and UNESCO should be looked at.

As you know, the advisory group on cultural industries suggests in its report that an international convention be negotiated. If that convention is not negotiated under the WTO as such, it can only be done under UNESCO. The problem there is the potential for conflict between UNESCO and the WTO on those issues.

Where peripheral problems are concerned, therefore, I feel that it would be important for Canada and the other member countries of the WTO to look closely at the need to develop relations between the WTO and the specialized organizations in the particular fields.

I will deal quickly with these specific sectors. An agreement on services seems to me to be particularly important. The negotiations slated to begin in the year 2000 will necessarily include the services sector; there is no choice on that. The text of the agreement itself calls for negotiations on services beginning in the year 2000.

First, it should be noted that the General Agreement on Trade in Services is in its preliminary stages. It will therefore be broadened during the negotiations, just like GATT increased in scope during the negotiations that led to the lowering of customs duties and non-tariff barriers.

Moreover, the agreement on the Uruguay Round included plans for more negotiations. The requirement was for three specific areas, which I would like to comment on briefly.

The first issue on which negotiations were to continue was subsidies. These negotiations have just begun, and it is likely that they will continue under the WTO. The same is true for safeguards in the areas of trade in services and government contracts. In these three areas, we might therefore see developments.

The subsidies area alone will obviously assume considerable importance. In some areas, like culture and services, subsidies are quite widespread. If we end up with a subsidy regulation system that is at all like what is in the WTO's agreement on subsidies and countervailing measures, there will be major constraints applied to subsidies for services.

In this regard, I think that the upcoming negotiations will need to take a close look at existing Canadian measures that subsidize the services sector to see if it might be necessary to ask for reservations in various sectors.

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This might be a long and difficult exercise, but I believe it is absolutely necessary to do it, and to do it well, if the government is to be left with any room to manoeuvre.

With respect to broadening the scope of the agreement through the year 2000 negotiations, there will be some issues raised. These issues resulted from the implementation of the General Agreement on Trade in Services, particularly relating to the link between investment and services.

As you no doubt know, it is often necessary to have a trade presence in the country where you want to export services. As soon as we start talking about a trade presence, we are probably talking about investment, and the question arises as to whether such investment to establish a trade presence comes under the agreement on services or the agreement on investment. Once again there is a potential for conflict between services and investment. This problem has not been resolved and it should be carefully examined so that specific measures can be taken.

The same can be said about the mobility question. People often need to go from one place to another in order to be able to provide services. At present, regulations on the movement of people for the provision of services are inadequate. Immigration rules are generally applied to foreign citizens who want to come to Canada, but the question that will arise will be the extent to which these rules will continue to be compatible with the requirements to facilitate the movement of people for the provision of services.

All these questions are complex and we absolutely need to find clear answers, otherwise the agreement on trade and services will lead to many problems.

As my last point, I will deal with investment and competition. There is a fairly strong possibility that investment will be the subject of an agreement and this is being debated by the WTO. I believe that Canada's recent experience makes it necessary to reexamine part of the plan negotiated by the OECD and perhaps the standards in NAFTA.

I am referring here in particular to the problems of creeping expropriations and the complaints Canada is facing in this area. If investment is negotiated, these issues absolutely must be clarified, since there can not be any real agreement on investment if negotiators stick to the proposed MAI text and NAFTA. I suspect that the general reaction in many countries will be the same. An agreement that enables firms to challenge government intervention so easily will be deemed unacceptable.

I would also like to mention that in order for negotiations on an investment agreement to be successful, a competition agreement will have to be negotiated as well. During the OECD investment negotiations, the general feeling was that that agreement primarily benefited large companies. I think that that view does not really reflect the reality. The agreement benefits both exporting and importing countries, it helps resolve many investment-related problems and it facilitates investment, although it does contain some shortcomings. The main one was that people felt that the interests of investors were given priority, which is understandable.

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To counterbalance that, it is important to have a competition agreement to cover the private activities of large companies, forcing them to work within a defined competition framework, which would be acceptable to all WTO member countries and would be binding in certain contexts where investment is linked to competition. I think that that is something that might be worthwhile.

One problem that must be mentioned is the relationship between multilateralism and regionalism. I want to tell you that I have real doubts about Canada's strategy of negotiating free-trade agreements with various countries around the world.

I think that this is a counterproductive strategy that will be detrimental and has already begun to be detrimental to the World Trade Organization. This strategy raises concerns, and I could show you many statements by the Director General to back this up. Mr. Ruggiero is concerned and Canada should perhaps reexamine its strategy.

There is a danger of creating contradictions. There is a danger of balkanizing international trade organizations and making their actions contradictory, thus eventually weakening the WTO. I would suggest that this approach be reexamined, which is not to say that all undertakings in this area should be abandoned, but rather that this strategy of signing a plethora of agreements should be reassessed.

The Acting Chairman (Mr. Bernard Patry): Thank you very much, Mr. Bernier. You have given us an overview of what is happening and especially what will be happening at the WTO. We will now take questions.

[English]

I'd like to ask Mr. Obhrai to ask the first question, please. Mr. Obhrai.

Mr. Deepak Obhrai (Calgary East, Ref.): Thank you.

You'll have to listen to the interpretation.

It was a very interesting analysis from you. This is my first hearing. What I'm interested in.... You talked about the law. You talked about implementation of the law and going through the courts. I presume this would be in the framework of the WTO law you're talking about, which is binding. Nevertheless, it seems to me that you mentioned a very important fact about WTO not being transparent, having the NGOs, the other groups not having an input in that. So what comes out of this is a narrow ruling, I would presume—I'm just looking for your opinion—and then countries with their own political objectives intervene there.

You mentioned the issue of China. I would presume you were talking about China coming in and bringing its own political agenda into the picture. We also see that happening here. There's a debate going on in Canada in reference to Bill C-55, which is again, from my party's point of view, a political agenda on the part of the government. That's our view, with the Americans having a different view and counter-vision.

In your study and view, as you open up this whole wide scope and more countries join in, how much impact is it going to have on free trade, on the WTO, when all this political pressure is applied and your law is not tallied as to the books? How do you see that, including the NGOs coming in and other social services?

[Translation]

Mr. Ivan Bernier: I will answer in French. What we can predict about China's entry and the influence that it will have on other developing countries is that it will have an impact on the pace of negotiations and more particularly the potential for recognition of an increasing number of special situations and exceptions for developing countries. As well, problems relating to culture and labour will take on a more important role, but may not always move in the direction we would like.

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Therefore, where labour and the environment are concerned, one might expect to see resistance to the establishment of strict rules requiring the developing countries to implement policies that they might in fact be unable to implement. This is currently the case regarding the insertion of social clauses in the trade agreements. There is almost unanimous opposition among developing countries to any initiative to put this type of clause into the WTO.

Developing countries are showing strong resistance to the idea of the WTO getting involved in the environment sector. Their fear is that this might lead to restrictions on exports from developing countries whose products did not comply with environmental requirements which they were unable to meet. That is the type of problem that might increase to some extent.

Moreover, the importance of issues involving employment and development will be taken into account, and greater attention will be paid to the role of the economy in human development. I believe that we will hear this kind of talk more often, given that the system is being opened up to NGOs and civil society.

In my opinion, then, these negotiations will be different and more complex, but they will require negotiators to have a better handle on the scope of the systems that developed countries have traditionally implemented within their own borders.

I do not know if that answers your questions.

[English]

Mr. Deepak Obhrai: I'm looking from the perspective here that WTO came out to promote free trade in everything, and with the advent of all this, I am wondering if the course in the future is WTO's mandate will be reduced to such a level, with all the exceptions you just mentioned and the other political interests, that really WTO becomes just another ineffective organization. Is that a possibility? That's what I hear from your analysis of exceptions and everything coming in with all those....

[Translation]

Mr. Ivan Bernier: Efforts will have to be made to resolve this dichotomy in the interests that will be more apparent in the new WTO, but I'm not necessarily prepared to say that the WTO will be weakened, that it will lose influence or that we should fall back only on regional organizations.

The WTO, or the GATT, has demonstrated through a number of crises in the past that it was able to land on its feet, and I still have the distinct feeling that these problems will need to be solved and that they will be solved. The answer does not necessarily lie with regional agreements. Ultimately, things will have to be done at a multilateral level.

In the investment field alone, the value of a multilateral agreement on investment is precisely that it includes developing countries and all countries in the world. I believe that we need a forum of this kind, but things will be more complex and difficult than in the past.

The Acting Chairman (Mr. Bernard Patry): Thank you, Mr. Bernier.

Mr. Sauvageau.

Mr. Benoît Sauvageau (Repentigny, BQ): Mr. Bernier, I appreciate your taking your valuable time to appear before us as an individual witness. You already participated in the round table in Ottawa. It is interesting to hear your views in greater detail.

In your study of the major issues relating to the WTO, you brought to our attention some 75 questions which you will certainly not be able to answer in the next 10 minutes. If by chance you had a brief to complement the page of notes outlining your presentation, I would be very pleased to read it. I am sure that the other members of the committee would like to as well. You could send it to us later. Is that possible, Clerk? So if you ever have any written material on the many questions you have asked, I would be very happy to see it. I will, however, raise a few of these points during the little time available to us.

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You talked about the problem of China and how its views are different from those of the United States and other western countries, in the event that China joins the WTO in the next few months. Could you talk a little more about those differences? That is my first question.

You also mentioned a process to ward off countervailing measures resulting from rulings of a WTO panel or an appeal tribunal. Do you have any suggestions on how to defend against these rulings?

You also talked about opening the door to civil society. How and why? You talked about links between the ILO, the WTO, UNESCO, etc., and peripheral problems. In the economic arena, there is talk of the IMF and a new architecture, which is the fashionable term. Would you talk about a new architecture for these various institutions governing us, including the ILO, UNESCO and the WTO? Would you go that far?

I come now to my last question. When you took part in the round table on culture, you heard everyone in unison saying that there had to be a convention on culture under the WTO. If I remember correctly, you said that it was perhaps too late to bring this idea up at the WTO, given the timetable required by its agenda. This morning, you have said that it could be proposed at UNESCO. Could you say more about that? If you do not have time to do so, perhaps you could send us your ideas later.

The Acting Chairman (Mr. Bernard Patry): You have five questions then.

Mr. Ivan Bernier: I will answer quickly, given the short time we have remaining. I will start with the question on culture. I did point out in Ottawa that it was probably useless to think of coming up with a cultural convention under the WTO because it was already too late. I do not think that will work.

However, a convention on culture could be negotiated in another forum that would appear at first glance to be a more favourable one, and that is obviously UNESCO. The problem that will arise, though, is the very one that I was mentioning earlier, involving relations between what might be negotiated under UNESCO and commitments that the parties are already negotiating at the WTO. Some way has to be found of resolving those disputes.

I do not think that it is impossible; the problems are similar to those that are being dealt with currently in the environmental field. People are working hard to find a mechanism to make it possible for multilateral agreements on the environment to be established in the context of the WTO so that there can be relations between the organizations governing those agreements and the WTO. That covers the last question. I will take them in reverse order.

With respect to peripheral problems, I think there is in fact a trend underway. We are starting to see inter-relationships among the various types of international organizations, and there is an increasing need to structure these relationships more clearly.

At present, an international organization can have observer status with the WTO, but that is not enough. It is not what I have in mind. I feel that we need much more effective and concrete measures to be able to resolve problems among the various organizations and agreements.

Where civil society is concerned, you asked how and why. I think that the only way to proceed is to continually promote greater transparency and facilitate access to relevant documents. In an ideal world, it would be great to see all groups who make up civil society having a say in the negotiations, but that is utopian. It is impossible to negotiate with 100, 200 or 300 participants. There has to be a negotiating organization or group.

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But mandates can be defined. In the European context, we know that the Commission has to develop policies that meet the needs of all member states, and within the member states, there are also specific groups that assert their views. I think that a country like Canada and other major countries of the WTO have the potential to develop such mechanisms.

A meeting like the one today is part of the process to set up these mechanisms. However, there are other possibilities as well. Sectoral ties can be established between organizations to increase their participation in certain sectoral discussions so that they are not working only at the world or general level. I think that there is a need to develop sectoral approaches to resolve problems that come up or other issues. However it is done, I think that the main thing is to look further, to try to get involved in what Canada is doing and to explain it, and to convince people of the value of the measures being put in place.

On the question of countervailing measures resulting from rulings, that is a genuine problem. I would like to underline here today that we must absolutely get out of this situation in which countries can cause harm to various other countries simply by announcing countervailing measures. I am sure that you understand what I mean by that.

The message that we will need to get across clearly in the context of the WTO is that a country cannot act in that fashion. A country could use countervailing measures once it has been authorized by the WTO to do so. The measures should not be announced until after authorization to use them has been given.

In the United States, because of section 301 of the Trade Act, it will clearly be difficult to change the present situation, which suits American firms and allows for considerable pressure to be brought to bear. I believe that it will be difficult, but the situation must be resolved. In order to do so, it may be necessary, in addition to prohibiting that type of countervailing action, to develop more effective consultation and discussion mechanisms for implementing the rulings.

There is a period of 12 to 15 months following the ruling during which the countries concerned can hold discussions with WTO assistants. I think that some lessons are being learned from this, and no doubt more specific rules will be needed to facilitate dispute settlement instead of making the situation more complex and difficult.

Finally, there was the question of China and how its views are different from those of Western countries. In its bid to join the WTO, China obviously wants to promote a more favourable context for developing countries, one that does more to take into account their difficulties. That can surface in various areas, such as intellectual property, investment and other, similar sectors. I think that China and other developing countries will come with more concrete proposals in the form of official requests. These would be proposals on behalf of developing countries, in that context.

The Acting Chairman (Mr. Bernard Patry): Thank you very much, Mr. Bernier.

We will now give the floor to Mr. Bachand.

Mr. André Bachand (Richmond—Arthabaska, PC): As my colleague, Benoît Sauvageau, said, there are a great many questions to discuss. Over the course of this and the next few weeks, we will have the time to ask them and to get much more comprehensive answers.

I would like to ask you as well as the other witnesses to give me an overview of the WTO. However, I think that five minutes would not be enough time to do so. So we will stick to more specific points. That was my first comment.

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You expressed your concern about the danger of reducing the WTO's importance through the FTAA, the Free Trade Area of the Americas, and through all the bilateral, trilateral and regional agreements among various groups of countries. I do not really share that concern. I think that these agreements will only put proper and constructive limits on the WTO's future influence.

Personally, I would encourage the Canadian government to quickly conclude suitable regional agreements at the level of the Americas. Why? Because even if individual countries are represented in international negotiations, country groupings, like Europe, North America, South America and Asia, are also represented directly or indirectly, and there is often a consensus within a group.

At present, Europe is getting ready to adopt a common position with respect to the WTO, in which it has very considerable political, demographic and economic weight. Canada must also work with regional allies to be able to hold its own against positions held not by individual countries but by blocks of countries. One could even say that continental blocks are being built. I therefore think that it is all right to use this strategy, but in a constructive way.

That was a comment. I will now move along to more specific things relating to your experience and background in law.

We often hear about NGOs and civil society, and therefore individuals, not having a voice at the WTO at special groups, panels or even at the appeal stage. But some people would go farther and say that NGO and civil society could lodge complaints. What is your view of this, given the position of some countries that feel the need to maintain their sovereignty in the area of legal procedure?

I mention that because my second question is along those lines. I want to talk about the MAI. As you know, the MAI negotiations failed. People blame culture, but I think that it was much more complicated and that there was more than culture involved.

Under the MAI, firms had the right to take legal action and thereby deny governments an incredibly important aspect of their sovereignty, which I feel was very dangerous. Do you think it would be possible for entities other than governments or States to be able to lodge complaints?

More specifically, and still on the subject of the MAI, do you think that our negotiations on investment are being used to try to bring in by the back door what could not be brought in by the front door?

The MAI did not succeed. It received the great deal of publicity very quickly. For two months, it was on the front pages. There were protests, such as Opération SalAMI in Montreal, etc. Do you not think that the media is being used to drown.... The process that failed for the MAI is going to be repeated in these very broad negotiations, and the results may will be the same. There is still the legal point of view, professor Bernier, regarding who can appeal, etc. So there is a link with the MAI.

Mr. Ivan Bernier: I think that in view of recent WTO decisions, we can see the beginnings of greater openness to participation by various groups, but it is fairly limited. It is not being done directly, but a group can submit a brief to its own country, and the national government can put it in its own brief.

Mr. André Bachand: Mr. Bernier, you are not talking about the Reform Party, which... [Editor's note: Inaudible]

Mr. Ivan Bernier: No. In the context of a ruling of the environment in the United States, environmental groups succeeded in getting some of their own demands into the American brief.

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That said, the groups in question asked to be able to submit a brief directly to the WTO, and not through their government, so that it would be taken directly into consideration by the special group. But the special group refused, saying that it was up to the governments to do that. Yet we do seem to be seeing the beginning of a trend, and it may be possible to do things under certain conditions. That is about where we are.

Regarding more direct participation in the dispute settlement mechanism or in the WTO, there is no serious consideration being given to that. Much more is being done in the area of consultation.

You are right about the MAI. The fact that investors could freely challenge national regulations was a major problem. The concern is not so much that investors have a right to challenge regulations, but that they have a much greater scope for action than they should have been given. That means that, in the case of an expropriation, an investor can complain directly and ask for arbitration, but when we start talking about situations that are equivalent to expropriation, we are not really dealing with expropriation. Anything can be deemed equivalent. Any investor who feels threatened by a government measure that might affect their firm's operations or profits in a serious way can initiate a challenge. That is the trend we are beginning to see now.

Will that also happen at the WTO? If the investment issue is to be negotiated under the WTO, that door that was opened absolutely must be closed. Investors must be able to complain about specific and limited things involving a genuine expropriation or similar measures, but certainly not, as was the case, for situations equivalent to expropriation, which opens the door very wide for anything. That is the real problem.

The Acting Chairman (Mr. Bernard Patry): Thank you, Mr. Bernier.

Ms. Folco.

Ms. Raymonde Folco (Laval West, Lib.): Mr. Bernier, this is the second time that I have had the pleasure of listening to you.

First, you talked about developing countries and the possibility of China becoming a member; you said simply that this was a new concept and that China might see things differently.

Could you elaborate on how China might perceive its role in the WTO and on the importance of its becoming a member, in particular for developing countries?

Mr. Ivan Bernier: This is something that would have interested—

Ms. Raymonde Folco: I'm sorry, I have to leave the room because I have urgent messages.

Mr. Ivan Bernier: I want to come back to this because this is obviously an issue of interest to members.

It should be understood that China is a major economic power in the making.

Ms. Raymonde Folco: In the making.

Mr. Ivan Bernier: It is a great power in the making because of its immense market. Its market potential is of interest; development has just begun.

If the United States goes into China and Europe does not, the Europeans will certainly be worried. And if the opposite happens, the Americans will also be worried. The market is too large and has too much potential, with 1.2 billion inhabitants, to be ignored.

The fact that this is a developing country is of the utmost significance. China is very much aware of that and is negotiating the opening up of its market very cleverly, often by forcing firms to re-export part of their production. That is why there is currently a trade deficit of between $40 and $45 billion between the United States and China, in favour of China. We are talking about a great deal of money and the amount will only increase. Last week's statistics indicated that the United States' trade deficit with China had increased.

That is true for a number of developed countries as well. If you go around the stores, you can see all the products that are now coming out of China.

China certainly considers itself a major power. In its negotiations for WTO membership, it has shown that it will take the time it needs and will not give in to pressure to make concessions to developed countries or the United States.

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It is taking its time and knows how to defend itself and its points of view, which it says represent the views of developing countries. It wants developing country status. Because of its strength and size, China will force developed countries in the WTO to listen to what it has to say and it will become a sort of leader for developing countries.

Developing countries have had very little weight up to this point in the WTO. Up to now, the basic decisions in negotiations were taken by the United States, Japan and Europe. When the United States sided with one of the other two groups, that meant that the decision was practically clinched.

The repercussions are significant, and it shows that the specific situation at present is subject to change. That is what must be understood. Unless China is refused membership for the next five years, it is almost inevitable that it will be a member of the WTO when the upcoming negotiations take place.

The Acting Chairman (Mr. Bernard Patry): Thank you.

Ms. Debien.

Ms. Maud Debien (Laval East, BQ): At the beginning of our hearings, we met with officials of Foreign Affairs who said that discussions were underway with the provinces on the upcoming WTO negotiations. In your opinion, what are the main aspects that Quebec should emphasize during its negotiations in these discussions? What are the main risks for Quebec?

My second point is more a comment. You were talking earlier about peripheral problems related to the WTO, that is, social clauses, human rights and environmental issues. Would the WTO not be the most appropriate institutional forum for dealing with, clarifying and resolving all these major problems? All countries can put their signature on the major international instruments, but we know very well that those conventions generally have no regulatory or coercive power, whereas the WTO is on its way to becoming the most powerful forum in the world, where nearly all issues will be dealt with.

Mr. Ivan Bernier: To answer your last question, I think that it is dangerous to give so much power to the WTO, especially since the way it works leaves little scope for social considerations or labour and cultural issues; and it is just beginning to take an interest in the environment.

I have been able to track the WTO's growing interest in the environment. It goes back to the beginning of the 1990s, at the earliest, if we're talking seriously. And even at that, there is a gap between what the WTO says about the environment and the environmental action taken under the WTO.

It is not easy to get an organization that has been invented and designed essentially for trade purposes to take into account other types of problems. I will grant you that the WTO has achieved a level of effectiveness not necessarily achieved by others, and that is why people want to put social clauses into the trade agreements.

That is a hybrid solution. The objective is not to turn the WTO into an organization with a social, cultural, environmental and trade mandate, but rather to promote the establishment of linkages and rules with respect to relationships among trade, environmental, labour and cultural issues. It appears that that is the avenue that is being followed right now. Efforts will be made to develop closer institutional linkages to foster, for example, greater consideration of environmental issues at the WTO, without making the WTO into a true environmental organization.

• 1035

Since the WTO plays a role in all these areas, I could say that all issues are important for Quebec, although agriculture is clearly a priority. As we know, there has just been a decision on dairy products, and agriculture is a relatively new sector because it was largely left alone during the Uruguay Round. The measures taken are in the area of support: agricultural subsidies, export subsidies and market access. These are the three major issues in the agricultural sector. There is no doubt that the upcoming negotiations will try to further decrease internal support for agriculture, limit export subsidies still more and open agricultural markets of member countries even further.

Under these circumstances, it is clearly crucial for Quebec—and it also applies to the very promising services sector—to have its own thoughts on the issue and to consider these situations based on its own problems. This is why, in my opinion, the Quebec government recently decided to take steps to consult the agricultural sector about the forthcoming negotiations. These factors will lead to a better understanding of the problems that will be reviewed by the WTO. These things will be achieved with greater ease if provinces show more interest and intervene in these sectors.

Ms. Maud Debien: Thank you, Mr. Bernier.

The Acting Chairman (Mr. Bernard Patry): Mr. Bernier, before thanking you for appearing here today, I would like to ask you a question. You talked briefly about the government procurement agreement. We know that an agreement, albeit one containing many restrictions, was signed by 27 of the 134 member countries on January 1, 1996. Canada, for instance, issued restrictions pertaining to ship repairs and urban transportation. What should Canada's position be with respect to provincial and municipal procurement? Should we proceed or should we issue restrictions, particularly with respect to education and hospital facilities?

Mr. Ivan Bernier: This would be useful. I would be in favour of including provincial procurement, if only to provide greater transparency in the way that these markets operate. There is currently a paradoxical situation under NAFTA, which is not exactly but almost like the situation under the WTO. Under the NAFTA, national governments were required to implement a procurement review system. All procurement decisions made by a government agency are now subject to review if there is any conduct that is contrary to NAFTA requirements. This requirement applies not only to the Americans and Mexicans, but also to Canadians, and it ensures that Americans and Mexicans do not receive any entitlements that are not afforded to Canadians. However, this requirement applies only to federal government procurement. I don't think that it would be a bad thing to have provincial government procurement also covered by such an agreement.

We saw what happened federally under NAFTA. The first 25, 30 or 35 decisions made by government agencies were regularly condemned for incompatibility with NAFTA provisions. Gradually, because of complaints, these agencies began to adjust their way of doing business with the result that, today, complaints are rarely found to be warranted and the agencies are conducting themselves in a much more prudent, objective and neutral fashion than they used to. If this were also the case for the provinces, I think that this would be a gain. I'm hoping that we will go in this direction.

The Acting Chairman (Mr. Bernard Patry): Thank you very much, Mr. Bernier. It is always a pleasure to hear what you have to say, and when you testify as an individual, it's even better. I wish you a pleasant day. Once again, thank you for appearing before us as an individual.

• 1040

Mr. Ivan Bernier: It is I who would like to thank you. I wish you luck and a pleasant stay in Quebec City.

The Acting Chairman (Mr. Bernard Patry): Since we are already running a bit late, we will begin hearing our second witness immediately. I would like to welcome Mr. Paul Crête, the Member for the riding of Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques.

Mr. Crête, I'm convinced that you are already very familiar with the way we work. Thank you for handing out a copy of your brief and I would invite you to begin.

Mr. Paul Crête (Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, BQ): Thank you for allowing me to appear. The remarks I will be making this morning correspond exactly to the mandate that your committee has been given.

I read in the notes that the study undertaken by the committee illustrates very well the new role that Parliament plays in general. I will be speaking more about the role that Parliament wants to play. By becoming a forum, the committee enables the government to consult Canadians democratically before negotiating international agreements. This is indicative of a change in positions—rather than presenting citizens with a fait accompli, they're now able to give their point of view.

I'm particularly interested in the question that you raise in this document; namely, what should Canada's position be in sectors where negotiations must begin in the year 2000, primarily in the agricultural and service sectors? My presentation will focus specifically on agriculture.

On February 20, we held, in my riding, a seminar on KRTB agriculture, namely, Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques, and globalization. I think that it would also be safe to say that our conclusions coincide with those for the entire Lower St. Lawrence region as far as globalization is concerned.

Today I have provided you with a summary of this seminar which was attended by more than 110 participants from the agricultural sector, including producers, processors and elected representatives of the agricultural sector, if I may call them thus. The presidents of the South Shore and Lower St. Lawrence UPAs, which are the two regional UPAs concerned, were in attendance. The opening address, which was to launch the discussion, was given by Mr. Gratien D'Amours, the Second National UPA Vice-President.

I know that you have already heard witnesses who have talked to you about agriculture, that you will hear many others and that other committees are also looking into this issue. I will piggyback on to Mr. Bernier's statement, when he said that agriculture will really be an important sector during the next round, but I will present you with the viewpoint of a region as it faces globalization.

What is the KRTB? This is a very prosperous agricultural region whose economy is based primarily on dairy production, further to the supply management system implemented in Canada in agriculture during the sixties or seventies, with the result being that Quebec has clearly become the biggest dairy producer in Canada. The region I represent is perhaps one of the leaders in this sector.

It is perhaps important to point out that this seminar was the result of an exchange I had with students from the Institut de technologie agricole de La Pocatière, who told me that they wanted to earn their livelihood in agriculture, that they believed that they had the ability and the training required to do so, but that they wanted to know what kind of guarantees the governments could give to them and they wanted to know if they could in fact make a living in agriculture in the future. They asked me: "What's going to happen if I decide to purchase my father's farm and remain in this field? We don't want total certainty, but we do want to know what the conditions for tomorrow's agriculture will be. Are we to assume that in-depth changes are coming? Should we diversify or should we specialize in only one area? In addition to being producers, should we also become processors?" These are the types of questions that the students asked me.

The seminar enabled us to analyze the current situation and I will give you a quick overview of our conclusions. First of all, everyone was fully conscious of the fact that farm income support was going to be reduced. This situation was presented as an impact of the international agreements. However, we realize that Canada has been much more zealous, if I may use that word, than any other country in the world in complying with the requirements of these international agreements, as we saw, for instance, with the milk subsidies. The agricultural participants sent us a very clear message: before Canada takes any other action in the agriculture sector to comply further with the objectives of the international agreements, the other nations of the world have to follow suit with concrete measures.

• 1045

I don't have the statistics with me, but they can be provided to you by people with greater expertise in the field. However, I can tell you that these statistics clearly show that Canada has really adopted a very aggressive attitude in terms of complying with international requirements. Some malicious folks have even said that this was perhaps a way of coming up with an argument to reduce the deficit and that this was the contribution made by the farmers to reducing the deficit.

Secondly, the participants said that they were very worried about the impact of this opting out. We are lagging behind in finding new technologies, in coming up with better-adapted products and in establishing short-term management programs. We saw the need to intervene in this sector when the pork prices fell. We have to find a solution so that we will not be so much at the mercy of international crises, such as the Asian crisis.

We also talked about a lack of control over the future. People do not necessarily want to have greater control, but they would like to know what type of environment they will be working in. It was suggested that there be a true agricultural policy acknowledging the importance of this sector and of its future. This policy should include guidelines for encouraging tomorrow's farmers and protecting Quebec farms. This recommendation is valid for all of Canada.

According to one of the more original solutions we heard, it was suggested that Canada could intervene internationally and strategically suggest that the supply management system we developed here be adopted by other countries, including developing countries. When you look at the financial security of American producers, you realize that they are not as advanced as we are in terms of supply management. So perhaps this is an avenue for the future. By making the domestic supply management system in each country more secure, we will be reducing the need for subsidy programs. There is perhaps even some future for such a system in Europe. Canada could play this card and this could be its contribution to the negotiating process, but without having to yield to even greater liberalization. Canada could, instead, present a model that may be attractive for the other countries. This solution may be a way to meet some of our concerns.

The other major question we dealt with concerned the small producers. Although our farms have grown a great deal over the past 10, 15 or 20 years, will we be able to continue operating farms that are much smaller than those found in the United States? Are we going to be able to continue having industrial farms that are family-run? I'm not suggesting that we go back to the days of tiny operations, but I am saying that we must ensure that the current network continues to exist and remains robust.

We also gave a great deal of thought to the transfer of farms and how this should be done. Globalization is not far away. When a son or a daughter who is 20, 22 or 25 years old has to make the decision whether or not to buy the family farm, he or she has to know the conditions under which the farm may be run in the future. In buying the farm, is the person guaranteed that certain systems, such as the one governing milk quotas, will continue to exist? Today, milk prices are very good, but who knows what they will be in two, three or five years? We could make a comparison with the people who buy taxi permits and who do not know whether the permit control system will still be in place a few years from now. This is the same type of problem.

Nevertheless, farmers are confident that they will be able to rise to the challenge of international competition. They believe that the Canadian government should focus on what is allowed under the green boxes in the international agreements. During this seminar, the participants came to the realization that the federal government, as well as other bodies, could intervene in green box sectors without violating in any way the international agreements.

• 1050

It was felt that special efforts in the area of research and development would have compensated for the extra efforts required of producers in reducing the deficit over the past few years.

My region was particularly hard hit with the closure of the La Pocatière experimental farm, a farm that specialized in sheep rearing, which is growing in Quebec and in Canada. It was argued that this sector had no future when in fact production was clearly on the increase. We don't want the federal farm to be reopened tomorrow, but producers are hoping that they will be able to say, in three or five years, that the Canadian government did indeed reinvest in research and development in green box sectors, thereby protecting the competitiveness of our agricultural industry in the future.

We also talked about the importance in differentiating Quebec's production. For instance, Quebec dairy producers refuse to use rBST. Could our industries not do something in these terms internationally, without necessarily trying to compete with the mass production of the United States or other countries that have particular climatic conditions?

We also discussed the issue of our regional farmers and the UPA position. No one will challenge the fact that the UPA is a very well organized and very solid lobby group. The purpose of this seminar was to look at the impacts of globalization on the people of a particular territory.

People are no longer saying that globalization is mean and black and that protectionism is good. People have been experiencing this process for some years now. They have analyzed the situation and have taken a look at what is going on, but they do want to ensure that there will be a future for agriculture and that we will not dismantle the model that we established for ourselves here in Quebec and in Canada.

I will conclude by saying that agriculture in the riding of Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques is alive and well and that, over the decades, it has been able to adapt to changes in the market and in regulations. It is important that tomorrow's farmers be able to visualize, as clearly as possible, the environment in which they will have to compete. They will have to change from being specialized dairy producers to being diversified producers and processors. They are prepared to do this, but they want to have a regulatory framework and government policies that allow this.

In conclusion, I would like to be spokesperson for the people from my region. These people deserve to have unequivocal support from their governments because they have created an agricultural sector that deserves to be showcased and used as an example throughout the world.

The Acting Chairman (Mr. Bernard Patry): Mr. Crête, thank you for sharing the results of the seminar you held in your riding. I would like to thank you especially for telling us about your citizens' concerns and for suggesting possible solutions.

We will now go to questions.

[English]

Mr. Obhrai, please.

Mr. Deepak Obhrai: Thank you for coming. We meet you here.

You talked about agriculture and your riding is an agricultural riding. You talked about the Government of Canada giving support to the agriculture industry. You've brought up a lot of issues, primarily protectionism and subsidies. You know that right now there's a strong debate going on in western Canada in reference to grain markets. The Wheat Board, which is the supply management system that exists over there, farmers now are finding is curtailing them. What I seem to find is that the old farmers like the supply management system, but the new farmers are more aggessive, as you mentioned.

You also mentioned that those in the agriculture industry feel they can take on the challenges that are coming along. We see this happening over there. So in this context, at the conference you attended, did they ever address this issue where there's a demand for a more open market, which is in conflict with the supply management system that is in existence in Canada?

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[Translation]

Mr. Paul Crête: I'm pleased that you asked me this question. You are expressing the opinion of people from the West.

During the seminar, we also asked ourselves a lot of questions about the Canadian government's ability to defend adequately the farmers from Canada's West, from Quebec, from Ontario and from any other region in Canada.

We have to be able to adequately defend all Canadian agricultural interests in the context you just referred to, particularly in the case of American markets. The agricultural market, like all other markets in Canada, is increasingly becoming a North-South market. The American population is there, the clients are there, the critical consumption mass is there. I think that the Canadian government is facing a tremendous challenge if it wants to shoulder this responsibility.

Personally, I think that if Quebec were a sovereign State, it would be in a much better position to defend Quebec agriculture. If the people in the West were to adopt the same attitude, they too would be able to put up a much more adequate defence. We have only to recall the decision made concerning softwood. We did succeed in reaching an agreement with the Americans, however, in the end, this agreement had a negative impact on Quebec, particularly on regions such as mine.

We are much closer to New Brunswick, which can sell its softwood to the United States without being affected by the issue of tariffs. Whereas a decision made for Canada was designed primarily to resolve the conflict that existed between British Columbia and the western United States. So there's a problem here.

The other aspect you raised pertains to the question of whether or not to pursue free markets. I'm a bit more familiar with dairy production. A decision has just been rendered which will affect approximately 5% of the Canadian dairy market, however, it's not only this 5% that counts. It is important that we recognize that this was a bridgehead spanning several years and that, in three, five or ten years, there will be a growing number of free markets.

Whether we are talking about dairy or any other type of production, it is a responsibility of parliamentarians and of the government, in my opinion, to refrain from setting up obstacles using conventional protectionism in an effort to safeguard this way of doing business and increasing exports and instead create conditions that are conducive to the development of a freer market so that, in the medium term, we will be competitive.

Farmers in Quebec and in Canada, and the people who represent them, are changing. You have only to look at what happened during the last negotiations. During the next round of negotiations, we want, first and foremost, to create attractive free trade conditions that would enable Canada to be competitive with the other countries. In addition, we don't want Canada to have to play the boy scout.

The Acting Chairman (Mr. Bernard Patry): Thank you, Mr. Crête. Mr. Sauvageau.

Mr. Benoît Sauvageau: I think it's really interesting to have the members of Parliament testify.

Paul, I would like to welcome you and to thank you, particularly for giving us the position of a region. I think that we're going to hear from many national groups that are primarily based in Ottawa, and therefore it is very useful for our committee to hear what a farmer from the KRTB may be thinking.

I have three questions to ask you about your presentation, Paul. First of all, I would like to talk about the changes in the way that farmers are thinking. At first they said no to globalization. They thought that it was some hideous black beast. However, slowly but surely, they started by saying that they would have to learn to adapt and to bow to market pressure and that there were certain advantages in doing this.

In order to improve public opinion, you have to consult properly. You consulted the farmers in your riding. There will be a UPA consultation in Quebec and a similar consultation in the other provinces. With the next round of negotiating taking place in November, what is your personal opinion and what is the opinion of the farmers in your riding with respect to government consultations, whether it be the Government of Quebec or the Government of Canada, in an effort to come up with a position on agriculture?

• 1100

On page 6, you state:

Generally speaking, it is very clear that most agricultural producers support the UPA position.

As regards the UPA position, if I recall correctly, Mr. Proulx—

Ms. Maud Debien: From the UPA?

Mr. Benoît Sauvageau: From the UPA. When he testified in Ottawa, he told us that he was in favour of having the export subsidies eliminated in exchange for a 4% increase in market share for all Canadians. Naturally, he was also in favour of stabilizing income for small-time farmers. There weren't too many problems as far as eliminating export subsidies was concerned. That's a question I'd like to put to you.

My colleague from the Reform Party also talked about the east-west problem in defending the interests of farmers. We heard, during the course of the same round table, that there was an agreement amongst farmers from the East, from the West, from Ontario, from Quebec and from British Columbia. These people are in agreement. It's the governments that can't agree with each other.

The UPA representative had said: "We agree with each other. If the governments can't agree with each other, we are going to get in their way." Do you share this opinion?

Mr. Paul Crête: First of all, I would say that people are not really concerned about whether or not there are consultations. What you're doing here today is useful and I think that it will help move things ahead. This is being done in several committees. The farmers are most concerned about where we will yield and where we will not yield once we're at the negotiating table. They also want to see how the governments will ensure that the aspects agreed upon will really be reflected in the final agreement.

This is a concern that I understand very well, having participated in several negotiating rounds myself. There are the Stockholm negotiations. The negotiators have greater solidarity amongst themselves than they do with the representatives. We have to find the control mechanisms, the flexibility required to keep control of the mandate that has been given so that it will be followed.

As for export subsidies, according to the reports that we have seen, it is quite clear that Canada is in a good position because it can put on the table conditions that are saleable. The Europeans and the Americans will have more problems doing this.

As for the green boxes, the farmers want to ensure, for instance, that the federal government will not simply say that it did something about the export subsidies. The government will also have to be able to negotiate measures that will not be felt until five years down the road. It takes several years for measures to be implemented in agriculture.

Decisions made today in research and development will ensure that we have a healthy agriculture sector in 10, 15 or 20 years. Supply management did not spring from research and development. Rather, it was a way to make markets stable over a 10, 15 or 20-year period.

In my opinion, the evolution of agriculture will, from now on, be tied to the way that we invest in research and development and in other green box-related issues.

People want us, for example, to be very careful about this issue of protecting drugs or other similar products. They do not want to see a new form of protectionism evolve. This is not an attractive option for the future.

You also asked a question about the States. I hope that my comments won't cause you to think that I am sacrilegious. I am no expert in agriculture, but a year and a half or two years ago, I attended, in Victoria, a meeting bringing together representatives from agricultural organizations in Canada. The ability to defend the interests of farmers varies tremendously from one province to the other. I have no doubt that the UPA, in Quebec, will be heard by the Government of Quebec and the Government of Canada because its position is solid. The Quebec Minister of Agriculture took it upon himself to ensure that the Quebec position was that of all participants.

• 1105

He was willing to take the time to make sure it happened. This week, there was a follow-up to last year's agricultural summit, which will surely establish new benchmarks. I don't know if the other agricultural federations in Canada are as solid, not in terms of its members, but in terms of their past, because of the kind of intervention which happened in the past.

We have to wake up to technology to ensure that Canada's positions will be respected. When Canada will have to present its compromise position or its own position during the negotiations, there might be a turn of events which will lead some Canadian regional agricultural economies to feel frustrated. We will have to pay attention to this area.

We also have to keep a close eye on the impact of international policies on local agriculture. Take diversification, for instance. Let me give you a very concrete example.

In my riding there was a business which mainly concentrated on milk production. But the producers realized that the very industry was going to change, so they diversified their production to protect themselves somewhat. There is the problem with pork production and the way the public has received its environmental consequences.

At first glance, these issues may not seem related, but in my opinion, there is a direct link between them. This is what globalization has in store for us. In the past, globalization agreements have had an impact on quality of life or social programs. The same problem exists with means of production which, at the other end, affects the environment. This leads to divisions within a same region. Questions are asked. I hope you take this into account.

The Acting Chairman (Mr. Bernard Patry): Thank you, Mr. Crête.

Mr. Bachand.

Mr. André Bachand: It's very interesting to hear what the member for KRTB has to say. It does resemble the old KGB. In any case, it's a new way to make people aware of this very beautiful region of Quebec. It's the first time I hear KRTB, it sounds like a new radio station. The letter K normally indicates an American station.

What you say is true. At the moment, a lot of people think we have to take a position. Canada needs a single position on everything during the upcoming WTO negotiations. We can forget, and you reminded us, that this is a negotiating position; we have to remember this. If you don't budge on something you want, I don't think you will make any progress; you might even end up with something you never wanted. This is very important as it applies to agriculture, and I would like to congratulate you for taking a particular interest in agriculture in the KRTB area.

You question whether the federal government will be able to represent every part of the country. You were right when you said that it won't be easy. Canada is a very vast country.

The problem is that each area has become specialized over the years. Quebec produces 42 per cent of Canada's milk. Therefore, milk production in Saskatchewan automatically goes down. Conversely, even if Quebec greatly increases its grain production, it would still produce less than Saskatchewan. For many reasons, including geography, each region has to become specialized.

You also talked about sovereignty. I can tell you that even Quebec, in certain areas, people believe that their government does not represent them as well. The problem is that Quebec is also a vast territory. Some sectors are not well represented. Quebec is often accused of defending its dairy industry to the detriment of other sectors, including manufacturing.

I would like to know what you think of labelling. It's more or less related to the WTO, but there is an important issue, a product whose name I find very hard to pronounce: bovine somatotropin. I would like to know what you think of this.

• 1110

Should there be labelling to indicate that a product is organic or not? Great Britain has started to do this, and it's causing a lot of problems which will eventually be discussed at the WTO. Indeed, organizations which import or export products which may or may not have been genetically manipulated, which may or may not contain particular chemical products, maintain that Great Britain's actions go against WTO rules. It might be interesting to follow this issue.

You said that in your riding people are beginning to diversify their production in anticipation of the new WTO agreement as well as in anticipation of the elimination of quotas. You rightly highlighted that the prices for quotas, but also the price of an acre, were very high in Quebec. It costs a fortune to buy land with quotas in Quebec today; prices have never been higher and this raises the problem of new blood and investment. I want to hear what you have to say on the danger of diversification. Normally, when you have to deal with globalization, you want to become even more specialized. How does one explain this? On the one hand, you want to diversify to counter globalization, and on the other hand, you realize that you need to be extremely specialized in order to meet the global challenge. I'd like to know what you think of this as it relates to agriculture.

The Acting Chairman (Mr. Bernard Patry): Mr. Crête.

Mr. Paul Crête: I'd like to begin by saying that my riding is identified by the acronym KRTB. I don't think it has anything to do with the KGB, unless we have our own mafia!

As for somatotropin, the issue I was highlighting is the importance of positioning oneself in terms of finding a niche and to see which niches have a future that can be developed without necessarily going against mass competition. It's a choice: you can go into mass production or choose a market niche where you could be more efficient and for which you can find new markets. There are 250 million Americans; if 30 million Americans decided to pay a little more for quality organic products, that's the size of the Canadian market. Americans have chosen mass production. RBST improves production, but some people don't want to drink milk knowing it has been treated with this hormone. Those are the choices we'll have to make.

Regarding labelling, I think quality is what's at stake. A label must indicate what goes into a product, what kind of product it is and if it is really a natural product. We have to move in this direction, with as much transparency as possible, but without going to the extreme, which would entail unreasonable monitoring and control costs.

Regarding diversification, I hope the green box system is expanded to diversify production for which we already have the know-how. We can produce milk, but milk is processed for a second or a third time into other products. International agreements still leave room for governments to invest in certain areas. This would allow us to increase the value added of certain products and to reduce land overuse.

We must always remind ourselves that agriculture is not a factory but is based on natural elements. Burning fields, as was done in the past and is still done in some parts of the world, is not necessarily the right thing to do in the long term. We therefore have to decide what choices to make in that regard.

I just wanted to clarify that.

The Acting Chairman (Mr. Bernard Patry): Thank you.

Mr. Graham.

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Mr. Bill Graham (Toronto Centre—Rosedale, Lib.): I apologize for coming late. I arrived just as you were talking with my colleague about chemical products added to agricultural ones. I'm thinking of the situation with beef, where the Europeans have doubts about importing agricultural products from the United States and from North America because this area is more open to using modern processes than is Europe.

Some people say that the only solution is labelling, which would allow consumers to read the content of imported products. It would provide a level of protection. Others, in Europe, maintain that these products are cancer-causing and that it is the duty of the State to protect its citizens from using such products.

In Canada, if I understood you correctly, your producers are inclined to using modern products and everything a modern agricultural system has to offer, and perceive the measures adopted by the Europeans as barriers to our exports into Europe.

What do Quebec consumers think of these products and what should we do to develop a well-balanced domestic policy to protect our consumers as well as our producers? Do you have an opinion on this?

Mr. Paul Crête: Your question leads me to say that we will have to pay very close attention, during the upcoming round of negotiations, to the whole issue of pharmaceutical products used in one way or another in agriculture to increase production, and that it not be used as a smokescreen to hide a new form of protectionism. We have to study this closely to see if, indeed, there are legitimate concerns or if it is only a pretext to....

Something in that vein happened in the case of wood. England had decided to stop importing our softwood lumber because they found a fungus which was potentially dangerous. This was completely ridiculous, but it became a pretext for them to stop importing our product, or to stop us from exporting it. So these problems have to be addressed in a constructive fashion.

The best way for Canada to project a positive image is to ensure that it's animal health inspection system, for instance, is transparent enough to show that we are doing a good job.

A rather negative example of this is lamb production. For the last 10 or 15 years, lamb production had increased significantly, until scrapie surfaced. Neither Health Canada nor Agriculture Canada has been able to determine the source of this disease, how it developed and how it spread throughout the animal population. Elected representatives had to work very hard to avoid turning this issue into a very emotional debate like the one that happened around mad cow disease in England. Producers' associations also had to work hard to ensure that the public understood that this disease could not be transmitted to humans.

This type of situation should be an example to us on how to deal with this type of situation in the future. Should Canada decide to make an extra effort, it should ensure that its quality control system be transparent enough for everyone to recognize that its producers can be trusted. They already are, but more has to be done.

I hope I was clear. In my area, we are not willing to necessarily put production first.

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Producers in my riding did not choose to use somatotropin. In fact, they did the opposite. They want to have a good place in the market and provide quality products, and they want to be able to have a choice. Americans chose to use somatotropin, our producers did not, and if Canada, as a country, decides to reject it, it should be able to allow its producers to advertise what is in their products, which are different in that respect. If the only difference between a bag of American and Canadian milk is a label with "American product" or "Canadian product", and if the label does not indicate that one type of milk is different from the other, the lowest price will rule the market. But if the label contains more information, price will not be the only factor influencing a consumer's decision.

Mr. Bill Graham: I understand. We often stand between the Americans and the Europeans in that regard. We are perhaps more open than the Europeans, but we are not willing, as are the Americans, to use any kind of pharmaceutical product to increase production at any cost.

Mr. Paul Crête: I do not pretend to be an expert, but I just thought of something and that is the production of cheeses made from unpasteurized milk. These cheeses exist in Europe. But at a certain point, in Canada, government officials thought this was wrong and wanted to impose very strict standards. They said that this type of product should not be tolerated in Canada, but they quickly realized that in real life it did not make any sense. That's why I warn you from the outset not to go to one extreme or the other, and not to create a new protectionist measure. Because if that happened, consumers and producers would lose.

Mr. Bill Graham: Thank you.

The Acting Chairman (Mr. Bernard Patry): Ms. Debien.

Ms. Maud Debien: Hello, Paul.

Mr. Paul Crête: Hello.

Ms. Maud Debien: Welcome and thank you for your presentation.

I want to come back to the issue of supply management. We know that in Canada and Quebec there's been a long-standing debate on this matter. However, we also know that many countries manage to handily protect their import-sensitive farm sectors by using supply management techniques. Take for instance the peanut market in the United States, or the sugar and milk markets in Europe. Their systems are markedly different from our supply management system, but the same factors come into play.

This basically means, and I would like you to tell me what you think of it, that it is strictly politics which protects these sensitive markets in other countries, and not hard and fast trade rules. Until now, that's the way it's been.

So if it is purely politics which protects supply management, Canada will have to buckle up—if I can put it that way—and make sure it keeps in place its own supply management system.

Mr. Paul Crête: I basically agree with you, Ms. Debien.

Ms. Maud Debien: I didn't notice! This issue of supply management is beginning to interest me.

Mr. Paul Crête: Perhaps I did not express myself clearly enough. In my opinion, it is wrong to manage agriculture like just any other product. You have to realize that in order to flourish, trade in agriculture needs to be based on a system which guarantees producers minimum financial conditions. Some might say this is politics, but it's also economics, because in the medium term, if our producers do not have this guarantee, there will suddenly be a dearth of people wanting to enter the field. If that happens, we'll go back to a time where agriculture was largely a matter of fate and vulnerable to market fluctuations. This has just happened in the pork industry and in markets in Asia.

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If we operated in an exclusively market-based system, 90% of Canada and Quebec's pork production would be gone and the remaining 10% would be spread out. But in the transition period, there would have been no pork on the market at all. Pork prices would have widely fluctuated. You don't find this kind of situation with other products, but it does happen in the agricultural sector.

I agree that there has to be political pressure and that the government has to stand up for itself. The government will stand up for itself when it understands that, in doing so, it will help agriculture, and its own long term domestic production and development.

Governments will be judged on how they treat this area and how they will deal with multinationals and their economic activities. Some multinationals can survive any crisis and may take advantage of the death of small businesses to dominate the market, but this is not necessarily in the best economic interest of the countries involved. You have to think of these things when you make your recommendations.

The Acting Chairman (Mr. Bernard Patry): Thank you, Mr. Crête.

Ms. Folco.

Ms. Raymonde Folco: Mr. Crête, I have a question for you about supply management. This might be because Ms. Debien and I both represent ridings around the city of Laval which have a bit of agriculture, though not at all on the scale of what is in your riding.

My question has to do with regional particularities in terms of supply management. You are probably more aware than I am that at the next round of WTO negotiations, people are generally saying that supply management as it exists in Quebec will disappear. From what I hear in conversations and from what I read, everything points in this direction. Indeed, Quebec has a particular system.

Instead of asking you to criticize, even though it is important to do so, I would ask you to take a step forward and to suggest to us how Canada could protect what is perceived as being a regional particularity—albeit an important one—without appearing to be protectionist. Protectionism is a bad thing these days. I also want to know whether you think your proposal can succeed.

Mr. Paul Crête: I mentioned this in my brief. It's an original element which really came from the grassroots. Politicians did not push for this. Farmers told us that the best way to maintain supply management was to convince other countries to implement it.

Last Saturday night, I had supper with Mali's ambassador to Canada, who happened to be in Rivière-du-Loup. We talked about this issue. He said supply management had great potential in developing countries. A constructive solution would be for Canada to say: "We will explain this system to several countries, tell them what it offers and what its advantages and disadvantages are." Canada might also ask international agricultural federations to talk about Quebec's system in all the other countries. If that were to happen, several countries might discuss the possibility of implementing it. This could happen at the same time as negotiations take place. But we will have to be very careful because we do not want to impose our system on other countries. We simply want to familiarize them with it and to show them how it has helped stabilize the agricultural business. It might be a good way to receive the support of countries which are not very powerful, but which might carry some weight if they all got together.

I'm surely not an expert in this field, but I thought the idea was original and interesting. I think it would help develop agriculture throughout the world, particularly in developing countries. It might also lend more weight to these countries during international negotiations. In the end, it might not be a bad thing. It might be interesting if they held more sway during the upcoming rounds of negotiations.

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Ms. Raymonde Folco: Thank you.

The Acting Chairman (Mr. Bernard Patry): Thank you very much. I would like to thank this morning's witness. Despite the fact that the agriculture committee is currently studying the future impact of WTO negotiations on agriculture, it is very important for our committee not only to know what is happening in the farming sector, but also to understand the concern of farmers. With that, I would like to thank the witness for having shared with us the results of his conference. Thank you very much.

We will now break for a few minutes.

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The Chairman (Mr. Bill Graham): Dear colleagues, can we please reconvene? Mr. Dupras has told me that Mr. Germain's approach is slightly different from that of Mr. Théberge and Mr. Rémillard; as a consequence, we will split them up. Instead of hearing from all three of them at once, we will ask Mr. Germain to speak first. When he's done, we will hear from Mr. Théberge and Mr. Rémillard.

Go ahead, Mr. Germain. You have 10 or 15 minutes to make your presentation, after which we will ask you questions.

Mr. Daniel Germain (Sociologist, Association coopérative d'économie familiale de Québec): I'll do my best. Thank you for hearing us.

The ACEF de Québec is a movement which has been interested in trade liberalization since 1985. We have spoken before many parliamentary committees on various issues affecting trade liberalization.

For mainly the last two years, we have focussed on agricultural matters, which I will address more specifically today.

We have participated in various conferences, including the large conference on agriculture organized by Quebec's Department of Agriculture last year. We were members of the Forum des décideurs de l'agriculture et de l'agroalimentaire québécois, at which we represented consumers. We have followed up on that for the last year. We have worked on several current bills concerning change in the agriculture sector and on issues affecting sanitary and phytosanitary standards. We have also worked on various national codes: the national meat code, the national retail sales code and more. That gives you some idea of the work we do.

L'Association coopérative d'économie familiale de Québec is eager to speak before this committee. However, we were given next to no notice to prepare a thorough and enlightened brief. We would rather have addressed a variety of issues, including those affected by the agreement on agriculture. We are on top of what is involved in this agreement. I'm specifically referring to the WTO agreement.

In our opinion, Canada must continue to support its agricultural sector. The food safety of all Canadians depends on prosperous local farming which is also protected from market abuse. Taxpayers want to support their farming sector.

At this point, I want to highlight that we are not against open markets, not at all, since Canada could greatly benefit from them. However, this cannot happen any old way and, for now, we are concerned about some of the measures taken by the WTO.

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We believe that Canada should also defend its Crown agencies and marketing boards, which have the support of producers. To our mind, this system is essential in a market where, historically, oligopolies tend to rule. Producers and countries must have the marketing tools to help them operate in unfair markets which are often dominated by consortiums, cartels and where all manner of collusion takes place.

Furthermore, we don't think taxpayers' money should go to supporting every type of export subsidy, such as tax measures, domestic support for export-oriented production lines or direct subsidies. In short, we expect our agricultural sector and policy to safeguard local production so that Canada's food supply is adequately protected in the long term. I'm not saying local production should be completely self-sufficient, but I believe consumers should be able to harvest that which grows in Canada and Quebec.

There are historic reasons for this. In the 19th century, there were several famines throughout the world. Think back to the depression of the thirties: at the time, there were few agricultural policies in place to support local farm production. Terrible things ensued, including famine. We don't think that will happen again any time soon, but we just want to remind you that agricultural policy has a point, which is to ensure food safety by helping producers so they don't have to declare bankruptcy.

From that point of view, I think that an agricultural support policy is quite justified. However, we are not talking about iron-clad support. We understand that it may be necessary to compromise at the present time, but we must guarantee protection for our agriculture.

Let's take the example of pork. The Asian crisis is another good example. Pork producers lost a lot of money because of that. We believe that taxpayers should not have to support agriculture for export markets. As a comparison, let's say that when I deposit money in a bank account, up to $60,000 of my money is protected by deposit insurance. However, if I decide to buy stocks in the financial markets, I've no protection. We can draw a parallel here. The export market is a higher-risk market, and often a very lucrative market, that we should not protect. This severely distorts the markets.

This completes my observations on agriculture as such. I would now like to focus specifically on the agreement on sanitary and phytosanitary measures. As you know, this is part of a series of agreements concluded under WTO auspices. An opinion was recently issued on this question. We thoroughly analyzed the document, focussing on four points.

First, we examined the recognition of the sovereignty of States to be incorporated in the provisions of the Agreement on Sanitary and Phytosanitary Measures. We also examined strengthening the scope of the agreement with respect to the harmonization of sanitary and phytosanitary measures among countries, so as to bring about greater international standardization, and also the scope of the Agreement with respect to genetically modified organisms, products derived from genetically modified organisms, and other products of biotechnology.

We also examined expanding the protocol on biosecurity adopted in the context of the Convention on Biological Diversity which was, I believe, recently signed—the final discussions took place in recent months—so as to include the socioeconomic impacts in assessing the risks to countries that import genetically modified organisms or derived products.

Our first finding in analyzing the various agreements, and specifically the Agreement on Sanitary and Phytosanitary Measures, is that the document confirms, assures and guarantees a priority to freedom of commerce over protecting human and animal health and preserving plants.

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We are not opposed to opening international markets and facilitating international trade. However, this opening should not have absolute priority. In our opinion, human and animal health and the protection of plants is more important than free trade. In other words, sustainable development must have priority over free trade. This also applies to social issues.

Therefore, our first recommendation is that Canada advocate this point of view. The WTO may not be the right place for this. However, in the medium and long term, we will have to come up with a structure that incorporates into the WTO agreements other types of agreements that override various interests in the common good. I believe that this is an important point to advocate, and we are asking you specifically to discuss these things.

On the other hand, with respect to sanitary and phytosanitary measures, we also represent consumers; consumers want to ensure that products have no detrimental effect on health. The scientific way of assessing risk in the Agreement on Sanitary and Phytosanitary Measures is already a good thing. It will make it possible to come to certain objective conclusions.

However, we believe that some provisions of the agreement are insufficient. It is obvious that our knowledge, at the present time, is incomplete. We implement new technologies or invent new products without truly being able to assess all their consequences and impact. There's always a lag between the time of a new invention and its marketing, and our understanding of the consequences.

We have seen numerous examples of this, including thalidomide in the drug field. Recently, there has been somatotropin. Had it not been for pressure from the public, I'm not sure that Health Canada would have banned its use for reasons of animal health. There was a great debate on the subject that lasted several years.

Therefore, I believe that what we call the precautionary rule must be very explicitly added to the Agreement. In other words, if we do not have sufficient scientific knowledge to make a decision and demonstrate that there is no risk, the principle of reasonable doubt should be applied and allow countries to ban products until there is sufficient knowledge available. We are not sure that the present Agreement clearly states this. I shall not quote the Agreement to demonstrate my point, because we don't have enough time.

We are asking that State sovereignty for sanitary and phytosanitary measures be strengthened in the context of international harmonization. Let me explain. First of all, we strongly support having international sanitary and phytosanitary standards because this will enable various countries to harmonize their measures. We know that Canada has good standards that satisfy Canadian citizens. Consumers feel well protected by these standards. We do not want international harmonization to be achieved by downward levelling. Therefore, we support the harmonization of international standards, provided that it allows countries who wish to do so to impose higher standards.

I would like to clarify a point. This should not be done so as to impede commerce, either overtly or covertly. At the present time, we have the tools to analyze whether a country is using such measures to impede commerce.

The problem with the present Agreement on Sanitary and Phytosanitary Measures is that any Act or regulation is presumed to be likely to create a trade impediment. This is clearly the spirit of the Agreement on Sanitary and Phytosanitary Measures. It is quite obvious in the wording of the articles. There is a presumption that any policy adopted by a country to protect human health may be a form of protectionism. Still, at the outset, this represents two strikes against consumers.

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We also think that the agreement specifically provides for food quality and animal welfare. I wish particularly to emphasize the issue of quality. The agreement will have to provide certain rules concerning product certification. The agreement is not very clear on this point. We are asking that a product certification procedure be explicitly set out. Obviously, we are thinking especially of sanitary and phytosanitary aspects.

Another point that is very problematic according to consumers, is the whole issue of biotechnology. Our association has a very moderate position on this point. We do not think that genetically modified products are inherently dangerous and should be banned from the markets. Having said that, we advocate caution. In my opinion, the present agreement does not allow for caution.

We are demanding, specifically, that trade of genetically modified organisms be regulated. At the present time, such products cross borders. Some products are going from one country to another even though we aren't fully aware of the consequences. I will give you the example of Monsanto that conducted experiments on genetically modified wheat in India. The wheat was sterilized and pollinized the wheat of neighbouring farmers. Consequently, their wheat became sterile. This gives you an idea of the risks that may be involved with certain genetically modified organisms. Therefore, we must proceed with caution. We have to have proper regulations in this regard.

That also indicates that an importing country must issue an entry certificate for these products, which clearly demonstrates that the importing country has analyzed the product and has concluded that it presents no risk to human or animal health or plant preservation.

We also ask that financial compensation be provided when damage has been caused to biodiversity, or human or animal health. If the Agreement on Sanitary and Phytosanitary Measures cannot completely integrate all of these elements, we think that the Protocol on Biosecurity and the Convention on Biodiversity have priority over free trade. This should, in my opinion, be clearly set out in the agreements on global trade.

On the one hand, we have the WTO and, on the other, various agreements that tend to protect the common good. There does not seem to be a complete link between the two. We will have to do this soon, because, if not, it may happen that the WTO and the weight of the economy and the transnational and multinational corporations will create a situation in which citizens no longer have anything to say. We haven't reached this point yet; nevertheless, some very disturbing things are happening.

Take the case of margarine, in Quebec. Unilever Canada has threatened to sue the Quebec government. I believe that Unilever's annual budget is the same as that of the province. How will countries be able to defend themselves properly if some of these companies have far greater resources than the States? We have no answer to these questions, and we are worried. I should like to point out that the agreements are not at all reassuring in this regard.

There is also a question that many people have asked us, specifically people from the Quebec Department of Agriculture. We were asked whether there should be a specific agreement to cover genetically modified organisms and derived products. We think the answer is yes.

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In some respects, this is what should happen. Some people are now saying that the Agreement on Sanitary and Phytosanitary Measures, which deals with drinks and food, will necessarily apply to genetically modified organisms. To some extent, this is true. However, as I said a while ago, since these products are new and we are unable to prove that there is no risk, we have to proceed cautiously. We are not advocating systematically blocking such products, but rather ensuring that companies and governments take the necessary steps to study the issue thoroughly and to demonstrate the absence or risks. We know that the stakes are high, and that this affects not only human health. The issue of biodiversity is important, and I believe that the issue of sustainable development is also important in this regard.

Therefore, basically, this is what has to be done to defend Canadians' interests at the WTO. The common good has to be considered, as well as free trade.

Thank you.

The Chairman: Thank you, Mr. Germain. We have read your brief; it is very detailed and completes your statement. Mr. Obhrai, you have the floor.

[English]

Mr. Deepak Obhrai: Thank you, sir, for coming. You did raise some very interesting points and you did bring quite a lot of caution in here.

There are two things on which I want clarification. There is a kind of confusion in my head here. In your opening statement you said you want to defend state-run organizations, but in the second breath you talk about the taxpayers do not have to support exports. To me, a state-run organization is taxpayer-supported. Then you say the taxpayer should not need to support it. I'm in agreement with the second statement. I'm interested in your first statement, more or less.

Thank you very much for bringing this health issue into account, especially the genetically altered agriculture products that are starting to make it into the market. You are raising your caution flag in here. My question to you.... We have the WTO, which is supposed to regulate the free market and we should leave this regulation of the free market to WTO. You did mention it to that degree when you talked to the agricultural officials from Quebec as to what I will venture to say is the responsibility of not having unsafe products brought into the country should rest with Health Canada or an organization like that.

Why would WTO want to venture...? I would be a little wary to give this WTO a huge bureaucracy where they would now create a health section in there to check these things. I think I would be far more comfortable, and I'm sure most Canadians would be, if this responsibility were Canada's responsibility—you know, that this is an unsafe product, it's not tested. As you mentioned, we have very high standards and we want to maintain those standards. I'm reluctant to hand it over to the WTO. Do you have comments on that?

[Translation]

Mr. Daniel Germain: I would like to clarify what I said. In fact, the best agency to deal with sanitary and phytosanitary matters is the World Health Organization, rather than the WTO. This is what I meant a while ago, and I shall be more specific. I firmly believe, although this may not happen in our lifetime, that within approximately a century, we will be heading towards a form of world government. This is obvious. There are unmistakable signs. I believe that the World Health Organization should be one of the agencies that would cover a group of other agreements, including the WTO.

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The WTO would be part of a series of more specific agreements regulating trade. This should be included in a series of agreements that promote the common good. This is my opinion.

Furthermore, on the issue of taxpayers, I believe that our observation may appear somewhat contradictory. Basically, we want to say that it is normal that citizens pay taxes to obtain services and protection. It is in that spirit that we explain to citizens that agricultural support enables them to be supplied with local products at a fully competitive price. At the same time, the same citizens are consumers, they work and run businesses etc. This promotes a form of social solidarity.

However, the citizens should not pay for a form of protectionism that defends the interests of a particular group, interest group, group of producers, group of processors or a small group of citizens. Support policies have to be implemented in the interest of the common good. As for the rest, compromises will have to be made and the agricultural sector, like any other sector, must not be given undue protection.

Having said that, I would like to remind you that agriculture is a very important and strategic sector of a country. Agriculture produces food. Agriculture must have some special treatment and we have to maintain a certain level of food security. This problem exists in certain African countries. All their production goes to foreign markets to pay their excessive debt. They cannot produce local products and are entirely dependent on national trade. Canada is obviously very far from this type of situation, and we certainly hope that this remains the case.

The Chairman: Thank you.

Mr. Daniel Germain: It's a pleasure.

The Chairman: Mr. Sauvageau, go ahead.

Mr. Benoît Sauvageau: I shall probably share my time with Ms. Debien.

Mr. Germain, I would like to tell you that I did not read your brief in advance. It was given to us a while ago, during coffee break. However, I looked that it during your presentation. I focussed on the recommendations. I believe that your brief answers my questions, and therefore I shall draw upon it. I would like to tell you that it seems to be very good and very worthwhile for us and for the committee.

You referred on a number of occasions to the problem of the relationship between, for example, the WHO and WTO. This reminds me of what Mr. Bernier said earlier, when he talked about peripheral problems. Do you have any specific ideas for solving this peripheral problem, not in a century through a world government, but in the short term? Do you have any possible solutions to offer us?

Mr. Daniel Germain: Specifically, we would first have to address the very structure of the agreements. The problem at the present time is that these agreements at the outset give priority to free trade over all the other freedoms. It is difficult to work in the context of an agreement that enshrines that liberty.

We are proceeding by developing special clauses. We are proposing some of these. We believe that sovereignty must be guaranteed. Each country has the right to adopt the policies that it deems appropriate. This would be incorporated into the agreement, where there would be provisions and recommendations that, in our opinion, would be incorporated into certain articles, on condition, obviously, that these do not create barriers to trade or deliberate distortion. It's difficult.

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I am fully aware of the position taken at the outset of the negotiations, because we are already starting in a specific context. The agreements may have to be rewritten. This would be the most concrete way of incorporating clauses. In fact, we have proposed them. I think that we can promote open markets while at the same time protecting populations and providing adjustment mechanisms for countries that are out of step.

In the area of sanitary and phytosanitary standards, some countries are far behind us. Therefore, if there is international harmonization, some countries will have to raise their standards and others may have to lower them. This might happen to the Europeans and perhaps to the Canadians, also.

Ms. Maud Debien: Mr. Germain, I would like to have your opinion on supply management. You probably heard my comment a while ago on this subject.

Why is it that most countries have no problems protecting their agricultural sectors that are sensitive to imports, merely through supply management? I gave the example of peanuts in the United States, and also of sugar and of milk in Europe. Here in Canada, the discussion on supply management always seems to create a problem, whereas this is not the case elsewhere. Can this protection be explained, basically, strictly by political pressure?

I would also like to comment on Mr. Obhrai's intervention on sanitary and phytosanitary standards. Mr. Obhrai said that in Canada we obviously do not have a problem with our health and safety measures, which you yourself have said are excellent, but this is not the issue. The problem is with products in the context of free trade. The problem occurs when we receive other foods or products that might constitute a risk to human health. I think that in that case, there absolutely has to be an agency to set rules in the field of food security for humans and animals.

You mentioned the WHO, but I previously said that these major international agencies had no powers of regulation or enforcement, whereas the WTO has such powers. Therefore, questions of great concern to human beings should be decided at that level.

Mr. Daniel Germain: I will first reply to the first question. I find what you have just added very interesting. Indeed, the WHO does not have the power of the WTO.

Ms. Maud Debien: It has none whatsoever.

Mr. Daniel Germain: I would like to clarify my comment. It would be effective if the WHO were given adequate regulatory powers, and this is where we see the disparities. The right to trade is protected and even armoured in the WTO; the common good does not appear to enjoy as much protection.

If we could achieve the degree of regulation and discipline set out by the WTO for aspects related to the common good, the citizens, not only those of Canada, but those of the world would be better protected.

Another problem, still related to the same question, is that at the present time, deregulation is occurring in Canada at the same time as the WTO agreements are being signed. Therefore, there is an increasing trend to leave health issues in the hands of a neutral agency.

We have a problem with this. We think that public authorities should maintain management in this regard. They must not only have a right to review. They are the managers. We can see this trend specifically in Quebec. There is talk of a certification agency for HACCP standards.

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This agency would not even be within the Quebec Department of Agriculture, Fisheries and Food; it would be a neutral organization. The issue is what type of neutrality.

This question is raised in the various boards created under the various agreements. There is a board that manages disputes under the Sanitary and Phytosanitary Measures Agreement. The appointment procedure for members is not set out anywhere. The public feels very far removed from all of this. We perceive a loss of power, a loss of transparency. To whom shall we present our complaints? This is the crux of the matter.

We have been asking for years that representatives of consumers be members of these "neutral agencies". This is not the case. The question of transparency is more difficult. Obviously, if I am seeking satisfaction, I can call my MP or my minister, and I have access to government information, but this is less often the case with other types of agencies.

This is happening at the present time. We are told that it is because of budget cuts. In Canada, there is a very solid political lobby. This brings me to the first question. There are calls for a total deregulation at any cost, but obviously, we are aware that the Canadian government is resisting such pressure to a certain point.

As for supply management, I can tell you that, at the present time, the debate is purely ideological. At the present time, both sides of the issue know that supply management is justified, but I think we have to examine how it is being done. Having said that, we cannot eliminate the supply management agencies, and we have said that clearly on a number of occasions. In any case, we are in markets of imperfect competition. The perfect market exists only in Economics 101.

The market rule of supply and demand works in a village. There are 10 potters supplying a population of 2,000, and a balance will be created between supply and demand. Two of them may disappear, but eight will remain and they will adjust their prices. This works in a small, closed market. We are supposing that the market is closed, but in reality it is not.

Look at the case of oil. The oil producers collaborate to set their prices; they maintain the prices. They have achieved a vertical and horizontal integration of markets.

The supply management tools and, consequently, government marketing agencies or market boards are fully justified, as long as they do not deliberately distort the market.

Just between us, speaking of distorting the market, the Americans are not talking about it too much at the present time; they have private marketing boards. Why would these create greater distortion than a public board? I'm asking the question. We have no confirmation of that. A number of publications state—many economists pay it lip service, neoclassical economists more so than classical economists—that a fully competitive market is a theoretical concept and that, in any case, markets always tend towards concentration.

Governments have decided to intervene with supply management and marketing precisely to create a balance between the small producers, the small processors and the large players in the world.

To refer to Mr. Sauvageau's comments concerning what I would call collateral damages, I would say that these agencies are justified to act on behalf of the small players and small markets that may be swept away by the storm. It's a curious thing, but, generally, those who espouse unbridled free trade, without any distortion, are often the first to create business associations.

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History has shown that markets always tend towards oligopoly. Using these agencies creates balance in the market, rather than distorting it.

I have another argument on behalf of marketing agencies and supply management boards. We are supposing that the market is perfectly competitive. Suppose that the market is perfectly competitive and there are players and one of these is a marketing board or a supply management agency. A classical economist would accuse this agency of distorting the market. Generally, what do these agencies do? It is said that they always tend to keep prices high in the interest of the producers and processors.

In a fully competitive market, those not benefiting from this protective tool are favoured by the market distortion. If the prices are kept artificially high, those not under the wing of a marketing board will lower their prices and beat the board out of the market.

I feel that this is a purely ideological debate. It comes down to saying that less government is better government. That is the basic argument and I think that there is a compromise position that is enlightened, rigorous, and serious, which is held by the majority of Canadians and also, I believe, the majority of MPs in Ottawa.

People understand very well that we need to find the middle ground between the two extremes of, on the one hand, a completely free and unregulated market, and, on the other, a five-year plan, which brings to mind the KGB, like we were talking about earlier.

I think that there is a middle ground and that Canada is in a privileged position in this respect. We do not want that position to change. Mr. Chrétien has said that Canada was a good place to live. We want it to remain that way and we want citizens to be able to work and to continue to be well protected.

Ms. Maud Debien: Thank you.

The Chairman: Thank you.

Mr. Patry.

Mr. Bernard Patry: Mr. Germain, thank you for your presentation and especially for the thought you put into it. I would say that it is somewhat avant-garde in its approach. That is fine and is very positive regarding the future orientation of the WTO. Listening to you, it becomes easier to understand the very important role that ONGs and civil society must play in future negotiations.

I will come back in a minute to what Ms. Debien said. The Agreement on Sanitary and Phytosanitary Measures, which came out of the Uruguay Round, is indeed an avant-garde measure, in the sense that the most-favoured-nation principle does not apply in these areas.

My first question deals with the fact that China will probably be joining the WTO, along with Russia. These countries want to be considered as developing countries. What will that mean for the Agreement on Sanitary and Phytosanitary Measures? Do you really think that it will be possible to reopen, improve or amend the existing agreement to include recommendations such as the ones you just made to us?

Should the Canadian government try to align itself with certain other countries that have the same concerns? It could try to reach an agreement with other countries and then present these concerns to the WTO or the World Health Organization for discussion. What is your view on that?

This morning, professor Bernier was even telling us that it was already too late to make certain changes on culture.

You also talked about risk assessment, and more particularly about ethics. I would like you to elaborate a little on the ethics issue.

Mr. Daniel Germain: On your first question, I fully agree with you. There is likely to be strong pressure from China, because it is a huge market.

From a strategic point of view in these negotiations, we do not have that problem. It may therefore be difficult to make progress, and I am aware of that. I believe, however, that these issues must be discussed for the medium and long terms. In the short term, I think the first step should be to protect established international standards. We assume that Chinese standards are lower than our own. So when we import products from China, we ensure that these standards are raised. I believe that the Agreement must protect that principle and that no more slippage should be allowed. The standards that are currently called for in the Agreement are a minimum. We are looking at the issue from a longer-term perspective, recommending that these standards be put not necessarily in a WTO agreement, but in the framework for an umbrella agreement in which trade does not take precedence over everything else. Trade is one aspect of sustainable development. Healthy trade is important, but citizens as a whole must be taken into account as well.

• 1230

We defend the existing basis, but we feel that it is important to take into account other aspects in our discussions, including the ones we referred to. It is common knowledge that, as was the case in 1995 at the end of the Uruguay Round, if I remember correctly, Canada will not even take part in the final closed-door meetings.

The Chairman: On agriculture?

Mr. Daniel Germain: No, not necessarily. It will not participate in the meetings to put together the final agreement. Those meetings are held in camera, I believe, is that not so?

The Chairman: Yes, I believe so.

Mr. Daniel Germain: I may be wrong.

The Chairman: Are you talking about the Singapore negotiations or the ones before that?

Mr. Daniel Germain: No, the ones in the Uruguay Round in 1995, when the WTO was established. That is what I read, at any rate, but it does not matter. We know how little influence Canada has, with its population of 30 million. In comparison to the United States, we are lightweight. That is why we need to think about forming strategic and tactical alliances, as you put it so well. To do so, we will obviously have to make concessions.

With respect to sanitary protection, the Europeans are a model, although it is important to identify measures used for trade protection. For example, it was clear that there were reasons behind the position taken in the case of the bovine growth hormones. We feel that the mechanisms put in place should enable us to make that distinction, and possibly to form alliances. We are divided on this issue of growth hormones. But to try to come up with ideal sanitary measures, we have to look to Europe, which is an example to follow. European countries are experiencing integration as Europe unites. That will be the basis for the negotiations.

We were talking earlier about the solidarity that develops among negotiators, but they should try to keep in mind as far as possible the recommendations made by those who are behind them.

On the topic of ethical assessment, I would like to come back to the principle mentioned a little while ago to the effect that it is not possible to accurately assess all risks. Everyone knows, of course, that the greatest risk is death. We need to keep on living and not let paranoia take over. There is no perfect system. We believe that the public system offers the greatest transparency. Our risk assessment has limits. A country can decide that one death per million inhabitants is an acceptable standard, while another country may set the standard at one in three.

Genetically modified organisms raise ethical issues. Although I did not cover this area in my recommendations on the WTO negotiations, knowing that it cannot be rolled in with other negotiating issues, I would like to point out that human beings have given themselves the right to genetically modify organisms to create new forms of life. I believe that this issue needs to be examined more thoroughly.

• 1235

In our opinion, the most critical issue is that of risks that cannot currently be measured. Pigs are being raised for the purpose of transplanting organs into human beings. We are told that this is not dangerous, but when we look into the issue and look at studies, we realize that there are not always guarantees to that effect. It is not that we feel that these procedures should never be used, but we are aware that these experiments are one of the avenues used by firms who are developing products. It is quite legitimate for them to promote their products, since this is how they make their profits. We understand that and we respect their position. However, we feel that we need to give ourselves the power to provide balance by ensuring that there is an opportunity to examine all aspects of a product that a firm wants to put on the market. If the product presents a risk, the precautionary principle will apply, on the condition that the principle is not used as a form of trade protectionism. For example, debate on somatotropin went on for a number of years, and it was finally decided that the hormone was a health risk. The Department of Health therefore told us that somatotropin could not be used for the present. I think that it is important for these issues to remain in the public domain and for countries to have the possibility of....

Mr. Bernard Patry: I would just like to make a comment, Mr. Chairman. Research on xenotransplantation is currently being carried out in Toronto, even though there are serious ethical problems with it.

The Chairman: Yes, that is true.

Mr. Bernard Patry: Thank you.

The Chairman: Ms. Folco.

Ms. Raymonde Folco: I would also like to congratulate you, Mr. Germain, on the approach you take in your brief.

When you talked specifically about sterile wheat, I was reminded of conversations and of documents that I have recently read indicating not only that sterile wheat might contaminate adjoining land, but that there is a trend not toward the protectionism that has always been at the centre of WTO discussions, but toward a monopoly.

I gave the example of sterile wheat because I realized that a country like Canada or the United States could end up with a monopoly on wheat production because sterile wheat would have been sold to other countries, like Egypt and Romania, that are currently growing wheat, and that those countries will sooner or later have to buy new seed, whereas in the past one year's crop produced the following year's seed and this continued for hundreds and thousands of years.

But now we are moving in a whole new direction. One country or a few countries will have total control over seed production, and the other wheat-producing countries will have to come back to buy seed every year or every two years. That would amount to total control. This seems to me to be not only an extremely important ethical problem, as you have pointed out, but also a problem of economic control. There is little discussion of this at the WTO. Would you like to add something to that?

Mr. Daniel Germain: Yes, of course. I have examined more than one agreement and I can tell you that there is no doubt that free trade is being given priority over other rights, which promotes the type of situation you have just outlined. I agree that this issue has very little visibility in WTO discussions. Perhaps that is because negotiators are more concerned about economic development and immediate benefits. But I believe that we need to take a longer-term view. I deplore the fact that these issues are not being raised; the result will certainly be increased dependency by certain countries.

Imagine being in a situation where you are growing sterile wheat and you constantly have to buy seed from Monsanto Canada Inc., or some other company. That also raises issues relating to international security. We are living in a much more open environment.

• 1240

Mr. Bush talked of a new world order. There are various ways of looking at that. There are also increasing risks of conflict. If an economy is completely integrated at the international level, there are problems if a major conflict breaks out. During the Second World War, supply was a problem for Great Britain.

At present, everything is carried by boat, plane or truck. Merchandise travels by land, water or air. International trade not only creates dependency on products that people are no longer able to make themselves through traditional methods, but it increases the movement of goods and thereby adds to the potential for dependency. There are all sorts of reasons why the system can break down.

Ms. Raymonde Folco: Mr. Chairman, I would like to add a comment on that.

I would like to make two points that I forgot to mention. First, if a country or a transnational company controls the species of wheat—let us say that there are a certain number—and if those species become diseased, this creates a very serious problem for production and supply around the world. It is an international risk because of the limited number of species that will soon exist. I have used the example of wheat.

The other example is that if a transnational corporation controls the seeds and thereby food production around the world, the consequences in case of war are obvious. There is a problem with having a transnational company or even a few companies totally control wheat production, for example;

Mr. Daniel Germain: Exactly, and that underscores the problem, since genetic improvements have nearly eliminated wild wheat, except maybe a little bit here and there.

At one point, people realized there was a problem. If there is an outbreak of something like Dutch elm disease or a disease that attacks wheat, people panic and say: "That's it, there's going to be a famine." Seed preservation centres have now been set up. There are people and organizations in many parts of the world working to reproduce seeds and preserve these plants.

But with the introduction of genetically modified wheat, these questions are being raised. What will be done about security? If there are mutations or contaminations from one type of wheat to another, no one knows how quickly they can spread.

There are currently risks that cannot be controlled. When we talk about increased mobility, we generally mean goods and people. From an epidemiological point of view, there are diseases introduced into countries through international trade. There have to be safeguards put in place against that. That does not mean closing borders, but tools must be designed that are suitable to the challenges and situations that are developing. One does not get the impression that the tools are keeping pace with the challenges. We were talking earlier about the WHO, but that organization does not have enough teeth.

The Chairman: Thank you. In closing, may I ask you two things?

Mr. Daniel Germain: Yes.

The Chairman: First, I believe that your two precautionary rules, being the burden of proof and increased sovereignty, are interrelated. They may come down to the same thing, in that if you have a very strict precautionary rule, you will increase sovereignty or broaden the scope for action on that precautionary rule. They are two sides of the same coin, if I can put it that way.

Mr. Daniel Germain: Yes.

The Chairman: That is what I understood.

Second, I would like to come back to your reference about the democratic deficit in international institutions and even your comment on the role of the WTO with respect to the World Health Organization. Who will determine their respective mandates? Will it be done by setting rules? It is a very complex issue.

• 1245

Do you think that it would be necessary to at least have a parliamentary assembly associated with the WTO so that there is a minimum of democratic input? That way, there would at least be some discussion at the parliamentary level, and not just discussions between governments and NGOs, which tends to be the way things work now.

The WTO is a forum for NGOs and representatives, good or otherwise, of groups of experts. The governments set the rules. There is no real democracy in the system, as there is in the European Parliament. I give that as an example.

Mr. Daniel Germain: Yes, that would be important. It would even be a way to maintain national sovereignty at a supranational level. I think that parliamentarians from each country involved in the WTO should have opportunities to meet. The European model is an interesting one. It obviously covers more than just trade issues.

Many other aspects are involved, but that may be one way of ensuring a degree of transparency and accountability for citizens at the local level. That can work for countries. Citizens and NGOs could make suggestions to their parliamentarians, who would hold discussions with the representatives of other states.

I think that democracy is something that has to be exercised at a government-to-government level; it has to involve more than just meetings among officials and pressure from NGOs. Sovereignty means that governments must be fully involved.

Why have I emphasized the principle of sovereignty? From a legal point of view, the precautionary principle gives countries the right of self-determination. It was also deemed important, however, to include the principle of sovereignty, since this principle was clear in the WTO. There was a desire to feel the presence of governments.

The idea that you are proposing might be worthwhile, but the change won't come overnight. It may take fifty years, but I think that we need to go in that direction.

The Chairman: You have no doubt gathered that this is my hobbyhorse.

Last year we were in Geneva. All the countries were represented at the ministerial level. One of the NGOs pushing this idea of having a parliamentary assembly to alleviate the democratic deficit had organized a meeting which was attended only by NGOs and three parliamentarians, all Canadian. The idea may have merit, but it does not seem to interest the other countries at the moment.

Thank you very much, Mr. Germain.

Mr. Daniel Germain: Thank you for your attention.

The Chairman: I will now ask Mr. Théberge and Mr. Rémillard to join us at the table.

Mr. Rémillard and Mr. Théberge, we apologize for making you wait.

Mr. Théberge represents the ACEF Rive-Sud. What does ACEF stand for?

Mr. Enrico Théberge (spokesman, ACEF Rive-Sud de Québec): It stands for Association coopérative d'économie familiale. Our organization is similar to that of Mr. Daniel Germain, except that we have gone in another direction.

Today, I intend to outline the objectives of ACEF Rive-Sud de Québec. I will also try to express our concerns about the future development of international economic law and pass along our recommendations for the committee so that they can be submitted to the authorities who will be representing Canada during the Millennium Round of the WTO.

• 1250

The objectives of our organization are as follows. We are a community organization that was founded about ten years ago to protect consumers against certain commercial practices, enable them to acquire the knowledge they need to make judicious and reasonable purchases and promote new avenues to enable people to act as free citizens.

To achieve these various objectives, ACEF Rive-Sud, with the assistance and expertise of the women who are our valuable collaborators.... The permanent team is made up of women. I am a member of the board of directors and I do not do field work like the members of the permanent team. All the full-time workers are women.

The ACEF offers courses to the public on home ownership and financial preparation for retirement and organizes information sessions on various topics such as life insurance, the new child support legislation, etc.

The ACEF raises awareness of various issues through the media. It is also a member of various groups, like the damage insurance council, for the purpose of representing consumers' interests.

The ACEF also regularly provides counselling for people with budgeting problems. We meet with them to try to resolve their financial situation by suggesting a budget that takes into account their resources so that they can make ends meet. Our team members have realized that they have had to do a lot more budget counselling over the past few years. Why is that? Because many people are losing their jobs and losing their buying power as a result.

In coming before this committee, the ACEF Rive-Sud de Québec is trying to determine the causes of this problem of job loss and unemployment. I will therefore present to you some of our concerns.

Canadian and Quebec politicians are always crowing that they are going to eliminate the deficit. In order to do so, they have had to make certain choices. The Canadian and Quebec governments have cut budgets for various social programs and sold crown corporations. For example, the Canadian government sold a good part—I do not know exactly what percentage—of its shares in VIA Rail to private interests.

The Quebec and Canadian governments have weakened some protective rules. To give just one example, the Quebec government gave the go ahead for a dam to be built over the Chaudière River by the Innergex company, in spite of a thumbs' down from the environmental hearings board.

Rules to protect certain parts of the national economy are being weakened in keeping with neoliberal thinking. Priority is being given everywhere to market interests rather than the long-term interests of the public. This is an area for concern.

Where does this obsession with the neoliberal approach come from? One just has to take a quick look back at the development of the GATT, the precursor of the WTO, which was created in 1993-94.

The General Agreement on Tariffs and Trade was negotiated after the Second World War, in 1947, to open up international trade and lower tariffs imposed on imported products. In doing so, governments were questioning economic protectionism, which was the economic policy followed by most countries and which had its advantages and disadvantages: on the plus side, it was possible to protect a sector of the national economy; on the minus side, it prevented the opening up of export markets.

The signatories of subsequent GATT agreements negotiated lower tariffs and created a legal institution, the World Trade Organization, with a mandate to settle most disputes in international economic law.

• 1255

The bodies responsible for implementing these agreements were given the authority to impose fines or sanctions on States that did not meet their international commitments, something that had not been done to that point. Previously, when there was a dispute, efforts were made to resolve it, but governments often did not comply with the ruling. The World Trade Organization has the power to impose sanctions on recalcitrant parties.

Although these international commitments under the WTO may seem fair, if one looks beyond this economic rationale, we are experiencing a severe world economic crisis. There is an increasingly clear split between rich and poor in the world's population. This crisis results from the blind application of the principles associated with trade liberalization. When a government decides to implement liberal policies, it runs the risk of weakening its economy through international competition. It becomes more difficult to balance its public finances and the government will have to find new ways of funding the programs it had created. It may be tempted to take money from the wealthy, but in order to keep capital from leaving the country, it decides to swallow the economic pills prescribed by neoliberal pharmacists: the government withdraws from the economy and reduces public spending on social services and environmental programs. The Canadian and Quebec governments, like most other governments around the world, have subscribed to this horse medicine.

Ignacio Ramonet, the editor in chief of Le Monde diplomatique, has called the enslavement of politicians to this doctrine one-track thinking. His ideas are developed in the January 1995 edition of Le Monde diplomatique. This concept is mesmerizing and is used by the greatest minds in politics and the media.

Linda McQuaig, a well-known Canadian author, has written an eye-opening book called Shooting the Hippo: Death by Deficit and other Canadian Myths. She recounts a major media event that exemplified one-track thinking. The CBC broadcast a documentary a few years ago on the prosperity of the New Zealand economy, which apparently turned itself around by applying the neoliberal precepts of the World Bank and the International Monetary Fund, and where everything was apparently going fine as a result. Any criticism of this neoliberal model was denied by most of the media and most politicians. They do not dare examine the causes of the major devaluation of the Mexican peso or the current financial crisis in the Far East.

I will now give you our recommendations.

Only recently have Quebeckers been willing to look at the problems head on. But would the Canadian government have consulted the public at all if it were not for certain events like the brilliant action by one of the members of the House of Commons, Stéphane Tremblay, who wanted to hold a debate on parliamentary sovereignty, the arrest of 84 people in Montreal who were protesting against negotiations for the Multilateral Agreement on Investment, or the dramatic collapse of economies in the Far East, Russia, Brazil and Mexico?

In the present circumstances, people are well aware of the risks. They are calling the government to account and demanding change. They have finally realized that they are not immune to exploitation and exclusion. They have understood that the consequences of neoliberalism are felt outside the third world as well and that they have common cause with all those people shut out of the world economic machine.

Would it therefore be possible to establish true solidarity between those in the Western world and those in under-developed countries? If citizens in the West are willing to take a critical look at their society, they will come to the obvious conclusion that all human beings are in the same rudderless boat.

Would the new millennium, despite all the hysteria that it is causing, not be an opportunity for Quebec, Canada and all Western countries to reshape international trade and predicate it on international solidarity? To begin with, it would be irresponsible not to look to the past, to take into account these last few centuries where exploitation of people by other people has become a sort of religion, with colonization, slavery and the emergence of an increasingly brutal and merciless economic system. Worshippers of neoliberalism, however, do not dwell on the past, even to learn some lessons. What is worse, they have even less tendency to look at the future from a perspective that would take into account environmental and social needs. In their eyes, only the present counts. That is why citizens must speak up.

Once we have examined our consciences, we need to make resolutions. Every New Year's Day, people make nice little resolutions that soon go by the wayside.

• 1300

Given the issues to be dealt with, we need resolutions that will stand. In addition to calling for explanations from their governments, citizens should require guarantees and no longer tolerate their fate being decided by insatiable CEOs of multinational companies or all-powerful investors protected by the IMF, the World Bank and the WTO, which are the watchdogs of the world economic order.

To begin with, citizens want to put an end to the loss of control over and abuse by these international organizations, which have long exceeded their mandates and their powers. In the present context, their role should be redefined and citizens of all countries should have greater influence. Given the clear loss of public trust, these organizations must be democratized. Citizens should require their governments to ensure that any information concerning their involvement in international organizations or their backroom dealings with them and with investors be made public. If it had not been for the reaction of non-governmental organizations and other interest groups, the Multilateral Agreement on Investment might have been signed without the agreement of the public, which would have been scandalous.

Neo-liberalism can no longer remain a taboo subject to be discussed only by its defenders. And they can no longer be allowed to rule the planet by praising the invulnerability of this system and the logic of market forces. As we have seen recently, neoliberalism is far from invulnerable, and it is even less a necessary evil. In fact, what citizens are asking for is to be let in on the secrets of the powers that be, even if their governments have to greatly increase their efforts to communicate information. It is false to say that citizens do not know what is good for them. They are asking to be fully informed of what is going on. Where does one draw the line between neglecting or refusing to inform people and committing the crime of disinformation?

Lastly, although the ACEF Rive-Sud de Québec does not specialize in international finance or economics, it supports all proposals aimed at protecting national populations from the abuse and irresponsibility of investors. While neoliberalism can already impose its views on government, especially in the area of social policy, we fear that it will soon take over the right to manage in the place of governments.

Another problem is that movements of capital from one country to another do not always generate real wealth and they destabilize economies. We just have to think back to the serious situation surrounding the devaluation of the Mexican peso a few years ago. One of the proposed solutions included the idea of a universal tax on all international financial transactions. Such a tax would probably make investors more responsible and would constitute a new source of government revenue. Along these same lines, eliminating tax havens that enable dishonest citizens to shirk their responsibilities to their countries would be an important step towards social equity.

It is time to admit that the poor are poor and that they have no more money. Governments must stop cutting their programs. However, the most attractive solution remains the creation of an organization that would offset the three main international organizations I have just mentioned. As you can imagine, funding it would be difficult, but if we truly live in democracies, the public's wishes must take precedence.

This organization would focus primarily on controlling the flights of capital, settling disputes among governments and multinational corporations equitably and humanely, and keeping the people truly informed. It would be a kind of ombudsman, an institution that still does not exist in 1999.

Whereas the MAI wanted to place full powers in the hands of investors and equip them with full-fledged impunity, this organization would, on the contrary, attempt to hold them responsible by treating them like any other citizen.

Obviously, these are just a few possibilities. Since there is no one left who denies that we are in dire straits, it is necessary to act as quickly as possible. Since January 1, 1994, the Zapatistas in Mexico have been trying to apprise us of this problem quietly—some may have taken up arms—and to set up an intercontinental network to resist a neoliberalism.

On the eve of the new millennium, Canada has an excellent opportunity to go down in history by spearheading a project that would fully restore citizens' rights and by imposing itself as an international leader in the fight against neoliberalism. But can Canada truly display such initiative? We wonder about that. I hope that you will give us some encouraging indications.

• 1305

The Chairman: Thank you, Mr. Théberge. I invite you to come to Parliament in Ottawa, where you will be able to see this crime of disinformation being committed on all sides of the House on a daily basis.

Some hon. members: Oh, oh!

The Chairman: I'm going to give the floor to Mr. Rémillard, after which we will be able to ask questions of our two witnesses.

Mr. Rémillard, since you were kind enough to distribute your brief, you do not need to read it in its entirety. You could raise the important points.

Mr. Stéphane Rémillard (Appearing as an Individual): It is more like notes for a presentation as opposed to a brief. I would like to start by apologizing to the interpreter for whom I will probably cause some problems.

The Chairman: That is kind of you.

Mr. Stéphane Rémillard: Occasionally, I may stray a bit from the text and I will be omitting some sections.

The Chairman: That is not a problem. I would just like to ensure that members will have enough time to ask their questions.

Mr. Stéphane Rémillard: Okay.

I would like to start by telling you that for four years I was a self-employed consultant in international trade and I often had the opportunity of working with private sector firms. I noted that from a business perspective some highly academic considerations are quite secondary. I worked on issues relating to housing. My presentation will therefore touch on the social side of things, which will perhaps offset the other aspects that I will deal with and show you that people who work in international trade can also have concerns that are social in nature.

The least we can say is that trade liberalization has caused much ink to flow. To make my contribution to the debate and to attempt to shed some light on the positions adopted with respect to this issue for our government, I plan to proceed in the following way with my presentation.

I will start by asking you to take a look at the data and observations contained in reports published by the WTO and the International Labour Office. These reports present some rather interesting characteristics that go back to Mr. Bernier's point of view on what is called the peripheral problem, in other words, a kind of theoretical incomprehension of the two faces of one reality of globalization, i.e. the social reality linked to labour and the reality that is more trade-oriented, where social considerations are more or less pushed aside within the WTO.

I am particularly interested in the labour aspect, which is an essential component of integrating citizens into our society. Lack of work and unstable employment are very negative factors in an individual's daily life and they hinder a person's ability to fully participate in Canadian or Quebec society.

By familiarizing ourselves with the observations in these two reports, we can identify the social repercussions of globalization and examine the state's authority to intervene in the economy in particular.

Contrary to Mr. Bernier, I have a highly interventionist vision and I believe that economic rationality must occasionally, if not quite often, be steered.

I will focus a bit more on the characteristics of the WTO, its evolution, its tendencies in terms of trade vision, as well as certain problems linked to the increasingly complex nature of the issues that we must deal with. I will perhaps address, as Mr. Graham did briefly, the democratic deficit at the WTO, in particular in the multilateral negotiation process, including the Uruguay Round negotiations.

A study of the conclusions from the first report of the WTO Secretariat on the evolution of international trade in 1997 provides us with a considerable amount of information on globalization. In the context of this presentation, I will simply present the general thrust of the report, since I am aware that we do not have a lot of time here.

On a general note, the WTO report indicates first of all that the volume of goods exported worldwide increased by 9.5%. That is a very significant increase, since the rate has only been higher one other time in the past 20 years. So we are not in a period of market contraction.

• 1310

Secondly, there was an increase of the order of 3% in production. That leads to an important finding. First of all, a gap is being created between trade itself and production. In some ways, that is an indication of what is called the gap that is created between a real economy and a speculative economy. You might point out that we are talking about trade, but speculation within the trade process itself also exists. In many cases, transactions are clearly transactions among intermediaries. A characteristic of liberalization is this gap between the real economy and the speculative economy. There is, however, a silver lining to this 3% rate for 1997. It remains the highest rate recorded in quite some time, since 1989.

In 1998, the organization also predicted more uncertainty because of the Asian financial crisis. We saw the impact right here at home, particularly on the Canadian dollar. But the organization also expected the average growth rate to remain higher than it was for the first half of the 1990s. Globally, the prognosis has been more or less borne out. We did not fall into a recession. North America succeeded in maintaining an adequate position in the marketplace.

This WTO report contains other important observations, including a very interesting one for both North America and South America. Truly exceptional rates were recorded in 1997. North America had a rate of 10.5%. That is above the world-wide average. The rate for South America was 12.5%. This performance led to an increase in our market shares that was unprecedented in 10 years. That element must be applauded, and it is reassuring. It is nevertheless favourable for North America. That is not the case in all regions.

The WTO also highlights some other significant points, including the fact that disparities among the regions have gotten smaller in terms of export growth. The strength of the US dollar caused a net gap between volumes exported and their value. It is the most marked decline in the price of exports in dollars since 1950. The dollar also caused somewhat of a distortion, because when you look at the same export volumes from the European side, you realize that the increases were more or less equal; in other words, there was a gap, but it was not very significant. So that could cause some difficulties with respect to the analysis.

The International Labour Organization's most recent report on world-wide employment contained some other highly significant elements, but from the labour and social economy perspective. It indicates above all a paradox.

In a period of growth in trade that the WTO considers exceptional, the average world-wide rate of unemployment is roughly 8.04%. That rate is quite high on a global basis. The figure reflects only part of the reality, because everyone knows that when we talk about unemployment statistics, there are a host of other aspects of the social reality that are ignored. I am thinking, for example, of the unstable nature of employment, people who have simply stopped looking for employment, people who have a job but only for very short periods and self-employed workers who are registered as being part of the workforce. A distinct must be made between the true self-employed people who are self-employed by default.

With respect to the unstable nature of employment, the ILO points out that 25 to 30% of workers on the planet or underemployed. That is also an important statistic.

In this presentation, it would be difficult to cover each of the regions that was studied by the International Labour Organization.

• 1315

For the G-7 countries, I compiled data on unemployment. Of the seven countries, only the United States and Japan stood out as having particularly low rates. Unemployment in the United States was at 4.7%; in Japan, it was 4.0%. Of course, I am not convinced that this data took the financial crisis in Asia into account. The figures compiled covered the situation a bit before the crisis.

In the United Kingdom, the unemployment rate was at 6.2%. That is a bit better than in other countries, but it is still not exceptional performance if you compare it to that of the two other partners.

Rates in the other countries, that is, Germany, at 10.7%, Canada, at 8.6%, France and Italy, at 12%, give rise to some questions. These are countries with very strong economies, but with unemployment rates near or above 10%. This is the start of a serious problem for these G-7 countries. What can be said about other countries that have economies which are much weaker and that experience situations where the structural impact of globalization are much more marked?

The ILO report also notes some new trends that have already been identified by some organizations here in Canada, but that warrant repeating. The social groups that are the hardest hit by the impacts of globalization are of course women, young people and older workers. That fact has been observed here in Canada as well.

The ILO also observed another trend: the growth of the tertiary or service sector, in addition to a higher demand for qualified personnel who require professional training on the job or when changing jobs. It also highlights an increase in the use of temporary staff to avoid costs linked to training and requalifying staff. In Quebec, of course, the famous 1% for training has had an impact. I did not, however, have the time to check those figures. It will be a good idea for me to check them, for the final draft of my brief.

An article written by Ms. Rossana Rossanda, a member of the Lisbon Group, published in Le Monde diplomatique and entitled "Limite à la compétitivité. Pour un nouveau contrat social," contained the following observation:

If capital moves in real time, men and women are rooted in their territory. Business, in some ways, passes them by and then abandons them, and their union and political structures dissolve.

That is a beautiful passage; it is well expressed and it reflects a reality. Ms. Rossanda's observations are confirmed for the most part in another ILO report on the world unionization rate. The report is not limited to unions, but also covers different types of associations in democratic countries. The report covers unionization rates in 36 countries. Of the 36 countries, only 10 registered an increase. That can become worrisome. There are places where negative performance was particularly marked. There is also a positive exception to the rule that must be pointed out, and that is South Africa with its increase of over 100%. Bear in mind that there is a specific context in South Africa, particularly with the restoring of all democratic structures that had more or less been dismantled during apartheid. The case of South Africa is perhaps not a sign of the general trend in unionization around the world.

The International Labour Office highlighted another important point. While a problem facing unions has been identified, employer associations throughout the world are facing a decline that is quite similar to that observed in the unions. How should that be interpreted? I believe that, somewhere, the competitive pressure that is manifesting itself is causing entrepreneurs to fall back on their immediate prerogatives and everything that could be called commitment to their own body, their own social group. It has all been somewhat disrupted.

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It might also be necessary to equip ourselves with the tools at the national level to try to bring pressure back down to a level where people are in a position to function and support our democratic institutions. That is a fact.

This brings me to the impacts. We must attempt to protect the entire democratic structure of our countries by giving ourselves various means. For the time being, we should consider that we are still in a period of reflection, but globalization is truly acting like a corrosive substance. Looking at how to increase protection might well be necessary. This could be done by increasing representation and defending the interest of each country on the basis of a regional group. The free trade area might well consider putting in place—and this will be in my recommendations—a sort of commission of the Americas, a little bit like the European commission, where not only the interests of our neighbour to the South would be represented, but also those of the various members of the FTAA. These interests could be based on a common position.

This brings me to the second part of my presentation, which deals with the WTO.

The Chairman: I must tell you that we usually give witnesses anywhere from 10 to 15 minutes to make their comments, so that we allow enough time for the committee members to ask questions.

Mr. Stéphane Rémillard: How much time have I taken?

The Chairman: You have already exceeded 15 minutes.

Mr. Stéphane Rémillard: I will try to do this very quickly then.

Everyone is very familiar with the way that the WTO works. This organization relies heavily on very conventional analysis of open economies, meaning large-scale free markets. I have already identified some of the impacts of globalization. The WTO does not appear to be interested in containing the effects of globalization. This is one aspect that must be considered in the relationship that Canada should try to pursue in order to get the organization to show greater sensitivity to these impacts or, at the very least, to undertake impact assessments. This may not be all that difficult to do.

The growing complexity of issues dealt with by the WTO is having a significant impact. This situation occasionally results in countries such as Canada, among others, making commitments that they cannot possibly keep. Why? For all kinds of reasons, and particularly for constitutional reasons: the shared jurisdictions make it difficult to abide by these commitments.

To some extent, the problems associated with marketing boards are partially explained by this difficulty to coordinate work that is shared between the federal and provincial governments. This also holds true for cultural issues.

The Canadian government should at least take a look at the opinion given by the London Privy Council, which suggested that the door should be opened to allow, for federal systems, the creation of a WTO forum for states that are part of federations, so that their point of view can be heard and so that commitments made by the federations can be adjusted. Perhaps this will enable us to avoid having to pay countervailing duties for lengthy periods of time.

Finally, there is the question of the democratic deficit. I already alluded to this a little bit when I talked about my recommendation to create a type of committee which, during the comprehensive multilateral negotiation process, would enable us to have representation that is different from that of the United States. I will close here.

The Acting Chairman (Mr. Bernard Patry): Thank you for your presentation, Mr. Rémillard.

We will now go to questions.

[English]

Mr. Obhrai.

Mr. Deepak Obhrai: Thank you for your presentation and different point of view. I was quite keen to listen.

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Many of the things you have stated cannot be overlooked, cannot be pushed aside and say that these things don't exist. There is an impact on what you have suggested. Naturally free trade is having some degree of impact on what you have said and what your colleague on the other side has said. But I'm going to tell you something else. I'm going to tell you that you have to start looking at the bigger picture.

I grew up in a country that was a democratic country, that had good business, that had citizenship over there, that was very progressive. And it was a poor country—Tanzania; it was struggling. This March I had an occasion to go there and visit that country. During the time I lived in that country—and I want to tell about it, so listen to this very carefully—the government of that country changed its policy and decided that it was going to get into business. It went into business. It took everything it had from the people and created a state economy, as you said. The so-called things you were talking about and the so-called intervention by the state were there. In the process, it killed the incentive of the people. You have to understand that. The incentive of the people died. People left that country.

When I went back after twenty years, that country is suffering so badly. Its infrastructure has fallen, and every industry is up for sale.

Have you heard of President Nyerere? He is one of the highly respected socialists in this country. Do you know what he said to me? He said “My country has become weak. The state has become weak. And when a state becomes weak, it has no room to manoeuvre.”

And the question of rich people.... Do you know what happens? The ones who are the poorest never had anything in the first place. It's the lower middle class that disappears. It doesn't impact the rich; they can go out of it. Therefore in the global factor of the situation, you know, this free trade.... He came up with this neo-liberalism. Next time it will be neo-Blocism.

I'm talking to you from experience. I have seen the devastation that has taken place. You guys have to think carefully. There is no question. There is no such thing as neo-liberalism. I suggest that you look around the world, see the countries that have closed economies and see what situation they are in.

I have no questions, because I myself have witnessed everything over there. But I will take some of the points you have raised in reference to labour laws.

There always has to be a balance. You cannot tilt it one way or the other.

The Acting Chairman (Mr. Bernard Patry): Thank you, Mr. Deepak, for your comments.

We'll go to Mr. Sauvageau.

[Translation]

Mr. Stéphane Rémillard: I'd simply like to make two brief comments.

The Chairman: Two very succinct comments.

Mr. Stéphane Rémillard: First of all, I would like to point out that I'm not against free trade. Quite the opposite, I see free trade as an extremely important instrument that will enable us to maintain our quality of life here. When you talk about the need to establish a balance between a social vision and a business vision, I completely agree with Mr. Obhrai. We also have to realize that, as a result of the eroding powers of the Canadian government, we at least need some international leverage if we can't compensate for the loss of power nationally. That is simply my position, and it has nothing to do with an attack against neoliberalism.

The Chairman: Mr. Théberge.

Mr. Enrico Théberge: I have three brief comments.

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In my presentation, I did not want to brag about the merits of the State economy. We have several examples showing that this type of economy does not always work well; we have often seen cases where a nomenklatura made all the decisions. This will become an elite that decides everything, and this is not desirable. Right now, it is disappointing to note that the population does not have greater control. It is always the elite that makes the decisions and I find that very serious.

I would also like to point out that neoliberalism is a doctrine that was proposed and created by John Rawls and Robert Nozick. This brief comment is intended for Mr. Obhrai.

The Chairman: Mr. Sauvageau.

[English]

Mr. Deepak Obhrai: I have just one small comment.

You've said what you came to know. I'm telling you from experience. I have seen it. So I would suggest you do some more...[Inaudible—Editor].

[Translation]

Mr. Benoît Sauvageau: I have noticed that you are both inclined to favour the Tobin tax. I'm waiting for a phone call about a motion presented in the House by Lorne Nystrom, a member of the NDP, and amended by the Bloc Québécois, to ask the government to strike a task force on the Tobin tax. This motion should be discussed this week because there were only a few points that needed to be finalized. If you wish to follow this debate, I would refer you to motion M-239. The Bloc Québécois sponsored the amendment; I moved it, and it was seconded by Stéphan Tremblay, who gave a speech on the issue.

As Mr. Théberge mentioned, Stéphan Tremblay presented some 50,000 signatures in the House using the new MP signature process that allows us to introduce motions or bills. This matter is also following its course.

I'd like to go back to the issue of greater transparency within the WTO. We have seen how some NGOs like to use the Internet. We have only to think of the Multilateral Investment Agreement. When the text appeared, the hue and cry was close behind. Some witnesses suggested that we should make the texts of WTO discussions available on the Internet to allow the various NGOs or parliaments to find out what's going on immediately. What are your thoughts on the matter?

As regards openness, consultation, information—you have spent a few hours here this morning, because this meeting is open to everyone—and statistics on unemployment, I would like you to correct me if I'm wrong because I always feel bilious when I hear statistics on unemployment. I don't want to play politics, but I will say that you have only to see how, with some cutbacks, we could reduce the unemployment rate.

For example, if we required 2,500 hours of work instead of 910 to have access to employment insurance and if we were to determine that people will no longer be entitled to this insurance after receiving benefits for the first time, the Canadian unemployment rate could drop to approximately 1.7 or 1.5%. Would we be any better off? I don't think so. So we have to be careful with the statistics on unemployment that we are given.

In the United States, workers are not entitled to collect unemployment insurance more than once or twice, and the rate is standing at 4%. How does this compare to Canada? We are not dealing with the same thing at all. It is all well and good to compare ourselves to each other, but using comparable situations.

Mr. Enrico Théberge: As for the availability of information on the Internet, this tool is very attractive because it enables us to have access to various files or points that were not available before it. However, it remains to be seen what the citizens are able to do. What is important is that we'll try to counterbalance the interest of the multinationals. Globalization appears to have been done for and by the multinationals. A few countries may come out all right, but we are only talking about a few countries, and unbridled competition will always prevail over international solidarity. We will never think about others if we continue to let the multinationals take the lead on everything.

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I am happy to be here, but it is because of an invitation sent to the ACEF Rive-Sud de Québec that I'm here. Several other organizations were not told about this meeting. I am not familiar with all of the ways that you advertize, but very few organizations know about the committee meetings.

The Chairman: This meeting?

Mr. Enrico Théberge: About the committee meetings that took place at the Concorde today. I spoke to many members of organizations located in Quebec City and they told me that they had not been advised.

The Chairman: You have touched on another problem. We wanted to advertise in the newspapers, but it costs so much that the committee couldn't afford it.

Mr. Enrico Théberge: This meeting was open to everyone, but I wanted to point out that the "everyone" was very limited.

The Chairman: People have to know about it, we understand.

Ms. Debien.

Ms. Maud Debien: First of all, I'd like to comment on what Mr. Théberge had to say. Your remarks and those that we have heard to date from certain NGOs and participants in civil society denote that there is some discontent, that everything is not clear. Moreover, the failure of the MAI is also evidence that there is a democratic deficit and lack of transparency. It is, therefore, important that people be informed and participate in the discussions.

It is not important that we establish who's right or who's wrong or that we side with neoliberalism or with a society that is more socialist; what is important is that we ask the right questions. I think that you are here to testify to that.

I do not want to follow along the same line as Mr. Obhrai by saying that if, in some countries, such and such a thing worked out well, it was because of this or because of that. We are here to listen to you and to come to the realization that, indeed—and you are not the only ones who have told us that there is some discontent and that we have to ask the right questions, the Canadian government must make the right decisions during WTO negotiations. This is how I understood your testimony, Mr. Théberge.

Mr. Rémillard, in one of your recommendations, you talked about the democratic deficit and you suggested that a commission of the Americas would offset this deficit. The Chair alluded earlier to a parliamentary assembly such as the one found, for instance, at the Council of Europe. Is this how you see a commission of the Americas?

Mr. Stéphane Rémillard: [Editor's note: Inaudible]...of a free trade area. The degree of integration is not necessarily the same. For example, the level of integration achieved at the European Community is much more advanced. If we were to set up a commission at the outset, this would already be a plus.

We must not forget that the European Community was not established in one fell swoop; the Parliament came much later on. The Commission played this role for a long time to try to offset this deficit. Moreover, the debate on the democratic deficit took place at the Commission level as well. It is precisely because of these efforts that they succeeded in establishing a European Parliament as well as regional committees and several other things.

I am very familiar with this topic because I worked as a student at the Commission of European Communities. We can borrow certain aspects from them, but on a step-by-step basis. Putting the cart before the horse would probably cause the whole process to derail. I am more conservative in such matters.

Ms. Maud Debien: Thank you.

The Chairman: To follow up on Ms. Debien's question, you know that in the European system, the Commission is perhaps the least democratic system in the world. There is perhaps something of a paradox in what you have just said.

Mr. Stéphane Rémillard: Yes, but....

The Chairman: It is perhaps the term "commission" that....

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Mr. Stéphane Rémillard: Well, we'll have to reach an agreement. We will also have to bear this in mind with respect to the multilateral negotiating process because we need to have a representative organization. Obviously, we could have perhaps used a better word than "commission".

The Chairman: No, but there is....

Mr. Stéphane Rémillard: We will have to reach an agreement.

The Chairman: Mr. Rémillard, there is a committee under NAFTA, but its members are ministers in charge of international trade. This committee meets once or twice a year; it's an institution that has very little power. We could, therefore, suggest a more significant institution.

Mr. Stéphane Rémillard: Yes, a major institution that would enable us to calibrate representation of the free trade area so that, when the GATT enters into the equation, we will have a position of the Americas that does not reflect the U.S. position exclusively. This is the principle that I was advocating.

The Chairman: Yes, yes.

Mr. Stéphane Rémillard: I was not suggesting that we copy the European Community.

The Chairman: No, but we should specify that you are suggesting a political institution rather than a bureaucratic institution such as the European Commission.

Mr. Stéphane Rémillard: This would be a preliminary step. Perhaps we'll have to think of this institution as one that is constantly evolving; however, we will eventually have to come up with something that will be much more democratic.

The Chairman: Mr. Bachand.

Mr. André Bachand: Thank you, Mr. Chairman.

I have a few comments because the presentations were quite rigorous. As far as Europe in concerned, I think that we have to be careful. We are learning something new about Europe every month. Now that the energy and enthusiasm of the early days have waned, there are more questions surfacing about Europe. Accordingly, we have to pay very close attention.

I recall the statements made by certain Quebec members of Parliament when the Euro came into force. Over the past few weeks or months, we have seen what has happened with the Euro.

My colleague Benoît Sauvageau talked about the unemployment rate. I would like to remind him that the unemployment rate has nothing to do with employment insurance. The unemployment rate is a completely different calculation. We have to be careful about this. Unemployment is calculated, particularly in the G-7 countries, in similar fashion, setting aside a few differences. If we were to compare Canada's unemployment rate with that of the United States, we would see that there's a problem. More jobs are created in the United States than in Canada.

I agree with Mr. Théberge's comment. The committee has not done enough advertising, and we must shoulder the blame for this. However, as the Chairman pointed out, it's a matter of money. Members of Parliament or politicians are often accused of spending money willy-nilly. Before a committee representing all parties can travel, it has to fight tooth and nail. It's difficult to obtain the money required for travelling. We have to cut back on our budget, particularly in the area of advertising.

The big problem is putting things into laymen's terms, explaining the WTO to the people. I think that this is very clear; people are reacting because this issue is very complex.

You alluded to the MAI earlier. Operation SalAMI, in Montreal, probably enabled many people to understand what was going on. Although SalAMI did not stop the negotiations, it did perhaps create some interest and enabled people to understand what was going on internationally. I think that that is important.

Our role, as a committee, will be to try to make this issue understandable to people. Unfortunately, we are more or less here to listen to what people have to say. We have invited people to come and meet with us, but we are not here to educate.

We spend millions and millions of dollars in order to promote budgets, at the federal and provincial levels, but how much money do we spend to alert people to these agreements that may cost them millions and millions of dollars in terms of social programs, jobs, etc.?

We talked about the Tobin tax, which is an old concept now. The Nobel Prize cheque was cashed a long time ago.

• 1345

The Tobin tax is an issue that keeps coming back. Right now we are discussing the issue in the House. Many questions have been raised on this topic. I would like to hear your opinion on the Tobin tax. We view it as a possible source of revenue. We're even talking about an equalization system. Can you imagine? Although equalization stirs everyone up here, we're talking about an international equalization system.

I would like to hear your comments on the feasibility and advantages of the Tobin tax. Your input will help us as we are about to begin a debate in the House on the issue. I know that this is a highly specialized subject, but I would like to hear your opinion.

The Chairman: Had he thought about it, I'm sure that Mr. Bachand would have advertised the report on the G-7 published by this committee four years ago, as we had discussed the Tobin tax. I know that you weren't there, Mr. Bachand.

Mr. André Bachand: No, but I did read it, Mr. Graham.

The Chairman: We discussed the topic to some length and I would recommend to those who would like to know more about the Tobin tax that they read this report.

Mr. Théberge.

Mr. Enrico Théberge: That would interest me.

The Chairman: I'll send you a copy of this report.

Mr. Enrico Théberge: Great. Thank you very much because this is always a very interesting issue.

Mr. André Bachand: It's very interesting.

Mr. Enrico Théberge: The feasibility of the Tobin tax is an idea that was put forward by certain organizations. An ad hoc committee was established in France. A committee was also struck in Europe; we are starting to see the consequences for Europe.

I don't have any specific thoughts as to its feasibility, but the idea is out there. It has been said that international financial transactions would be more contained than they currently are. That is, at least, a beginning. We can't expect any miracles; there are never any miracle solutions. We have only to look at what is occurring in Canada. We have not yet come up with a miracle solution. We need to find a solution to contain the market and the speculation that is currently going on. I have just talked to you about the advantages.

You talked about calculating statistics on unemployment. We are inclined to say that, in the United States, there is less unemployment than there is in Canada, and there are more jobs. Perhaps more jobs are being created there, but these are often precarious jobs. We have a lot of statistics and reports showing that this is true.

Mr. André Bachand: You are quite right, however, I would like to make a slight correction. I don't want to correct Benoît, because I would never dare to do so, but I would simply like to point out that the unemployment rate is an indication, a general view. We then have to take a look at the disposable family income and the link with poverty. Several factors come into play. There is, for example, the issue of housing and personal health. To come up with one statistic, we have to compile a series of statistics.

You are right when you say that we have to look at the whole problem. A person may be earning minimum wage, living in unsanitary conditions and finding it difficult to educate his children. The problem is very broad.

The Chairman: Mr. Rémillard, do you wish to add anything?

Mr. Stéphane Rémillard: I could perhaps add something with respect to the feasibility of the Tobin tax.

To some extent, I do believe it is possible to implement such a mechanism. Some financial transactions are extremely complicated. I do not think that it will be any more complicated to implement the Tobin tax. Of course we will have to set up a central coordinating agency. That is clear.

I do believe that this could be feasible. Obviously, this may mean setting up another international organization. Is this a disease? I don't know.

Ms. Maud Debien: There has to be some political will.

Mr. Stéphane Rémillard: Yes, obviously.

A Voice: And a great deal of technological will.

Mr. Stéphane Rémillard: Yes, but I don't think that the technology poses any problem. We cas see that there is a technological evolution in progress that always comes as a surprise to some people. So we don't have to be concerned about that.

The Chairman: Mr. Patry.

Mr. Bernard Patry: Mr. Théberge and Mr. Rémillard, I would like to make a few comments to follow up on the ones made by my colleagues.

My first question is for Mr. Théberge and deals with the creation of a committee and Canada's position with respect to the NGOs and civil society. I think that you can read the address given by Mr. Sergio Marchi before the international committee on the Internet site.

• 1350

On page 9, you can read the following:

When negotiating the FTAA, for instance, we sought—and obtained—the creation of a special task force on civil society which will hear opinions from all walks of life in our societies.

I think that it is important to mention this because this is a first. This may have a snowball effect and the things that we would like to see being created will be drawn to the attention of the WTO. That's my first comment.

My second comment has to do with the Tobin tax. Everything is, of course, feasible, but every country in the whole world will have to be able to be part of this system. If a country does not become part of the system, all currency transactions will be steered to this country; currency transactions will, therefore, be initiated from this country. This would bring in a great deal of revenue. As you mentioned, we could give some thought to equalization to assist developing countries, poor countries, the needy of the planet. But is this really feasible? I don't know, but we'll discuss the issue in the House.

My colleagues and the Chair also mentioned the committee of the Americas. This will be my third comment. We already have the Organization of American States. There are many organizations like this. As far as we are concerned, this would simply be one more committee. Perhaps the problem has to do with the name, and Mr. Graham has already mentioned it.

We also have the COPA, the Conference of Parliamentarians from the Americas. If we want to do something positive, we need something that is parallel to the government, where we would have representation from parliamentarians of all other countries involved. I think that the brainstorming, comments and discussions should take place at this level, because if we simply leave this up to the committees, which are run by officials, it won't work.

An hon. member: Just like COPA?

Mr. Bernard Patry: Like COPA? Perhaps COPA was too big. All of the American States were there. It was a bit too big. This should be a little bit smaller.

Thank you. That's all.

The Chairman: Mr. Théberge, do you wish to make a comment?

Mr. Enrico Théberge: I'd just like to make one last comment about Mr. Patry's remarks.

I understand the global problem that now exists. When one State takes some progressive steps, all of the other States have to follow suit. That would be the ideal. However, if we were to say that this is not worth pursuing because of this threat, we may very well lapse into doing nothing at all. Consequently, we must try to find a legislative tool that will allow us to skirt this danger or take it into consideration.

The Chairman: Thank you very much. So many people have made this complaint to us. We have the same complaint ourselves.

You said that the elites were the decision-makers. You're not talking to elites now. That's the problem. The elites are far removed from us and this is what is scaring us right now. Would you agree with me that we must deal with the issue of integration, in terms of the environment, the economy, etc.? We are trying to create institutions to deal with this ever-growing integration.

I think that this issue will become even more difficult when China joins the WTO, because then you will have two other huge and complicated societies that will have to be factored in with all of this.

Mr. Théberge, you are young, you are part of that group of people who are more open to new technology. Do you think that with the new technology, with Internet, there will be more opportunities for people to consult with one another? We would then have a democratic basis for these decisions; it would not come to the point where such decisions would be made far removed from the population. Right now we are dealing with decisions that are coming at us from everywhere.

As I read in a recent newspaper, there is some concern. I really think that Europe is in quite an upheaval. I had the opportunity to teach European law there for years; we could see a system whereby member States would direct thorny issues to Brussels, so that Brussels would have to take the political consequences for decisions that the member States didn't want to have to make themselves.

There is, therefore, some kind of millstone around democracy's neck. Will the new technology provide us with the same opportunities as this assembly of parliamentarians, to which I am particularly attached?

• 1355

Mr. Enrico Théberge: As for the problems that will arise in the various international debates that will take place in the future, I do believe that these will be the tools and that we will have no other choice but to use them.

As for what was said earlier about the NGOs disseminating the MAI accords, this was done through the Internet. It's because of the Internet that we were able to seize this opportunity to establish an informal international forum. Consequently, Internet may be a tool.

The Chairman: Yes, but can the Internet be used to develop consensus and not simply to voice opposition?

In the case of the MAI, Internet was used as a voice of opposition, but if people want to survive into the 21st century, they're going to have to have the means to resolve these things and come up with solutions.

Mr. Enrico Théberge: The real problem is that we can very well imagine a situation, right now, however, establishing a consensus and a dialogue on a chat.... I'm not very familiar with Internet, but I do find that this is a big issue.

The Chairman: We were told that on the Internet, there were....

Ms. Maud Debien: Is this a comment on your comments?

The Chairman: Ms. Debien, yesterday, we were able to vote on the Oscars over the Internet. If we were to begin with this, we....

Ms. Maud Debien: I apologize, Mr. Chairman, but I simply want to state that the Internet is available only to a privileged class, to informed, educated people. We may be dreaming in technicolor, but civil society, the general population, will always have information problems.

Most Canadians do not have access to the Internet. I don't think that the problem lies with the technology behind Internet, but rather with access to the Internet network for John and Jane Doe.

The Chairman: Yes, quite.

Ms. Maud Debien: As long as these problems are not resolved, the technological problems....

The Chairman: Apparently, Canada is the most connected country in the world, but we are, all the same, trying to do that.

Mr. Théberge, Mr. Rémillard, thank you for coming. You have given us a great deal of food for thought. Thank you very much.

Mr. Rémillard.

Mr. Stéphane Rémillard: I would simply like to make a comment about something Mr. Patry said. We agree with what he had to say about the COPA. I was referring to a democratic and representative force in the relationship between the Free Trade Area of the Americas and the WTO. I'm not getting into the parliamentary process.

The Chairman: I'm going to talk about a few housekeeping details.

The rooms have to be vacated by four o'clock; the bus is leaving at four o'clock, in front of the hotel. I know that some of you have your own cars.

Ms. Raymonde Folco: I have my own car. If people would like to come with me, I'd be pleased to have their company.

The Chairman: All right.

Tomorrow morning, we will begin at nine o'clock. We have a heavy day.

The meeting is adjourned.