FISH Committee Meeting

STANDING COMMITTEE ON FISHERIES AND OCEANS

COMITÉ PERMANENT DES PÊCHES ET DES OCÉANS

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, March 31, 1998

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[English]

The Chairman (Mr. George S. Baker (Gander—Grand Falls, Lib.)): I now call the meeting to order.

We have a couple of things to do before we get to our main subject today. The first is to approve the motion to have a press conference on Thursday, April 2, 1998, at 12 noon, in the National Press Building, concerning the second report of the committee, which will be tabled in the House on that day, concerning fisheries matters on the west coast. Is the committee in agreement that we have the press conference at 12 noon, following the tabling of the report in the House of Commons on Thursday?

Some hon. members: Agreed.

The Chairman: Mr. Duncan.

Mr. John Duncan (Vancouver Island North, Ref.): Mr. Chairman, originally we had planned on having something going on here and in Vancouver. For my own clarification and confirmation, the way it sits right now it will all be right here. Is that correct?

The Chairman: The clerk says Mr. Stoffer will be on the west coast as per our original meeting, but do you see any necessity for having any hook-up with the west coast? No.

Mr. John Duncan: I think it's an awful lot of expense at this point for one individual.

The Chairman: If it's all set up and can't be cancelled, the expense would still be there. What it would be is the NDP hooked up with Ottawa. But I'm in the hands of the committee, whatever the committee decides.

Is it okay if we were to have just the one press conference here in Ottawa? Mr. Matthews says yes, absolutely.

Mr. Wayne Easter (Malpeque, Lib.): I have no problem with that.

The Chairman: You have no problem.

Mr. Wayne Easter: I think, in fairness to John, the original intent was to go Friday, but we don't know if the House is going to be open Friday, so it had to be moved back to Thursday, which complicates your life in terms of Vancouver, as I understand it.

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Mr. John Duncan: Yes. The way I look at this is that I don't want to see the committee split up and I don't want to defer tabling in the press conference until later, so the best of the alternatives is to have it here. We're all here. Do it and get it done on Thursday.

Mr. Wayne Easter: I agree to that.

A voice: We need a quorum for a motion.

The Chairman: The clerk says the chair doesn't count. A lot of people say that.

Some hon. members: Oh, oh.

The Chairman: We'll just postpone it until we get nine, but that's the understanding we've arrived at. We know what the substance of it is and when we get one more person here we'll just simply pass the motion.

Let's continue. The second thing we'll have to pass when we get the numbers of people here, just so we understand what we're passing.... The first motion we're going to pass concerns the press conference, which we'll adopt as soon as we get quorum. The second one, which I will put just as soon as we get quorum, concerns the reports on fisheries management on the west coast, in central Canada and the Arctic. The budget for the reports, which includes the reports, contract consulting, witness expenses and video-conferencing, is $30,000.

Those in favour?

Mr. John Duncan: Can we get clarification again before we vote on this?

The Chairman: Okay.

Mr. John Duncan: Is this for producing the reports resulting from future trips?

The Chairman: Yes. And for the west coast. So here's the breakdown.

Mr. John Duncan: It's not the one we're delivering this week.

The Chairman: Including the one we're delivering this one.

Mr. John Duncan: I thought we already had approval for that.

The Chairman: Part of it. Let's do the breakdown. Reports: $10,000. Contract consulting: $4,000. Witness expenses: $11,000. Video-conferencing: $5,000. Estimated total cost: $30,000. That's from April 1 to June 30, 1998, for the expenses of the committee.

Those in favour?

Some hon. members: Agreed.

The Chairman: Now we'll move on to our committee meeting. We have two witnesses with us today. From the Department of Foreign Affairs and International Trade, we have Mr. John Gero, who is the director general of Trade Policy Bureau II, services, investment and intellectual property. That's in the Department of Foreign Affairs and International Trade. And then, from the Department of Fisheries and Oceans, we have Mr. Marshall Moffat, who is the director of the economic analysis policy branch of DFO.

Perhaps we could start with a statement from the witnesses.

Mr. Gero, would you like to go first? This is concerning the multilateral agreement on investment, of course.

Mr. John Gero (Director General, Trade Policy Bureau II, Services, Investment and Intellectual Property, Department of Foreign Affairs and International Trade): Thank you, Mr. Chairman.

I thought I'd bring the committee up to date on the background about the Multilateral Agreement on Investment, talk a little bit about the fisheries issues and then try to situate where we are currently in the context of the negotiations. Then I would be happy to answer any questions the members may have in this regard.

The MAI negotiations started in 1995 in the OECD, which is a group of about 29 developed countries. The organization is located in Paris, as you well know.

The motivation for creating an MAI was in large measure a realization that in the context of global rules there were lacunae in the investment field and international investment flows were becoming more important in the context of economic development throughout the globe.

In addition, there were also close to 1,300 to 1,400 separate bilateral foreign investment protection agreements throughout the world and it was thought that it would be easier if these were all rationalized in one agreement rather than in 1,350.

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As a result, negotiations began to create in essence a multilateral agreement for the protection of investment. The agreement has in essence the same kind of form as other existing international investment protection agreements. It has provisions on non-discrimination, which means that one would treat a foreign investor the same as one would treat a domestic investor. It has provisions regarding the protection of that investment—that is, to the extent that one expropriates such investment one would provide fair compensation in that regard. It has also a dispute settlement mechanism so that to the extent that states feel that one or the other of them are not living up to their obligations under the agreement then there are provisions on how to provide or settle disputes among them. That's the general framework that all investment protection agreements have, and the MAI is no exception in this regard.

From Canada's perspective, we have supported the creation of a multilateral agreement on investment for a number of reasons. Clearly, in an open economy like Canada's foreign investment is extremely important, both from an incoming perspective and an outgoing perspective. As you will have seen lately in the numbers, we have achieved approximately the same balance in investment. We have approximately the same amount of foreign investment coming into Canada as we have foreign investment going abroad. It's important to ensure that Canada has an appropriate investment climate to attract foreign investment, to create jobs and growth in Canada. Similarly, it's important to ensure that Canadian investors going abroad be fully protected vis-à-vis their investment.

Secondly, from our perspective and for the last four or five decades, Canada has always valued an international rules-based system. We're a middle-sized economy, and from our perspective it is always better to work within a set of rules rather than the context where in essence might makes right. We don't have the ability to use baseball bats to beat people up with, nor would we like to have baseball bats used on us in the context of a disequilibrium, in the context of negotiations as unequal partners. So we've always supported the establishment of international rules because from our perspective as an open economy that is very important for our economic growth.

Thirdly, in the context of the MAI, frankly, there wasn't a great deal that was new in the concepts that were being discussed in the MAI. We already had a number of bilateral foreign investment protection agreements in that context and we were trailblazing in the context of regional agreements because NAFTA had contained a fairly extensive chapter on investment protection. In that context, it did not create new disciplines that Canada would have to enter into in the context of our investment policies. Our goal in the context of negotiating the MAI has always been to in essence replicate the NAFTA or the provisions that are in the NAFTA in a larger context of the 29 members of the OECD.

If I can turn to particularly fisheries issues, there have been a number of concerns expressed in the context of fisheries as to what were going to be the implications of an MAI vis-à-vis Canadian policies in the sector. First of all, there have been a number of concerns vis-à-vis non-discrimination, because as you all know, we have a number of laws, such as the Fisheries Act and the Coastal Fisheries Protection Act, where we do give preferences to Canadians in that regard and do treat foreigners differently. Just as in in the NAFTA, the intention in the MAI is that one would have reservations through a process of exceptions that would make sure the treaty did not apply to these kinds of laws. That is, we could continue to discriminate as we do in the Fisheries Act or the Coastal Fisheries Protection Act. We did this in NAFTA, and it is our intention to do that to the extent there are any provisions that create difficulties for us in the context of the MAI.

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Secondly, there has been some concern expressed that the definitions in the MAI are broader than what they are in NAFTA. It's true that in the current consolidated text there is definition that goes beyond the context of NAFTA. Certainly from our perspective eventually the MAI will have a similar kind of definition to that of NAFTA. It is certainly not our intention through a definition of what investment is to broaden the scope of an investment agreement beyond what we already have in that context.

Thirdly, there have been questions raised as to what are really the effects of the provisions on expropriation, and how do those get interpreted and will they somehow affect the abilities of governments to regulate in the normal course of events. There have been some interpretations that expropriation provisions mean that any time the government does anything that is detrimental to any individual enterprise, somehow that should be defined as an expropriation. That is clearly not our view. It has not been historically how one interprets expropriations. There's certainly a consensus among all the countries around the table that this is not the way expropriation would be interpreted, and it will be clear in the context of the MAI that one has a very narrow interpretation of expropriation so that it does not in any way affect the ability of governments to regulate in various economic sectors.

These seem to be the three areas where there's been the most concern expressed in the fisheries context. There have obviously been a number of concerns expressed in other areas, in agriculture and health care, in social programs and in culture, a number of areas outside the areas of fisheries. There the minister has made it clear in his statements that from a Canadian perspective we have a number of very important considerations that we will not sign a deal that in any way affects our ability to legislate in that regard, that it is incorrect to say that Canada somehow will undertake what are called standstill obligations or actually undertake some kind of roll-back obligations in these areas. We will certainly intend that the MAI will not in any way inhibit the government to legislate and indeed make it more restrictive to the extent necessary in these areas of concern.

That is in essence the picture of what's in the MAI, the Canadian interests, the kinds of concerns that are being expressed in fisheries and in other areas.

Let me give you a little bit of where we stand at the moment. As you know, the deadline for the conclusion of the MAI was initially April 1997. Ministers met at the annual meeting of the OECD then, and it was not possible to conclude an MAI at that point in time and they gave themselves an additional year to conclude, which was to April 1998. I think it's clear now that there will not be an agreement concluded by that date either. It is not clear yet what ministers will decide this upcoming April, but what is clear is that there won't be an agreement at that point in time. From our perspective, and as the minister has stated publicly in a number of cases and a number of times, to us it would be important to have an MAI, but we want to have a good deal, one that isn't detrimental to Canada. From our perspective, the timeframe is not important. From our point of view, it's the quality of the agreement that counts.

Secondly, also from a Canadian perspective, because obviously in the context of the OECD it's only limited to 29 countries, we would prefer to see a far larger global agreement in that regard. We've always regarded the discussions in the OECD as a stepping stone to discussions in the WTO in this regard. We were instrumental in having work begun in the WTO at the time of the Singapore ministerial meeting on investment, and there's a working group established in the WTO. So from our perspective, that is where a global investment agreement will eventually reside.

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Why don't I stop there, and to the extent that you have any questions, I'd be happy to answer them.

The Chairman: Mr. Moffat, did you have an opening statement?

Mr. Marshall Moffat (Director, Economic Analysis Policy, Department of Fisheries and Oceans): Yes. Thank you very much.

I'd like to concentrate on the implications of the MAI for the fishing industry. First of all, I'd like to talk a little bit about the benefits of the Multilateral Agreement on Investment.

When you talk to members of our fishing industry, you very quickly get the idea that they're entrepreneurs who strongly favour free trade. Over the last several decades our industry has gone through a significant transformation from an industry very much production-oriented, with only a certain amount of value-added, exporting into one primary market to the south, in the U.S.

Our industry over the past two decades has expanded its downstream capabilities and expanded its world presence to a point now where we are a world power when it comes to the fishing industry in the marketplace around the world.

Our industry has done this in part by its ability to invest in foreign markets—first, as a way to get under what was then a tariff barrier in the U.S. before the free trade agreement, and then more recently, as a way to get additional raw material so that it can maintain its flow of products to its customers.

This investment in accessing raw material, in undertaking joint ventures, and in increasing the value-added of the products our industry markets worldwide has strengthened the profitability of our fishing industry.

What that means to fishermen is that they are dealing with an industry that is more profitable than it otherwise would have been. That means the fishing industry is more able to pay a price for its raw product that fishermen find more acceptable or more lucrative.

That's the fundamental link between investment flexibility on the part of our industry and the flowthrough back to profitability and then back through to the price that they can afford to pay for the raw product our fishermen land and deliver to them.

If we're going to say that we're free traders and free investors, there is one particular area we have to be very careful of in the fisheries sector, and that is the area of the rights of a coastal state to exploit the fish resources within its exclusive economic zone according to the United Nations Law of the Sea.

It is very easy, as I'm sure the members of this committee well know, for a factory freezer trawler from a foreign fishing nation to come into our zone, fish, and leave. The investment involved is in a portable fishing vessel, and it is possible for a foreign investor to come into our zone, fish, and leave, with absolutely zero benefit to the Canadian economy.

The Law of the Sea was not put in place particularly to prevent that from happening. It was put in place for conservation reasons, so that coastal states who depend the most on these coastal resources can have more of a say in reducing the amount of fishing that is taking place collectively by the entire set of fleets. That's the philosophy of the Law of the Sea and why it's important to coastal states throughout the OECD.

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So what we have to protect in negotiating an agreement like the MAI is the ability of the Government of Canada to take action to limit access to our zone by foreign nations and foreign fishing companies. There are two ways in which we do that. The first one is a restriction to majority Canadian-owned enterprises to access to domestic fishing licences under the Fisheries Act and the powers that Parliament has conferred to the Minister of Fisheries and Oceans in the Fisheries Act.

The second area is the control the Government of Canada can exert over the access that foreign fishing companies may be given, under Law of the Sea, to our zone. We have the control over whether we give access, how we define “surplus” under Law of the Sea, and the conditions under which any access is given to our zone. That's the Coastal Fisheries Protection Act. So that must be preserved in any multilateral agreement on investment.

Mr. Wayne Easter: Excuse me for interrupting. Can you run those by me again? You raised three points.

The Chairman: That was Mr. Easter asking the question, for the record. Mr. Easter wants you to wind back the last three reasons you gave.

Mr. Marshall Moffat: Okay.

The first point that we need is the Fisheries Act—the powers the Minister of Fisheries and Oceans has to issue domestic commercial fishing licences under that act. We want to preserve his exclusive authority to do that and to differentiate between foreign-owned and Canadian-owned entities.

The policy of the Department of Fisheries and Oceans has been for quite some time that in order to gain access to a commercial fishing licence, one of the conditions you have to meet is to be majority Canadian-owned—that's at least 51% Canadian-owned. That's the first item.

The Chairman: The second one.

Mr. Marshall Moffat: Or the second item, sorry.

The Chairman: No, no, that's the first one. Now get on to the second one, which is an interesting one, if you repeat exactly what you said the first time.

Mr. Marshall Moffat: I'll try to. I'll do my best.

The second one is the Coastal Fisheries Protection Act, which is a vehicle for the Government of Canada to implement its rights—its right to limit the access of foreign fishing nations and foreign fishing companies to Canada's zone under the terms of Law of the Sea, which require us to give access when there are resources that are surplus to our needs. So we determine surplus; we determine the access they get; we determine the conditions they have to meet to get access; we determine whether they get access to our ports, under Law of the Sea.

The Chairman: So it's not the Law of the Sea that determines whether we have fish in excess of our needs.

Mr. Marshall Moffat: No.

The Chairman: It's Canada who determines whether we have fish in excess of our needs—right, Mr. Moffat?

Mr. Marshall Moffat: Yes, but....

The Chairman: We retain that. But what, Mr. Moffat?

Mr. Marshall Moffat: The only “but” is that the Law of the Sea does obligate us, if there are fish resources surplus for our needs—

The Chairman: Oh yes, you said that. But Canada determines whether there are.

Mr. Marshall Moffat: Yes.

The Chairman: Yes. Go ahead, Mr. Moffat.

Mr. Marshall Moffat: The final point I wanted to raise with respect to reservations or exceptions is our ability to preserve fish habitat. This is an area that relates to the expropriation issue, which my colleague John Gero has already raised.

One of the examples is the implementation of our fish habitat protection obligations under the Fisheries Act. We certainly would not want a foreign investor to interpret domestic valid actions taken under the preservation of habitat responsibilities of the Minister of Fisheries and Oceans to be interpreted as an attempt to expropriate foreign investment. So that's the final area.

The first major block of concern is access to Canadian fish resources and our ability to differentiate between foreign-owned companies and domestic, and the second is our ability to continue to preserve the habitat as one of the elements of the environmental concerns.

The Chairman: Thank you, Mr. Moffat, and thank you, Mr. Gero.

We will go to questions. Just one question from the chair before we go on—just one. Perhaps I'll ask it of Mr. Gero, since he has been involved in services, investment and intellectual property.

It concerns, Mr. Gero, the OECD's policy concerning taxation of these corporations who would invest in the fishery or in any other industry in Canada under the MAI. As you are aware, Mr. Gero, being associated with the section on intellectual property, we have entered into various tax agreements with various nations of the OECD. It is OECD policy that the rate of withholding tax at the border be reduced to zero. Wouldn't you say that's correct?

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Mr. John Gero: Unfortunately, I'm not a tax expert, so I wouldn't be able to—

The Chairman: Oh. I thought you would be.

Mr. John Gero: No. That would be my colleagues at Finance.

The Chairman: I see.

Mr. John Gero: All l can tell you in the context of the MAI is that the MAI will not cover anything to do with taxation. It won't change the situation at all vis-à-vis taxation because the field of taxation is being carved out of the MAI as an area of obligation.

The Chairman: In other words, Mr. Gero, you could have then a multinational corporation buying into the fishing industry and paying all their taxes in Bermuda somewhere.

Mr. John Gero: I wouldn't.... All I can tell you is that none of that would be affected by anything in the MAI, because the MAI won't cover taxation.

The Chairman: Okay, Mr. Gero.

We're going to go to Mr. Easter, Mr. Knutson, Mr. Duncan, Mr. Stoffer, and Mr. Bernier. Mr. Easter.

Mr. Wayne Easter: I have a question on terminology. Would you explain what you mean by “standstill” and “roll-back” provisions?

Mr. John Gero: There's been a lot of discussion about this. Standstill refers to the ability of governments to maintain a current policy but make it no worse. In essence, it's a freeze of what you have now.

If there's a roll-back provision, it would mean you would agree to undertake not only to in essence freeze where you are at the moment but also make any measure you've created as an exception throughout the years less and less inconsistent with the obligations you've undertaken.

The MAI contains neither a general provision for standstill nor a general provision for roll-back, as I said. In the kind of reservation I was talking about, Canada will not undertake a general obligation on standstill or roll-back—that is, Canada will not be limited to maintaining their measures at the current level of inconsistency, nor would we undertake to roll back those measures of inconsistency.

So in the areas I was talking about, Canada is allowed to change legislation, and in fact make it worse than, or more inconsistent with, the MAI obligations. In that regard, we maintain, unencumbered, the ability of Canada to deal in those areas in whichever way Canada feels it so wishes to do so.

Mr. Wayne Easter: Would the roll-back provisions be similar to what we've done under WTO in terms of setting up tariff walls and phasing down over a period of years? Would that be similar?

Mr. John Gero: There are roll-back provisions. That's the concept of roll-back that you—

Mr. Wayne Easter: But that is the concept of roll-back we've agreed to under WTO.

Mr. John Gero: In the context of tariffs, for example—

Mr. Wayne Easter: We have.

Mr. John Gero: —we've agreed that we'd lower the tariffs gradually over a number of years, if that's what you mean by....

Mr. Wayne Easter: I guess there are some similarities between agriculture and fishery and natural resource industries. I come out of the supply management industry, and I'm not exactly impressed at the moment with the performance of either Revenue Canada or International Trade in terms of their performance on the butter-oil issue relative to the imports of butter oil into Canada.

I think you're probably aware of the issue. New Zealand mainly.... The dairy processing companies in Canada have managed now to import a product that's 49% butter oil and 51% salt, circumventing our supply management system. Somebody in Revenue Canada screwed up and never put it in the right tariff line. Now the dairy industry is paying a hell of a price for it. At the moment, it's gone to a trade panel for a reference.

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The reservations in NAFTA and the MAI state that fish processing enterprises that have a foreign ownership level of more than 49% are prohibited from holding Canadian commercial fishing licences. Because it's a 49% to 51% scenario, does this mean that any processing enterprise with 49% foreign ownership is currently being granted a commercial fishing licence in Canada? What's the story there, Marshall?

Mr. Marshall Moffat: Yes, theoretically if you had a company that was 49% foreign-owned, it would be eligible to receive a commercial fishing licence within Canada because the majority control of the company would still be Canadian.

Mr. Wayne Easter: Under investment rules, if you had a shell Canadian company set up with 51%, would it be able to get around our protections in terms of allowing foreign fishing in here? We're dealing with investment here, so the amount of money that moves at the flick of a computer switch now is unbelievable. It's very easy to set up a shell company in Canada with foreign investment and 51% Canadian ownership. How do you define it? Would that be foreign ownership or not, in terms of the ownership of the fleet? Do you know?

The Chairman: Mr. Moffat.

Mr. Marshall Moffat: That's an interesting question. From our standpoint, the entity that owns the licence, that enterprise itself, has to be 51% Canadian-owned. So where does the 51% Canadian ownership come from? That's the question.

Of course there are a number of other criteria you have to meet to get a commercial fishing licence; it isn't just an ownership requirement. But if you meet all the other requirements and have 51% valid Canadian ownership, then you are eligible.

Mr. Wayne Easter: Okay, we'll leave that for the moment. I think it's more complicated than that, because now you're into investments, so if you have a foreign investment in a shell Canadian company, is it a Canadian company or is it not? This gets complicated. How are we going to protect our own industry?

The second question I have, because I don't want to lose it, is—

The Chairman: It's your final question, Mr. Easter.

Mr. Wayne Easter: —how will the MAI affect the Freshwater Fish Marketing Corporation in terms of setting fish prices, obligation to process, etc., which is similar to marketing in the agriculture industry?

Mr. John Gero: If it's like the marketing monopoly you have in agriculture, it wouldn't be affected at all in that regard.

Mr. Wayne Easter: Then how is it protected in that regard? Right at the moment, I just told you the protection of the supply management system by international trade and Revenue Canada under the butter oil issue has been left seriously wanting.

I could tell you stories of people who've lost 3% of their quota—

Mr. John Gero: Right.

Mr. Wayne Easter: —which is tens and hundreds of thousands of dollars in some cases.

Mr. John Gero: I'm not an expert on the butter oil issue and I understand it's in front of the CITT, so I'll try to refrain from commenting on it. I'm not sure there are exactly the same kinds of provisions as one would have, and as you described, in the freshwater fish situation.

The Chairman: Thank you, Mr. Easter.

Mr. Duncan of the Reform Party of Canada.

Mr. John Duncan: Thank you.

Mr. Gero, I met you at the environment committee a few months ago or a few weeks ago—I don't remember—and you said at that time that the minister would be signing a letter of intent at the end of April. I gather that's off.

Mr. John Gero: I don't recall saying that.

Mr. John Duncan: You said there would be a photo opportunity or something at the end of—

Mr. John Gero: No, I said—

Mr. John Duncan: Okay. It sounds like it's off. If it was ever on, it's off.

The Chairman: Mr. Duncan, I wonder if could you explain something to the committee, or do you want to go on to the next question?

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Mr. John Duncan: I want to go on to the next question. That one's not going anywhere.

Mr. Moffat talked about the benefits of the MAI, and he talked about free trade and fishing entrepreneurs. We have a tuna treaty on the west coast. We have American tuna boats that can fish in Canadian and American waters, and we have Canadian tuna boats that can only fish in American waters under one form of licensing. I've had this confirmed by DFO because I asked the question earlier, and I find it very contradictory.

We have a hake policy on the west coast that is currently under review. You talked about the Coastal Fisheries Protection Act as something we can use to obtain our will in terms of who gets access. We have three hake processing plants on the west coast that have put a lot of money into their businesses over the last several years. And now we have a government that is apparently entertaining the idea of giving quota or allowing the delivery of hake to foreign boats and floating foreign processors by Canadian boats, as opposed to bringing it to shore. I find this very contradictory as well, very confusing for the investors and very disconcerting to people in those communities.

These west coast communities have lost major employment because of changes in the west coast fishery, and the only thing that has been filling the gap is this hake. Now, out of the blue, it's being.... I think today, March 31, was a very significant day. There may have been some kind of announcement, I hope. I also hope it was good news and not bad news. But I'm very concerned about that, and once again I see a contradiction in where DFO seems to be heading.

I understand there are some international discussions going on in terms of some of this offshore fishery in the Pacific, and Canada is not at the table. We have Canadian fishermen who are increasingly concerned that Canada is not at the table. They don't know why we're not at the table. I want to investigate which talks these are. We must have some rationale for not being there. I don't know what it is, but perhaps you do. I think we may need to bring some focus onto those issues.

The other thing I find interesting is that your third point—the ability to preserve fish habitat and the concerns about private property held by foreign investors, with possible implications for compensation—is not just a foreign concern, it is also a domestic concern. The Fisheries Act is being applied in new and more creative ways all the time. It's starting to have major implications for landowners, certainly in British Columbia. Their land is virtually being expropriated, but they still have to pay tax on it. They still own it, but they can't use it. This is building up a major confrontation. One is on its way unless this is resolved.

So I guess I'm asking for comment on those points.

The Chairman: Does either of the witnesses have any comment on Mr. Duncan's points? Mr. Moffat first, and then Mr. Gero.

Mr. Marshall Moffat: Thank you.

You've raised four important points there. I'm not an expert on the treaty details for tuna or hake policy. I know there is a serious discussion going on right now on the hake policy on the west coast.

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Here's what I can do in each of these areas. If you want me to follow up with the experts in the department, I can do so. I'll try to answer those questions and convey the answers perhaps to the chairman of the committee. Unfortunately, I don't know enough about those specific details to be able to give you a sensible answer today.

The Chairman: That would be fine, Mr. Moffat. Forward them to me, and I'll forward them to Mr. Duncan, or you can send a copy to both of us, John Duncan and me.

Mr. Marshall Moffat: Good.

Mr. John Duncan: But in a sense, it makes my point. We do things in a very disjointed fashion. Here we are talking about an international agreement with fisheries implications when we're talking about international issues to do with the fisheries. As I view it, there isn't consistency. Not everyone in the federal arena seems to really be aware.

Mr. Marshall Moffat: Yes. There's a great deal going on in terms of our international relations on fisheries issues. There are lot of detailed questions that we have to contend with, many of which this committee has struggled with as well. We certainly coordinate within the Department of Fisheries and Oceans on each of the issues that are being looked at at any one moment in time.

I appreciate—I take your point on this—the various issues you raised with me and the linkages between them and the MAI. I can assure you that when we were putting together, with our colleagues in Foreign Affairs, the nature of the concerns that we had with respect to the MAI agreement, it was primarily in the area of respecting and preserving the powers of the Minister of Fisheries and Oceans to differentiate between foreign investors and domestic ones.

That's the key issue we were addressing. With that one, there is a full consensus from all sectors within the department, who all participated with Foreign Affairs in setting those targets.

So some of the details here do have commonalties with the work we've done on the Multilateral Agreement on Investment, but they're not central to what we were really trying to accomplish in communicating our reservations in Paris.

The Chairman: Mr. Gero.

Mr. John Gero: I don't know that I have anything further to add to that.

The Chairman: Mr. Duncan, do you have a final question, or do you want to give your time to the Liberal member?

Mr. John Duncan: You're talking about how we have a 49% regulation under the Fisheries Act for licensing. So if the MAI were to say that.... I'm just wondering. We have this thing about a bona fide fisherman. That's really a 100% Canadian fishing licence, is it not? Isn't there some inconsistency there, Mr. Moffat?

Mr. Marshall Moffat: When you have a small-scale fishing enterprise whereby a fisherman owns one vessel and is operating within Canada, it's highly unlikely that a foreign investor is going to try to invest. Or if there were advances by a foreign investor, they would be repulsed by the fisherman in Canada.

So yes, when you're dealing with the smaller-scale owner-operator fisherman, it's highly unlikely you're going to get a situation whereby there's any kind of foreign involvement whatsoever. But if you're dealing with a larger company, particularly a company that might have public stock, some of that stock is going to be owned by foreigners. So there's going to a be a certain amount of foreign control through the ownership of those common shares.

The larger the enterprise, the more likely there may be some level of foreign involvement.

• 1630

Mr. John Duncan: I guess my question is whether or not those licences could only be issued to bona fide fishermen. Could those licences not be challenged under an MAI on the basis that you guys are not allowing any access to foreign content?

Mr. John Gero: Very quickly, the answer is no, because what we've said is that in the context of the reservations and exceptions that we've taken under both the Fisheries Act and the Coastal Fisheries Protection Act, the national treatment and most favoured nation treatment provisions do not apply in that regard. In the context of those acts, Canada does not undertake any obligations. So we can say it's 100% Canadian-owned and that the reservations mean we don't have any obligations in that regard under the MAI.

The Chairman: Thank you, Mr. Duncan. Mr. Knutson.

Mr. Gar Knutson (Elgin—Middlesex—London, Lib.): Thanks very much, Mr. Chairman.

I come at this issue as somebody who really doesn't know a thing about it. I know what I've read in the newspaper, and it's not something I've given a lot of detail too. My basic problem is that with any set of negotiations, you start off with the sense that you're going to win something and you're going to give something up. That's the nature of bargaining. We're going to win clear access to foreign markets for our investors, and we're going to win more foreign investment by providing a more stable regime to foreign investors. That's sort of what is on the plus side. But every time somebody raises a negative—health care, culture, supply management or fish—the response seems to be that there will be an exception made.

In the department's view, what are some of the things we might have to give up to get this deal? You've told us what the benefits are. Beyond Maude Barlow, who many people think is alarmist, I haven't heard anyone tell me anything. Just give me some examples of things we might have to give up so that the average Joe, the guy in the street, can say that this is a good deal or a bad deal.

The Chairman: Mr. Gero, what would we be giving up, or what do we stand the risk of giving up? Or are you going to say we're not going to give up anything and don't stand the risk of doing so?

Mr. John Gero: What we give up is that ability to treat foreign investors from non-NAFTA countries differently than we treat NAFTA investors. That's what we give up. In essence, according to an international treaty, we will provide to European investors the same level of protection we give to the Mexican and American investors. At the moment, Canada has undertaken obligations in the context of investment protection only vis-à-vis our NAFTA partners and those with whom we currently have bilateral foreign investment protection agreements. Those are the only obligations on the Government of Canada in that regard.

At the moment, we have no international agreements with, for example, Germany or France, to protect their investors in Canada. Therefore, what we will be doing is agree that we will treat them in the same way we currently treat Mexican and American investors under the NAFTA. From our perspective, the Multilateral Agreement on Investment will, in large measure, replicate what's in NAFTA. That will now apply to 29 countries as opposed to the three in the context of NAFTA.

Mr. Gar Knutson: Can you give me some specifics of what an American investor or a Mexican investor can do that a German investor can't do?

Mr. John Gero: Sure. In the context of NAFTA, we've undertaken non-discrimination obligations vis-à-vis American and Mexican investors in those areas that we haven't carved out under exceptions. In other words, in the context of a particular area for which no exceptions exist—

Mr. Gar Knutson: Such as?

Mr. John Gero: I don't know, investment in the car industry, for example. What the Government of Canada has undertaken in that context is that we will treat an American investor the same as we would treat a Canadian investor in that we would not provide any discriminatory laws, regulations, and so forth in that context, vis-à-vis an American investor as opposed to a Canadian investor.

• 1635

That's a provision we have in NAFTA that we don't have, in a similar context, for let's say a German investor. We could pass a law tomorrow that says we will treat a German investor differently and they would have no recourse because we have no international obligations in that regard. As a result of the MAI, we will now have an international obligation not to discriminate vis-à-vis a German investor. So that's what we're giving up.

Mr. Gar Knutson: I just want to know what that means to the guy in St. Thomas. Does that mean whatever remnants there are of the Auto Pact, which got swallowed up by NAFTA, would go?

Mr. John Gero: No, because there are no remnants. The Auto Pact still exists, so there are no remnants, as such.

That means that if BMW tomorrow wishes to establish a plant in that context, we wouldn't discriminate in the context of it being a German investor in an auto parts manufacturing facility, for example. We don't discriminate at the moment, frankly, but we have no international obligations not to. That's an important issue.

In a lot of cases—

Mr. Gar Knutson: Can I just jump in?

Mr. John Gero: Sure. Sorry.

Mr. Gar Knutson: We're short of time.

I'm still not clear. I just want one example where we would give something up. You're saying we wouldn't give up the Auto Pact. We certainly don't do anything to discourage BMW from investing in Canada or overseas now, so we do everything we can to attract it. Can you just give me one example where there would be some cost to Canada?

Mr. John Gero: That is a cost to the extent that at the moment, if tomorrow the government—

The Chairman: Just a second.

Mr. Gar Knutson: Take the average guy in St. Thomas in southwestern Ontario, and show me one thing he would lose, in a real meaningful sense. When we talk about health care, culture, or whatever, we say we'll draw exceptions for those.

Mr. John Gero: Right.

Mr. Gar Knutson: You talk about the Auto Pact or autos for a second, but when we look underneath it, these rules won't make any difference to whether German investment comes because we're doing everything we can to attract Mercedes or BMW.

Mr. John Gero: Exactly.

Mr. Gar Knutson: Could you just tell me about one wall we have to foreign investment now that will come down? Is there one place where we're discriminating against foreigners that we won't discriminate against foreigners after this is signed? Just one.

Mr. John Gero: I can't give you an example like that, but what it will do—that's your loss—is not allow you to bring that wall up again. If tomorrow you wanted to discriminate against a European investor, you wouldn't be able to do that in areas you haven't reserved or exempted, if you sign the MAI.

We don't discriminate. We have a very open system of investment in lots of ways; therefore we don't discriminate in that regard. But if Canada becomes a member of the MAI, we won't be able to bring that wall back up again in the context of a discriminatory nature.

Mr. Gar Knutson: They talk about land owned in Prince Edward Island and that it has to be owned by islanders. All these things I hear about in the newspapers is oh no, it won't be able to—

Mr. John Gero: Exactly.

Mr. Gar Knutson: But you're saying we will have exceptions for all this.

Mr. John Gero: Absolutely.

Mr. Gar Knutson: For all this?

Mr. John Gero: That's right.

Mr. Gar Knutson: Everything that—

Mr. John Gero: They were carved out of the NAFTA and they will continue to be carved out of the MAI.

Mr. Gar Knutson: Was there a single wall in NAFTA that came down in terms of investment? Is there something we did before that we can no longer do because of NAFTA?

Mr. John Gero: There are a number of exceptions in NAFTA on which there are standstill provisions, for example, that didn't exist before. For example, we agreed in NAFTA that we will not make any worse the level of foreign investment in airlines, I believe. In NAFTA we took a reservation on airlines and said we will maintain 25%, I think. I'd have to look it up for the exact number. We have a foreign investment restriction in the airline industry that says you can't have more than 25% foreign investment. The provision we agreed upon in NAFTA was we would maintain that exception, but we would never make it worse.

Mr. Gar Knutson: Higher.

Mr. John Gero: We would never make it higher.

• 1640

Furthermore, we also undertook that if we made it better, that if we would make it 15%, for example, then we could never ratchet it back up again to 25%. Those are the kinds of provisions that exist in NAFTA that were new obligations in an investment area, for example.

The Chairman: Thank you, Mr. Knutson.

We're going to go to Mr. Bernier, but before we do, Mr. Moffat, do you have anything to add to what Mr. Gero was saying?

Mr. Marshall Moffat: I have just a very short comment. I don't think we should be embarrassed if we find it difficult to find cases where Canada is giving something up in the agreement. Canada is, first of all, a major foreign investor. We are also a major source or destination for foreign investment. We benefit both ways from an agreement like this. We want to attract foreign investment and we want to have access to investing easily, in a protected way, in foreign markets.

So the fishing industry is an example of that. I would have to say that maybe 20 or 30 years ago it wouldn't be as obvious, but today it's quite obvious. We can benefit both ways. The fact that we have an aquaculture industry in Canada that has developed extremely well in the history of the last two decades is in part due to foreign investment.

The Chairman: Mr. Moffat, though, the question that was asked was what were the walls that were up that have come down, and the answer was there are none.

Mr. Marshall Moffat: Very few.

The Chairman: Mr. Bernier from the Bloc.

[Translation]

Mr. Yvan Bernier (Bonaventure—Gaspé—Îles-de-la- Madeleine—Pabok, BQ): Let me say first that it's always interesting to read the text of a free trade agreement between foreign and sovereign countries.

I wonder if the witness could provide us with further details. In answer to a question from Mr. Easter, you talked about three reservations that Canada is making in the context of the MAI. Which legal process do we have to follow to make such reservations? Do we have to table them at the United Nations? How can it be done? Which formal document is needed? Do we have only three reservations to make, as indicated in your document? And when was that document first released?

[English]

Mr. John Gero: No, I think it's actually....

[Translation]

There are only two.

Mr. Yvan Bernier: Two reservations?

Mr. John Gero: Yes, that's right. Those are the Canadian reservations in the context of the MAI. Our reservations don't go beyond the text of the MAI, which includes a section with special provisions applying to all nations involved. The agreement also includes provisions which would apply only to Canada. We have tabled a copy of Canada's reservations. There are two of them in the area of fisheries, though they don't go beyond the context of the agreement.

Mr. Yvan Bernier: But what are those two reservations? What link can I establish between what you are saying now and the answer you gave to Mr. Easter, where you were talking about three reservations? First, you mentioned that we have to make sure that we can limit foreign ownership to a maximum of 49%. Second, you talked about maintaining Canada's right to determine which resources can be considered as surpluses. Here I am summing up your comments in my own words. And third, you said that Canada would always have a say regarding the protection of fish habitats.

Mr. John Gero: You are referring to Mr. Moffat's comments. Those matters are governed by two legislations, namely

[English]

the Coastal Fisheries Protection Act and the Fisheries Act.

[Translation]

Mr. Yvan Bernier: I see. That is governed by two legislations.

Mr. John Gero: Exactly.

Mr. Yvan Bernier: How do you proceed to assert our need for reservations? Do you only have to say that the provisions of the MAI must not interfere with the provisions of those two legislations, which, as you told us, cover the three points that were just mentioned?

Mr. John Gero: Exactly. In that context, the provisions of those two legislations allow the Minister to discriminate at his discretion in favor of Canadian investors. That's why we want to put some reservations in the MAI. We appreciate that the agreement includes an obligation of non-discrimination, but given the provisions of those two acts, Canada prefers not to undertake obligations in that context.

• 1645

[English]

The Chairman: So those are the only two reservations you have made?

Mr. John Gero: That's right.

The Chairman: Only those two federal acts?

Mr. John Gero: That's right.

The Chairman: So on all the provincial legislation, you've made no reservations.

Mr. John Gero: But at the moment.... Let me talk about the provinces—

The Chairman: I'm sorry, Mr. Gero.

Go ahead, Mr. Bernier.

[Translation]

Mr. Yvan Bernier: It would certainly be interesting to hear his comments about the provinces, but for the moment I am trying to find some consistency between the different documents. In a document issued by the Senate, dated February 10, we can read an answer to a question that was asked by senator Gerald J. Comeau. Two points were raised there: foreign ownership, and port privileges granted to fishing vessels coming from nations who adopted similar methods or philosophy as we did on conservation. I guess that's something new. I am trying to find out if there are two different documents and what answer was given to the senator. Is that the government's position? I can't see the link between that and what we are discussing today.

Second, in the documents which you gave us today, we're asked to take care not to confound them with the MAI, because some provisions in those documents tend to refer to other international agreements. We are told to pay attention to the wording used in the United Nations Convention on the Law of the Sea, and it is suggested that the MAI should be worded in broader terms. What does that mean?

I am asking that question in the perspective of the famous bill C-27 which is in the air at the moment. Here again, this is a bill that deals with a fishing agreement between countries. Maybe the chairman could make a link between the two, but there seems to be similarities in various areas. Could you explain us why we are told, now that the wording of the Fisheries Act has been changed in the course of the last Parliament to take into account the Convention on the Law of the Sea, and particularly the Oceans Act, that we must take care not to confound that wording with the terms that are going to be used in the MAI, because all nations didn't sign the UN Convention on the Law of the Sea? And what should we think, still in connection with the MAI, of bill C-27 which is going to be tabled in the House of Commons?

[English]

Mr. John Gero: Let me cover several things at once. With respect to the reservations, you have a document we've tabled, the Canadian revised draft reservations. You will notice that the two reservations regarding fisheries are on pages 26 and 27. You will see that on page 27 in the context of the Coastal Fisheries Protection Act, which is an exemption from the “national treatment” and “most-favoured nation treatment” provisions:

In general, the Department grants such port privileges, including the purchase of fuel and supplies, ship repair, crew exchanges and transshipment of fish catches, only to fishing vessels from a country with which it has favourable fishery relations...

What that says is that you're therefore allowed to discriminate among countries if you so wish. So the reservation on page 27 and again on page 26 is to allow you to do what you just mentioned in that context. There is no distinction between the two.

With respect to terminology, I think it's always difficult in the context of international agreements to keep the terminology exact, but we're trying our best. One of the concerns, as I mentioned earlier, is that at the moment in the drafting of the MAI the definition of investment is larger than the definition we have in NAFTA, as far as what would be considered an investment. In the context of negotiations in the MAI, we are pursuing narrowing that definition so that it matches the NAFTA and so we don't inadvertently undertake additional obligations that we haven't had in the context of the NAFTA, that being our bottom line.

The Chairman: Mr. Bernier.

[Translation]

Mr. Yvan Bernier: I would not want to get into a debate for legal experts. If I didn't miss the interpretation we have been given, the reservations that we are putting now in the context of the MAI are similar to the ones Canada has managed to have included within NAFTA.

• 1650

Mr. John Gero: That's right.

Mr. Yvan Bernier: Maybe we could now revert to your question concerning the provinces. That was a good one.

[English]

The Chairman: In other words, Mr. Gero, all other fishing nations under OECD have made the same reservations as Canada has made.

Mr. John Gero: Pretty much so.

The Chairman: In ownership, how are you protecting fish plants that come under provincial jurisdiction, not federal jurisdiction, and have nothing to do with those two reservations that you've just told us about, have nothing to do with it at all?

Mr. John Gero: Exactly.

The Chairman: Then we'll go to Mr. Stoffer after your answer.

Mr. John Gero: At the moment, the Canadian position is that provinces are not covered in the MAI. The MAI obligation is only vis-à-vis the federal government, which is why all the reservations as currently drafted apply only to the federal government.

We're in regular consultation with the provinces, and there has been no decision that the provinces are covered. To the extent that eventually there's a decision by the provinces, in consultation with us, that provinces are covered, we would revert to the same kinds of exceptions as we have in NAFTA to ensure that to the extent there are situations as you've just described, where there are discriminatory provincial practices, laws, and regulations, they would also be carved out in the reservations, as they are in NAFTA where the provinces are covered.

The Chairman: Mr. Stoffer, from the New Democratic Party.

Mr. Peter Stoffer (Sackville—Eastern Shore, NDP): Thank you, Mr. Chair, and I do apologize for being late today.

Thank you very much. Of course, as you know, we're the only political party that adamantly opposed the MAI. I couldn't help but notice.... I assume you brought this book today.

Mr. John Gero: Yes, I did.

Mr. Peter Stoffer: Why wouldn't you have brought the minority report by Bill Blaikie on the MAI?

The Chairman: Mr. Gero, you wrote the minority report by Bill Blaikie?

Mr. John Gero: Yes, I did. I apologize.

The Chairman: Why didn't you bring that?

Mr. John Gero: That was an oversight.

The Chairman: Oh, an oversight.

Mr. Peter Stoffer: That's quite all right, Mr. Chairman.

Also, I noticed on the MAI, and I can't help believe it—

Mr. John Gero: Just so that I don't have to apologize too often, it's in the back of that book, if I recall correctly. So I did bring it.

The Chairman: Oh, it's in the back of the book. I didn't notice it, Mr. Stoffer.

Mr. Bill Matthews (Burin—St. George's, PC): It's attached, the same as our letters were attached.

The Chairman: I didn't notice it, sorry, and you didn't either.

Mr. Peter Stoffer: I apologize as well, then.

The Chairman: Mr. Gero didn't realize it was in the back either.

Mr. Peter Stoffer: Mr. Gero definitely did say one thing, though—that this MAI deal was supposed to have been signed by April 1997. Is that correct?

Mr. John Gero: Right.

Mr. Peter Stoffer: Mr. Gero, I don't think one Canadian, except maybe yourself, Mr. Marchi, and a few others, would have known about it. Why wouldn't the Canadian people...?

One thing Mr. Mulroney did, and God love him for this—I mean, I despise him for everything else he did—he at least told us what he was going to do with free trade and NAFTA. Why wouldn't the Liberal government under Mr. Chrétien, with people like yourself, have advised at least the Canadians that we were going to sign into this agreement? Why weren't we notified at all?

Mr. John Gero: To be fair, I think the existence of the MAI from its inception has been public. There were press conferences when the negotiations were launched, but frankly not a lot of people paid attention to it until about 18 months ago.

There are various reasons for that. Of course, in some contexts there's nothing new from a Canadian perspective to agreements that Canada had already entered into. But I think it's fair to say that over the past 18 months there have been a lot more extensive consultations happening than there were in the first 18 months.

Mr. Peter Stoffer: That's why we have opposition parties in a democracy.

Also, sir, regarding the MAI, I love these words:

...if there are clear rules to encourage foreigners to invest in our country and that protect Canadians—both corporate investors and individuals like you and me....

Very rarely do you see the words “We want to protect the Canadian interest”.

In answer to Mr. Knutson's question as to what we're going to give up, there's always a win. You have to give up something. I would say we give up labour and health standards. And if you don't believe me, great.

The MAI, and I'm going to quote here, “would also not”—

The Chairman: What are you quoting from, Mr. Stoffer? Is that your own document, or—

Mr. Peter Stoffer: It's notes from an address by the Honourable Sergio Marchi.

The Chairman: Oh, Sergio Marchi. He's the minister.

Mr. Peter Stoffer: It says right here: “The MAI would also not force Canada to lower its labour or environment standards.”

The Chairman: There you go.

Mr. Peter Stoffer: Well, anybody who works for Maple Leaf would have known of its 40% reduction of wages and benefits because they can't compete with American investments of meat products.

Also, the fact is that we can't even get the U.S. to agree to a clean-up or a cost of clean-up of the DEW Line.

As well, we are being sued by Ethyl Corporation in the MMT lawsuit to the tune of $250 million. If they win that lawsuit, we won't even be able to ban a neurotoxin from gasoline in our own borders.

• 1655

But that's not the reason I asked you those questions. It is for Mr. Moffat, when he had said—and I can't believe it—strength and profitability of the fishery. I just came back from a meeting late last night in Chéticamp with 200 people. They are losing their jobs because the fish plant is closing. I can't believe that you would sit here in this room and tell me that we're a world power in the fishery. I don't know the last time, sir, you've been to Tangier or Chéticamp, Nova Scotia, or when you've last seen Newfoundland, but I don't think there is one person who would sit there and admit that we're a world power in the fishery.

There is one thing though, sir, that I would love you to go over again, the Law of the Sea. Have we signed the Law of the Sea yet as a country?

The Chairman: No.

Mr. Peter Stoffer: We haven't even signed it yet and you brought it up continuously as a bible of what we're going by.

There is one statement you made, which I would love you to repeat one more time, because I'm going to put it in my householder to bring to every fisherperson in Atlantic Canada. It was about allowing foreign trawlers in our 200-mile limit for conservation reasons. Could you could just say that one more time? I don't mean to sound sarcastic, but that was quite a statement you made.

The Chairman: I don't recall, Mr. Moffat, you saying that. Did you say we allow foreign trawlers in some cases for conservation reasons? Is that what you said?

Mr. Marshall Moffat: No. Perhaps I didn't express myself as clearly as I should have.

Basically, under the exceptions to the MAI we are protecting the ability of Canada to exclude foreign trawlers from coming into our zone, not that we are trying to attract foreign fishing companies into our zone—quite the reverse.

The Chairman: Did you mention conservation, though, in the same sentence?

Mr. Marshall Moffat: Yes. The fundamental philosophy of the Law of the Sea is to give coastal states the right to exclude foreign fishing companies from within their exclusive economic zone so that the coastal state will have the power to take measures to ensure conservation of those stocks within their zone. That's the conservation rationale. Otherwise the same kind of international free-access fishing would take place right up to the 12-mile limit.

Mr. Peter Stoffer: Okay. I didn't hear that part, but I'll go through the blues again and if Mr. Knutson says he said that, then I certainly wouldn't ever disagree with Mr. Knutson—even though we haven't signed the Law of the Sea yet.

It's incredible. Why haven't we signed the Law of the Sea yet?

The Chairman: Mr. Moffat, would you know why we haven't signed the Law of the Sea yet? Maybe Mr. Gero would know.

Mr. Marshall Moffat: No, I don't have an answer for you on that. I know we participated actively in negotiating the Law of the Sea, so I assume that we support it. As to the legal aspects related to why Canada has not yet signed it, I can't answer.

The Chairman: Mr. Gero?

Mr. John Gero: No, unfortunately I don't have the answer to that either.

Mr. John Duncan: I believe we have signed the Law of the Sea. We just haven't ratified it yet. That's part of it.

Mr. Wayne Easter: John's right.

Mr. John Duncan: We've signed it but we haven't ratified it yet.

An hon. member: What's the difference?

Mr. John Duncan: Ratifying requires an act of Parliament and we have chosen not to do that. My understanding right now is that it's because of the Spanish circumstances in that—

Mr. Bill Matthews: The Spanish want more?

Mr. John Duncan: —ongoing conflict there. Until that is all clarified, we don't want to proceed.

The Chairman: You heard it from the Reform Party of Canada.

Go ahead, Mr. Stoffer.

Mr. Peter Stoffer: That will do it, sir. I could go on forever, but I won't.

Mr. Carmen Provenzano (Sault Ste. Marie, Lib.): I hope I can state my question very succinctly.

You have made it clear that we have to have regard for the division of legislative powers between Canada and the provinces. Where Canada doesn't have the legislative competence to get into an area, then the MAI naturally doesn't apply in that area. That's where we have the provinces going off and making laws that are clearly contrary and quite discriminatory. That's something the provinces can do.

We're talking about non-residents when we talk about foreigners. Where you are looking at allocating a resource, I am assuming that Canadian residency can be a prerequisite as long as it's covered in one of the areas that's exempt from the operation of the agreement.

• 1700

Let me just take an example. “Investment” is broadly defined. So say I'm a foreigner. I buy a shrimp boat, and I want to get an allocation of that resource on whatever coast. Canadian residency is required for the allocation, which is a discriminatory requirement. Can we do that after the MAI?

Mr. John Gero: The answer is yes. Basically what you've done in the fisheries sector is that you've carved out the non-discriminatory procedures of the MAI. You've said that these provisions of national treatment and most favoured nation treatment do not apply to Canada in the fisheries sector. It means that you can do whatever you want.

Mr. Carmen Provenzano: It's a discriminatory requirement.

Mr. John Gero: Exactly.

Mr. Carmen Provenzano: That's because it's on Canadian residency, which a foreigner could never have.

Mr. John Gero: That's right.

The Chairman: Mr. Gero, all the major fishing nations belong to the OECD, as I recall. Have all of the fishing nations taken the same exceptions as those we have taken, to your knowledge?

Mr. John Gero: Yes, my understanding is that every coastal state, virtually, in the MAI has exceptions on fisheries. I'd have to go through each one in detail to see what they've actually—

The Chairman: And the exceptions are practically the same, would you say?

Mr. John Gero: Virtually.

The Chairman: Any further questions? Yes, Mr. Knutson.

Mr. Gar Knutson: Is there time for another round?

The Chairman: Yes, go ahead.

Mr. Gar Knutson: I'll go back to my earlier points. So we can't identify anything that we're giving up that we haven't already given up under NAFTA vis-à-vis the Americans or the Mexicans.

What are the things that we might gain in a specific case? Are we looking for some particular barrier in Germany to fall? Are we looking for some particular barrier in Britain to fall? Is there some place that Bombardier or Nortel wants to invest but can't do so now?

Mr. John Gero: What we are looking for in the other 26 OECD countries is to get the same level of protection as what we're getting in the United States and Mexico. That is, that they will treat Canadian investors the same as their own nationals.

Mr. Gar Knutson: I understand that this is the general principle, but—

Mr. John Gero: That's what we're looking for.

Mr. Gar Knutson: —can you give me some specifics?

Mr. John Gero: If you're asking me if there's been a company that's identified a practice they feel they have a problem with at the moment, I can't give you a specific example as such.

Mr. Gar Knutson: So if I go back to St. Thomas, except in broad philosophical terms and general economic terms, I can't identify one single advantage. Unless Mr. Stoffer is right with the MMT case.... I don't know if he is. He might be right, I guess.

Mr. Peter Stoffer: I guess the case is whether or not we can get rid of it or not have it within our borders. That's my understanding.

Is that correct, Mr. Gero?

The Chairman: Mr. Stoffer, now we'll go back to Mr. Knutson.

Mr. Gar Knutson: I can't say to the average person in St. Thomas that here is an example of what we're giving up and here's an example of what we're getting. I can't do that with this agreement, whereas with NAFTA I could. I had grape farmers who were going to go out of business because grapes were coming in from the States. There were other examples of things that were going to change. But you're saying that basically what this does, more or less, is protect the status quo. It more or less entrenches the status quo.

Mr. John Gero: Yes. In essence, that's exactly what we're doing. We're putting into international rules.... As I said, there are a whole series of bilateral agreements out there on the Foreign Investment Protection Agreement. What we're doing, in essence, is creating a multilateral agreement that puts in place these kinds of investment protections that don't exist at the moment.

The Chairman: And there are no exceptions taken to the Income Tax Act or anything like that regarding taxation that you know of? There's no reservation?

• 1705

Mr. John Gero: No, because there's a general exception for any country. I mean, taxation is not covered under the MAI. The area of taxation is carved out of the MAI.

The Chairman: Investment is covered, but not taxation.

Mr. John Gero: That's right.

The Chairman: Amazing.

Mr. Duncan.

Mr. John Duncan: I realize that this is winding down. I don't get the opportunity to have the people who are closely involved in the negotiations here every day.

This is not specifically about fisheries, but we had the Supreme Court decision on Delgamuukw, which has turned land ownership in British Columbia on its head. We now have serious concerns about who owns the land in British Columbia. We've always assumed that the provincial government owned those lands.

The aboriginal exemption in this document on page 38 just doesn't cut it. It just doesn't. An investor investing in British Columbia right now.... We've always assumed that the federal government had the responsibility for lands reserved for Indians. Ownership of the provincial lands is now in question.

This is a federal court making a decision with major provincial implications. It has major implications for domestic and other investors, and can mean that people can actually lose their investment, potentially, as a result of something out of their control, out of provincial jurisdiction, that's a federal institution.

So when you say, for example, that there are no provincial exemptions in here because they're not considered part of the mix, I don't think you can make that clear demarcation in this instance. This might work for nine provinces for a lot of things, but in the tenth province—the first province, I should say—in British Columbia, that issue is so cloudy right now, and it's such a critical issue. This MAI, if for no other reason you can't.... It just doesn't do it.

I wanted to get that on the record, because I don't think you've probably thought seriously about it up till now. Both levels of government and virtually every sector of every industry in the province are currently paralyzed by this issue.

The Chairman: We'll go to Mr. Gero, and then we'll go to a final question from Mr. Easter.

Mr. John Gero: Well, I'm not a lawyer and I'm not familiar with the particular Supreme Court case that you quoted, but I will certainly go back and check on that. Certainly, from our lawyers' advice, the aboriginal exception does cover, in the context of the federal government obligations. But I will go and check.

Mr. John Duncan: That case was in December or January. These exemptions were filed long before that.

Mr. John Gero: That's why we will check. You can rest assured, to the extent there are changes in legal situations, obviously the reservations will be amended accordingly in the context of the negotiations.

The Chairman: Thank you, Mr. Gero.

Mr. Easter.

Mr. Wayne Easter: I don't know whether this is the right question to ask you people, but I'm sitting here kind of intrigued, and I never thought of it before until you mentioned that taxation is excluded. How come we've never considered including taxation? One of the problems we have in this country, in many countries in fact, is the very wealthy moving their wealth out of the country for tax advantages. Has there ever been any consideration that you're aware of in terms of coming to some kind of an agreement to have on taxation, to bring these wealthy individuals to hoy?

I raise the question because we seem to be protecting the investors, both foreign and domestic, but never making them pay their dues for the wealth they extract from the country in which they're doing the investing. Sometimes it's at a cost to people and resources within the country in which they're investing.

• 1710

Mr. John Gero: I guess I'm not sure whether the solution to that lies in international agreements or in domestic law. That's a different issue, and I'm certainly not a tax expert.

In the context of why it's not included in the MAI, it's largely because there is an extensive network of double taxation agreements that govern virtually all the countries in the OECD. In essence, those agreements cover how countries reciprocally treat each other's taxpayers in that regard. That's the basic philosophy of why the taxation is not covered in the MAI, but I'm afraid I'm not competent enough in taxation issues to be able to answer your question.

The Chairman: Is there anything on intellectual property? Surely you're associated with that.

Mr. John Gero: I can answer far more detailed questions on intellectual property than I can—

The Chairman: Well that's why you're supposed to be here. You're involved in intellectual property. Do you want to talk about trademarks?

Mr. John Gero: I'd be happy to talk about intellectual property, if you'd like.

The Chairman: Bifurcation of trademarks.

Mr. Stoffer.

Mr. Peter Stoffer: Thank you, Mr. Chair. If I may indulge for a moment, like Mr. Duncan, I don't often get a chance to speak to people who are directly involved in MAI talks.

This may sound like an ignorant question, and I apologize beforehand for asking it, but are free trade zones inclusive or exempt from MAI conversations? For example, New Brunswick is setting up a free trade zone, and Nova Scotia and the federal government are now contemplating a free trade zone in certain areas of Nova Scotia. How would that work in the framework of an MAI if an MAI were signed today, for example?

Mr. John Gero: The MAI deals with the treatment of investments and investors. Free trade zones deal with the shipment of goods and trade in products. To that extent, they are unrelated, and in the context of the MAI there will be no obligations on whether you can or can't set up free trade zones. That really focuses on areas where there is no tariff charged on incoming products, which is a different issue.

Mr. Peter Stoffer: And just one minor point: in your most humble opinion, will the MAI affect the Auto Pact in any way? I'm thinking of Bill C-11, which is coming through now. Of course a lot of the unions are very cautious and very nervous about this bill, and they're also very concerned about what an MAI would do in terms of the Auto Pact.

Mr. John Gero: No, from our perspective it shouldn't affect the Auto Pact in any way.

Mr. Peter Stoffer: It shouldn't? Thank you.

The Chairman: Okay, is that it for questions? We have to get to a couple of motions after we let our witnesses go, if you don't mind staying.

I want to thank Mr. Marshall Moffat, director of economic analysis policy, and Mr. John Gero, the director general of Trade Policy Bureau II—there must be a I and a III and a IV—services, investment and intellectual property, for appearing with us today.

Mr. Marshall Moffat: Thank you.

Mr. John Gero: Thank you.

The Chairman: I wonder if we could just revert back to our budget, which we still have to adopt because two gentlemen were not present at the time. There's a $30,000 budget until June 30, 1998. It involves: publishing reports, $10,000; contract consulting, $4,000; witness expenses, $11,000; and video-conferences, $5,000. I might add that these are just estimates, ladies and gentlemen, but the amount is $30,000. Is it so moved?

Mr. Wayne Easter: So moved.

Mr. Peter Stoffer: I'll second.

(Motion agreed to)

The Chairman: We're going to do the press conference concerning the west coast report. We need an update, Mr. Clerk. When will we get copies of the west coast report? Mr. Duncan asked me that question a few moments ago.

The Clerk of the Committee: We should have 150 copies tomorrow, and we'll get the remainder next Monday.

The Chairman: And those copies will go to my office?

The Clerk: No, they'll go to my office, and people will get copies Thursday morning.

The Chairman: They'll get them directly from your office.

The Clerk: Yes.

The Chairman: Okay.

• 1715

What we are going to have to decide now is who is going to appear at the press conference. I have a special request that Mrs. Leung be one of the people who appears. We can divvy it up between the parties for everybody else, including the official opposition.

Mr. John Duncan: Are we only allowed five at the table?

The Chairman: We'll work that out. We're only allowed four, but I'm sure we can push them for five.

Mr. Bill Matthews: I won't be there.

Mr. John Duncan: We should decide now, George, so all the planning is taken care of.

The Chairman: Okay, we definitely have the official opposition and the third party in the official opposition there. Then we'll have Mrs. Leung there. We have to have Mrs. Leung there, because she is from British Columbia, to thank the Minister of Fisheries and Oceans for all of the work he's done, and, if possible, the parliamentary secretary. I don't know if the parliamentary secretary is available.

Mr. Wayne Easter: I'm available, Mr. Chair.

The Chairman: This is a very good report.

Mr. John Duncan: So that's one, two—

The Chairman: —three, four, five.

Mr. John Duncan: What about Peter?

The Chairman: Peter's in B.C. at a union conference. He can have his own little press conference out there if he wishes.

Mr. Peter Stoffer: John, I was under the understanding you and I and whoever was going to be in Vancouver when the report was released here would release it in Vancouver. Wasn't that the original plan?

Mr. Wayne Easter: That was the original plan, but it got screwed up on Friday.

Mr. John Duncan: The original plan had more than you and me there, but when it came down to you and me, I chose to be here.

The Chairman: So you can do your own little press conference in Vancouver, Mr. Stoffer.

Mr. Peter Stoffer: I also understand there's teleconferencing going on with the union and the Suzuki Foundation regarding what I had brought up last time.

The Chairman: Yes. When is that teleconferencing happening, Mr. Clerk?

The Clerk: It will be from 3.30 p.m to 5 p.m. Thursday here, which would be 12.30 p.m. to 2 p.m. on the Pacific coast.

The Chairman: I wonder if you could appear with them, Mr. Stoffer.

Mr. Peter Stoffer: Yes.

The Chairman: Could you appear with them in British Columbia? It would be nice to have the NDP represented.

Is that okay, Mr. Duncan?

Mr. John Duncan: That looks okay.

The Chairman: We have to adopt the west coast report. Is that what we were just talking about?

The Clerk: As amended, because we opened it up the other day.

The Chairman: We opened it up the other day. Shall we adopt the west coast report as amended?

Some hon. members: Agreed.

The Chairman: I don't think we have anything else. If there are any questions regarding the NDP position on this report, have arrangements been made to be hooked up with him to answer questions if we're questioned from the National Press Building?

The Clerk: Yes.

The Chairman: Can you see if you can be at that particular location on behalf of the clerk?

Mr. Peter Stoffer: Wherever you want me to be, I'll be there. There is one concern, though.

The Chairman: Yes.

Mr. Peter Stoffer: In our report I remember we talked about lighthouses.

The Chairman: Yes, we did.

Mr. Peter Stoffer: Our recommendation was that they remain staffed.

The Chairman: Yes.

Mr. Peter Stoffer: Now that the minister has agreed to keep that staff, we should make some kind of remark saying this particular recommendation has now been looked after, and we should thank the minister for his cooperation on this particular recommendation.

The Chairman: Actually, the report went into printing long before the minister announced his—

Mr. Peter Stoffer: That's correct, but now we see it, people may look at it and go well...

Mr. Wayne Easter: It shows the wisdom of the committee.

Mr. Peter Stoffer: Yes.

Mr. Bill Matthews: Why didn't we recommend that in the east coast report?

Mr. Wayne Easter: It's too late. We didn't recommend it.

The Chairman: Ladies and gentlemen, we are public on the airwaves here on FM, in case you didn't realize it.

Now we have had a vote, we will adjourn.

Yes, Mrs. Leung.

Ms. Sophia Leung (Vancouver Kingsway, Lib.): I wonder if we can have a copy of the report tomorrow. If you have the report in your office, can we get a copy so I can review it before we go to the press?

The Chairman: Okay, that's the request made to the committee.

Ms. Sophia Leung: Yes.

The Chairman: Now, Mrs. Leung wants a copy of the report on Wednesday. I'd like you people to respond to that. If you object to it, say so.

Mr. Duncan.

Mr. John Duncan: I object from the standpoint that we've been through the negotiations and we should all know what's in there, more or less. As soon as we start putting reports out there, the next thing we know, this committee once again—

The Chairman: We might get some press coverage.

Mr. John Duncan: This committee won't have any credibility left. I'm concerned about that.

The Chairman: Mr. Matthews.

Mr. Bill Matthews: Since it is a west coast report and I'm going to be on the west coast of Newfoundland, would the committee agree for me to have a press conference there to release it?

The Chairman: Mr. Easter.

• 1720

Mr. Wayne Easter: Will the report be available to us Thursday morning early so we can pick up copies of the report at, say, 9 a.m.?

The Chairman: Mr. Stoffer, go ahead.

Mr. Peter Stoffer: Yes. With Sophia's request—

The Chairman: We're going to decide on Ms. Leung's motion.

Mr. Peter Stoffer: My flight leaves at 7 p.m. Wednesday, and if I can have ten copies to take with me.... By the time I get there and go to bed and wake up, you've already released your report here.

The Chairman: It can't be on the wire service then.

Mr. Peter Stoffer: No.

The Chairman: But Mrs. Leung has asked a simple question. She's asked to have possession of a copy by Wednesday. She moved the motion.

Mr. Knutson.

Mr. Gar Knutson: I think preventing her from having a copy is sort of silly. Presumably any member has the draft. They can make changes, so they can release it anyway, so they should—

Mr. Bill Matthews: How many times—

Mr. Peter Stoffer: Of course you can—

Mr. Bill Matthews: —before it's released—

The Chairman: So we have a motion before the table. I'm sorry to have to do this, but Mrs. Leung has asked me.... She asked me this before and I said she had to bring it up with the committee and she had to move a motion. She has asked that she be given a copy of the report on Wednesday.

Mr. Wayne Easter: Okay. My question to the clerk is, are copies available by Wednesday?

The Chairman: He gets them by noon Wednesday.

The Clerk: By noon Wednesday I should have 150 copies—

The Chairman: For release. That's all.

Mr. Wayne Easter: Can each member be given one copy by 4 p.m., so that Peter has one on Wednesday afternoon?

The Chairman: Mr. Duncan.

Mr. Wayne Easter: It will be the last time we'll be accommodating...what?

Mr. John Duncan: And you hadn't finished your statement. One each and—

Mr. Wayne Easter: One each by 4 p.m. Wednesday afternoon, in fairness to.... You have to catch a plane at what time, Peter?

Mr. Peter Stoffer: At 7 p.m. tomorrow.

Mr. Wayne Easter: At 7 p.m. tomorrow. So at 4 p.m. Wednesday they would be made available.

The Chairman: All the new pages are closed to that point.

Mr. Bill Matthews: There's no leak here, Mr. Chair.

The Chairman: It's too bad it wasn't on the late.... Whoops, we're on the public airwaves here.

Some hon. members: Oh, oh.

Mr. Peter Stoffer: I think basically most people realize that it won't be as—

Mr. Wayne Easter: Is there a motion on that, on what I asked for?

The Chairman: There is a motion. It's been moved by Mrs. Leung.

(Motion agreed to)

The Chairman: This meeting is adjourned to the call of the chair, which is Thursday.