SINT Committee Meeting

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

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

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, May 11, 1999

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[English]

The Chair (Ms. Sarmite Bulte (Parkdale—High Park, Lib.)): Good afternoon, ladies and gentlemen. I'd like to bring to order this meeting of the Sub-committee on International Trade, Trade Disputes and Investment.

Pursuant to Standing Order 108(2), the committee is conducting an examination of Canada's priority interests in the free trade of the Americas area. The consultation process has been ongoing.

At the same time, we have been travelling with the main committee and listening to consultations on both the WTO and the FTAA. But we are here specifically to examine our priorities under the FTAA, and I'd like to welcome all of you today.

According to my list, we'll start with Mr. Peeling of the Mining Association.

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Mr. Gordon Peeling (President and Chief Executive Officer, The Mining Association of Canada): Thank you, Madam Chair, and ladies and gentlemen.

What I thought I'd do is really just touch upon the executive summary, keep my remarks short—you have the written document—and leave as much time as possible for the questioning of witnesses.

But let me at least briefly tell you a bit about the Mining Association and about mining's contribution to Canada in the sense that we as an industry represent about 3.8% of gross domestic product. Twenty-five per cent of the exports in terms of the net contribution to our balance of payments in the current account is accounted for through the export of commodities. Eighty per cent of everything we produce is exported, the bulk of that to the United States but also to another 100 countries. That indicates from our perspective that trade issues are an extremely important issue for us as an industry. Approximately a little over 50% of all rail traffic is generated by the movement of commodities in Canada, and about 60% of our port materials is accounted for by the mining industry, so we have a large impact on the economic infrastructure of the country as well.

Let me turn to the issue of the free trade agreement of the Americas. My comments really won't differ all that much from the presentation we made two weeks ago in Toronto with respect to the World Trade Organization and the possibility of a millennial round.

As an industry, we support the process of the 34 countries of the Americas to establish a free trade agreement by the year 2005. We see that as an important step in the effort towards global trade liberalization.

The Mining Association recommends that the free trade agreement negotiations pursue a similar path of phasing out of tariffs, as was established under the free trade agreement with the United States and under the North American Free Trade Agreement, with the process for accelerated tariff reductions and zero-for-zero tariff reductions for the FTAA signatories over an established and reasonable period of time, much as both of those previously mentioned agreements allowed for some flexibility—within a 10-year timeframe—for moving to zero tariff rates.

We also recommend that the negotiations for the free trade agreement of the Americas address the issue of trade-distorting technical barriers that can impede market access. All measures related to technical barriers to trade under the free trade agreement of the Americas must be WTO consistent, in our view, and they must be justified on the basis of scientifically sound risk assessment and consideration of risk management options.

The Mining Association of Canada also supports the precautionary principle where international technical regulations or standards do not exist or are inappropriate, provided that the alternative domestic regulations or standards fulfil an assessment of risk and provided that this risk is based on sound science and technical evidence, with the scientific information to be gathered within a reasonable period of time. That language is more or less the formulation of the existing Sanitary and Phytosanitary Agreement under the technical barriers to trade, and it recognizes that the precautionary principle should be used as an interim measure while the science is gathered to then be the basis for a final decision on the appropriate restrictions or labelling or other types of processes.

To further improve market access, The Mining Association of Canada recommends that the government promote the use of its safe use principle, as was enunciated in the 1996 cabinet document, Minerals and Metals Policy of the Government of Canada. We feel that the government should improve regulatory co-operation by advancing mutual recognition of standards, equivalency, and best practices. We feel that the government should support voluntary standards where consistent with the World Trade Organization's technical barriers to trade and, finally, we feel that the government should address the issue of certification and accreditation.

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MAC believes that the FTAA should include an agreement on investment that provides a general framework for national treatment of foreign direct investment and also believes that the promotion of investment can lead to improved management practices, the introduction of new technology, and enhanced environmental, health, and safety performance.

The Mining Association recommends that the promotion of environmental and labour standards should be considered as separate and distinct issues from the FTAA investment or trade agreement and should be treated on a parallel track, i.e., as sidebar agreements.

We also think that such discussion should have reference to, as we would see it, the appropriate fora, such as the International Labour Organization for labour standards, the World Health Organization for health issues, and the United Nations environmental program and the UN Commission on Sustainable Development with respect to appropriate environmental standards in a more global context.

We recommend that Canada strive toward the clarification of existing rules, and I'm thinking here of the trade and environment interface. The transparent development and application of environmentally based standards and other measures should be the goal while, at the same time, they disallow unwarranted discrimination or unilateral extraterritoriality with respect to production processes.

Finally, we recommend that Canada support a strong and expeditious dispute settlement mechanism within the FTAA, whereby all member governments will comply with the decisions of the dispute settlement body and avoid unilateral actions against trading partners and unilateral measures involving the extraterritorial application and discriminatory application of national laws. Again, this is very much along the lines of the WTO.

I would just emphasize again that we see such regional agreements as important stepping stones. In actual fact, they can be the forerunners to a more broadly based World Trade Organization millennial round. In many ways, these agreements can lead the way to what should be the ultimate objectives on a more global basis. At the end of the day, we're very much in favour of, ultimately, a single set of rules and a rules-based disciplinary approach to enhance trade.

I'll end my remarks with that. Thank you.

The Acting Chairman (Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.)): Thank you very much, Gordon.

Mr. Neuheimer.

Mr. Joel Neuheimer (Manager, Market Access, Canadian Pulp and Paper Association): Thank you very much.

As Gordon was saying, we too look at this process as a subset of the WTO process, really, and we of course are looking for results from the WTO even before the new round starts at the Seattle ministerial this year. But as he pointed out, if you don't get what you're after at the WTO, this is really sort of an important fallback, if you will, for trying to achieve the same objectives—but obviously on a regional basis as opposed to the multilateral basis—and obviously that's still very critical for us.

This submission is made on behalf of the members of the Canadian Pulp and Paper Association. CPPA is a national association representing most of the pulp and paper produced in Canada. As a long-time proponent of global free trade in forest products, CPPA welcomes the opportunity to communicate its views on this groundbreaking initiative to unite the economies of the western hemisphere into one single trading bloc.

As you know, the area under consideration includes 34 countries and would extend benefits now enjoyed under the North American Free Trade Agreement and the Canada-Chile Free Trade Agreement to form the world's largest free trade bloc.

Since 1990, Canadian pulp and paper shipments to Latin America have more than doubled, rising from 600,000 tonnes to just over 1.2 million tonnes in 1998. This growth occurred despite the fact that tariffs in Latin America remain very high. In some countries, duties are in the double digits and can add as much as $50 per tonne to the cost of Canadian shipments. Most of these duties are applied to valued-added paper grades, which leads to tariff escalation, a problem that denies Canadian producers the opportunity to realize optimal economic returns from their paper resources.

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The Canadian pulp and paper industry supports a single comprehensive free trade agreement that would expand market access and establish clearer trading rules throughout Latin America and the Caribbean.

As a vital part of the Canadian economy, Canada's pulp and paper industry depends largely on trade, with 80% of its annual production exported to markets all over the globe. In fact, the Canadian pulp and paper industry is the world's largest exporter of pulp and paper. I'd like to make a correction here. Your text should read, “shipping to more than 100 countries worldwide”, as opposed to, “shipping to more than 80 countries worldwide”.

Without increased access to foreign markets, particularly in the developing economies of Latin America and Asia, at risk is the ability of Canada's forest products industry to sustain one million direct and indirect jobs, to support over 300 rural communities, and to remain the country's largest contributor of foreign exchange.

While the zero-for-zero agreement on paper products, concluded under the last round of multilateral trade negotiations—known as the Uruguay Round—was a considerable achievement, Canadian exporters still face trade barriers in the EU and especially in those markets with the greatest potential for growth in the future—Asia and Latin America. This is why the Canadian industry advocates having the zero-for-zero agreement accelerated to January 1, 2000, and having participation expanded to include as many key trading partners as possible. A successful agreement for the free trade area of the Americas could enhance and complement this greater multilateral initiative.

Apart from the tariffs aspect of these negotiations, Canada also has an excellent opportunity within this process to guard against the potential for any non-tariff barriers to become a threat to our future market access in the region. Non-tariff barriers are technical regulations or requirements that can provide for discriminating treatment of imported foreign goods versus domestically produced goods.

Building on the disciplines already within the World Trade Organization agreements, Canada should take advantage of this opportunity to seek further discipline in areas such as standards development and use to ensure that these tools cannot be misused for protectionist purposes.

Trade liberalization would directly benefit paper users in Latin America such as newspaper and magazine publishers, commercial printers, and the packaging industry. Domestic producers have built up capacity that has been made inefficient by high tariffs and the absence of effective import competition. These factors combine to limit choice and increase the cost of paper, which adversely affects the competitiveness of end-user industries and the affordability of paper products for consumers.

In addition, policies designed to protect producers of forest products from competition have significant resource-allocation and efficiency implications for the environment and for the economy as a whole. Such policies encourage production of paper products on the basis of other than strictly economic criteria. The consequent distortion of investment decisions results in misallocation of resources, producing suboptimal economic performance and lower income and welfare standards than would potentially be available in a non-distortional policy environment.

In conclusion, the elimination of paper tariffs would rationalize existing trade flows and represent a win-win situation for producers and consumers throughout the Americas. Free trade promotes the efficient use of resources by creating conditions for long-term economic growth. Liberalization would help to open new national markets to all producers in the hemisphere, thereby stimulating intra-regional trade.

The opportunity to create a hemisphere-wide trading bloc encompasses both developed and developing economies worth $10 trillion U.S. This is certainly a very compelling reason to pursue this process. A successful FTAA would produce economic, environmental, and social benefits for all parties to such an agreement. Given the great potential that this initiative has to offer, CPPA believes that the Government of Canada should pursue this objective intensely and looks forward to working with the government in partnership on this and other trade liberalization initiatives.

Thank you very much.

The Chair: Thank you very much, Mr. Neuheimer.

Next we have Michelle Swenarchuk, director of international programs for the Canadian Environmental Law Association.

Welcome.

Ms. Michelle Swenarchuk (Director of International Programs, Canadian Environmental Law Association): Thank you very much, Madam Chair.

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I have distributed a brief that focuses on investment. Given the possibility that investment will be moved to the WTO, I also presented this brief to the members on the WTO committee a couple of weeks ago. With regard to the FTAA, we know it's not merely a possibility; as the Canadian government states in its background documents for this committee, investment is being negotiated in the context of the FTAA. In fact, about three weeks ago in Miami, I had the opportunity to meet with about 20 of the investment negotiators from the various countries of the FTAA area, including Mr. Leblanc, our own Canadian negotiator, who is with us this afternoon.

Before speaking about investment, I just want to say that our view of the trade agenda with regard to the WTO and the FTAA could, I think, be summarized in one word, which is “convergence”. In fact, these agreements being signed by the same countries are of course going to be compatible. It's our view from reading the trade literature that for some countries, in fact, including the United States, one of the reasons to sign the FTAA is to speed implementation of previous commitments under the WTO. The two agendas are converging, and I think the same concerns arise for us with regard to both agreements, even if they aren't identical in wording.

With regard to the investment chapter, though, I think Canada has a particular role it should be playing in the FTAA negotiations. It's as a Canadian that I went to Miami to talk to the other negotiators—not as a representative of the Canadian government, obviously—and, in brief, I think the experience that Canada has now, given the investor-state suits against this country under NAFTA chapter 11, should be a warning to us that we should not be negotiating with other countries and signing agreements like chapter 11 of NAFTA.

As an aside, I have also provided to you a list previously provided to me by the Department of Foreign Affairs and International Trade; it is a list of those countries with which we have signed or are negotiating and signing bilateral foreign investment protection agreements. It's just a one-page list. You'll notice that some countries that are also potential signatories to an FTAA are on this list, notably, Brazil, Argentina, and Columbia. In fact, we, as Canada, are pursuing chapter 11 types of agreements on a bilateral basis as well as in the FTAA.

The brief that I've provided to you, which is the one I provided to the investment negotiators, is our view of why Canada should not be seeking to further internationalize chapter 11 of NAFTA. The first part of the brief summarizes the investor-state suits that have been filed to date against Canada, but also, as we know, there is one by a Canadian company, Loewen, against the United States, and there are anywhere from two to four against Mexico.

It's of course very difficult to get information since these processes are entirely secret, but the ones filed against Canada include: the Ethyl Corporation suit, which is by now notorious in this country; the S.D. Myers suit with regard to a temporary ban that was in effect on transboundary trade in PCB wastes; the Sun Belt Water case currently in process, in which a California company is seeking damages for the alleged impacts on it of B.C.'s provincial bulk water export ban; and finally, the Pope and Talbot case, in which this American lumber company is seeking damages for the most recent memorandum in regard to Canada-U.S. softwood, which of course is one that ultimately involves those two federal governments and four provincial governments in Canada. I've also listed the Loewen case and two of the Mexican cases.

The point of bringing these cases to legislators' attention is to underline the tremendous potential power—and, in our view, abuse—that can be wielded by foreign corporations using the investor-state suit provisions of chapter 11 and any other similar, broad, international agreement.

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As environmentalists, we are of course extremely concerned about the loss of the MMT ban in Canada, which was associated with the Ethyl suit, and we're concerned about the other cases, all of which have environmental and/or health-related impacts. In fact, as you will be aware—and I mention this later in the brief—the Department of Foreign Affairs and International Trade is sufficiently concerned about the scope of this provision, the expropriation provision in chapter 11, that it is even now attempting to negotiate with the U.S. and Mexico a memorandum of agreement to limit the possible interpretation of that section; I'm part of the advisory committee to the department on that process.

So it seems very clear to me that, resulting from that agreement, we in Canada have a serious problem for legislative powers. We should not, therefore, be continuing to sign bilateral agreements that incorporate that wording, nor should we, in my view, be supporting an FTAA investment chapter.

In the remainder of the brief, what I've done is to provide comments from various governmental authorities with regard to the potential dangers of this wording. Some of these comments were made in the context of the now defunct multilateral agreement on investment, which included similar provisions.

The comments are from the following: the members of the European Parliament in their resolution on the MAI; the Government of France and Prime Minister Jospin when the French withdrew from those negotiations; the perspective articulated by Jan Huner, who was the secretary to the chairman of the OECD negotiating group on the MAI, with regard to the impact in Europe of the news of the Ethyl suit, when there was only one suit at that time; recommendations made by the Government of British Columbia's special legislative committee relating to those issues; and finally, the Canadian federal government's own initiative to attempt to curtail the scope of those provisions through a memorandum of agreement.

You will be aware, simply from following the press, that we're not having great success in persuading our American and Mexican colleagues to curtail the impact of that section, which in my view is a further indication that we should not, therefore, be signing such wording with other countries. We should expect, in fact, to have to remain committed to that wording even if we find, with other countries—as we are now with the U.S. and Mexico—that the wording is a problem.

If I have a little time left, considering this question of convergence, there are a couple of other issues I'd like to raise. First of all, I don't have enough time to go into it in any depth, but I don't share my fellow witnesses' perspectives on the impact of those chapters in the WTO and NAFTA that have to do with setting domestic standards, namely, the chapters on technical barriers to trade and the sanitary and phytosanitary standards. I wrote about those chapters to some extent in the brief that I provided to the WTO committee.

Most of those comments are also relevant to NAFTA and an FTAA. It's my view and the view of most environmentalists in Canada that these provisions of international agreements now interfere substantially in the setting of domestic, environmental, and health standards, and we would not like to see them further extended.

Another issue that perhaps other people have not raised with you has to do with intellectual property and biotechnology. Again, the department's background materials for this committee indicate that Canada will be seeking an intellectual property chapter in the FTAA. There are many issues related to the internationalization of an intellectual property regime as has occurred through the WTO. I only want to speak to one issue at this time. It's one in which, again, I believe, Canada has a unique role, and that has to do with what is in NAFTA, in article 1709, about patentability of life forms.

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Now, as I say, this is a huge and complicated issue, but to make a long story short, in Canada, unlike in the United States, patents are given for single-cell life forms but not for higher life forms. At this time, in fact, the precedent case is moving through the Canadian courts; it is the application by Harvard University for a patent on its genetically engineered mouse, the Harvard “oncomouse”, as it's called. It is genetically engineered to be predisposed to develop cancer for the purposes of research.

The fact that Canada has not yet followed the American route in giving exclusive ownership of higher life forms is an international precedent of quite great importance, because in much of the world there is a very great controversy at this time about the extension through patenting of monopoly ownership over life forms—biodiversity. There are many controversies associated with it, including whether patenting of life forms conflicts with the obligations of countries, including Canada, under the UN Convention on Biological Diversity.

So without getting into the great complexity of the question, I would simply like to bring to your attention the fact that the question of patenting life forms in Canada has not been the subject of broad public debate. There is a recognition in the industry department that such debate is wanted. In fact, Industry Canada, which also needs to develop a position for the intellectual property review within the WTO, is at this time contemplating a public discussion of the ethical and environmental issues associated with patenting life forms.

My recommendation to this committee is that given that debate has not happened in Canada—

The Chair: Excuse me. I think we have a problem with the interpretation—and possibly with the recording, I understand. May we just suspend for a few minutes so we can deal with our technical problems?

Ms. Michelle Swenarchuk: Sure.

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An hon. member: Michelle, you got into this debate on patented life forms. Have you looked at...[Inaudible—Editor]?

Ms. Michelle Swenarchuk: The patent question is more narrow than the overall question of—

The Chair: Okay. This is for the record. We're talking about the patenting of higher life forms. Could you, for the sake of time, submit your comments in writing? I understand that there is a paper that applies to this in the WTO, but you also wanted to address the issue of water.

Ms. Michelle Swenarchuk: Okay.

I don't know whether anyone else has talked to this committee about the question of water trade, but it is at this time one of the most important trade policy questions before the Canadian government. The issue of trade in water was of course very contentious in both the debate over the free trade agreement with the U. S. and the debate about NAFTA. Now, I think, everyone concedes that although water flowing in a river isn't covered by a trade rule, if it's sold across the border it is covered by a trade rule.

Several months ago, Mr. Axworthy stated that Canada would be legislating a ban on water exports—or at least on bulk water exports. We haven't seen any such legislation. We've seen a reference to the International Joint Commission with regard to the Great Lakes. It is of course an important environmental question for us: water use, water depletion, and water export. This is particularly so now, when climate change is upon us, when the Great Lakes are at their lowest levels in decades, and when forest fires—just as the climate change models said—occur earlier in the season and are more frequent and more intense.

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The climate change scenario adds to our concern about the potential environmental impacts of water exports. It's our view of the law that a bulk water export ban within the context of a national plan for water conservation and management is justifiable within the trade rules, and we urge the Canadian government to move on that ban as soon as possible.

Thank you.

The Chair: Thank you very much.

And now we will hear from Mr. Cunningham, the senior policy analyst from the Canadian Cancer Society.

[Translation]

Mr. Rob Cunningham (Senior Policy Analyst, Canadian Cancer Society): Madam Chair, members of the committee, on behalf of the Canadian Cancer Society and its many volunteers, I want to thank you for the opportunity to appear here before you today.

[English]

I work as a senior policy analyst and lawyer with the Canadian Cancer Society. Most of my remarks are going to focus on the issue of tobacco. Just to mention this as an aside, I am the author of the book Smoke and Mirrors: The Canadian Tobacco War,

[Translation]

The French title of the book is: La guerre du tabac: l'expérience canadienne.

[English]

Trade and tobacco is one aspect of an overall tobacco issue that Canadians and Canadian elected representatives and governments have to deal with. First of all, let me start by mentioning our recommendations and the rationale. You do have the key points summarized in our written brief, which has been distributed to you.

The first recommendation: for clarity and for certainty, Canada should ensure that all international trade agreements contain effective, broad, and properly worded health exemptions applicable to the entire trade agreement. Second, international trade agreements should have a general further exemption for the tobacco sector. Third, these principles should apply not only to a free trade agreement for the Americas, but also to other international trade agreements such as our World Trade Organization agreement.

We would urge the committee to include these recommendations, to endorse these recommendations, in its report, not only in this particular study for the FTAA but also as part of the larger report of the Standing Committee on Foreign Affairs and International Trade with respect to WTO.

What is the rationale? Well, I know that everyone around the table is aware of the health consequences of tobacco, but I will just reiterate a couple of points. Forty-five thousand Canadians die prematurely because of tobacco use; that's more Canadians than the 42,000 who died in the six years of World War II. The tobacco epidemic is worldwide in nature. The World Health Organization estimates that 3.5 million people per year die because of tobacco, which is going to increase to 10 million per year by the year 2030 because of current trends—in particular, growing smoking rates in less developed countries.

Tobacco is a lethal, addictive, cancer-causing drug, a product that would inevitably be banned if it were newly introduced on the market today. While Canada has had a tobacco control strategy at the federal level since 1963, we now see very many countries around the world adopting tobacco legislation and initiating programs. We see that countries, through international organizations such as the World Health Organization, UNICEF, and UNESCO, are acting globally in terms of tobacco control efforts. Even the World Bank, supporter of liberalized trade, has anti-tobacco initiatives in its policies and actively encourages governments to reduce tobacco use.

In terms of trade, then, given this tobacco epidemic and given the consensus among nations, it would be a tragedy if a trade agreement were drafted and provisions were inadvertently omitted—or were inadvertently included—which then would prevent implementation of tobacco control measures that governments around the world support. That's why we have made our recommendations.

The tobacco industry itself is global, multinational, in nature. The three companies in Canada are all foreign-controlled—99% of the market—and their global revenues are approximately $165 billion per year, more than the revenue of the Government of Canada, more than the gross domestic product of 180 of the world's countries.

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Trade issues, and the North American Free Trade Agreement, arose, particularly in 1994, on the plain-packaging issue.... At that time, the House of Commons Standing Committee on Health considered plain packaging and held hearings. Ultimately the committee recommended the implementation of that, and I have distributed for your consideration a sample of what a plain package might look like. You see that it's a standard colour. This particular example has more prominent health warnings, but there's a tremendous contrast, for example, with the colourful, attractive, alluring package that we see in terms of the du Maurier package that I have here.

The tobacco industry, through the American companies Philip Morris and R.J. Reynolds, testified before the committee and argued quite strongly that plain packaging would violate NAFTA, that it would encumber the use of their trademarks, and that it would expropriate their investment in intellectual property trademarks, requiring the Canadian government to pay hundreds of millions of dollars in compensation. They argued quite strongly that they would pursue this remedy directly through arbitration.

While counter-arguments to their arguments were made, this is not something that I believe should arise when discussing health policy dealing with tobacco. There shouldn't be the delays and the debate; agreements should be drafted in such a way that it's clear that governments don't have to feel a chilling effect because of tobacco industry threats.

The health exemption would allow governments to have the necessary flexibility to deal with the epidemic. In fact, I can't think of a reason why you would not want to have a suitably worded health exemption. Looking at our closest neighbour, the United States, the administration of President Clinton is strongly anti-tobacco and has an articulated policy that they will not object to the tobacco control measures of foreign governments provided they're applied equally to domestic companies and to foreign companies. I think there's a real opportunity; I think you would have a consensus to have such measures among the member nations considering an agreement.

Those are the recommendations. That's the rationale. I welcome your questions.

The Chair: Thank you very much, Mr. Cunningham.

We'll open it up to questions and we'll start with Mr. Obhrai.

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

Thank you, ladies and gentlemen, for coming here today. Of course, I've heard you on the international trade circuit. I saw your same brief, but at that time you didn't mention the higher life forms and those things; it's a quite a subject to think about. I don't know much about it, about what you brought to us this time. I would like to read more about this thing and, really, more about its impact.

On tobacco, you did bring up some good points here. It's health-related issue. But that's what we've been struggling with all the time: environmental and health-related issues.

In my account of the subject, I want to go to Mr. Peeling on the mining industry: good reports.... We've heard reports that the mining industry didn't seem to have a good record of environmental protection, especially in third world countries. That's what we've heard from many witnesses that have come here. In your brief, you have asked that the environmental standards be put on the side, that they not be part of the trade agreement, which brings into question many other points.

One question I would ask is this: if your association has a higher environmental standard in reference to mining in Canada and you go out and hire in the third world countries, in a certain country that has a lower standard, what code of conduct would there be? Would you be running under the Canadian rules or would you be running under the local rules and saying, well, the local rules are satisfied for this thing?

These are the concerns we have on these environmental and health issues. That's the message we're hearing.

Mr. Gordon Peeling: Let me start by saying that the Mining Association of Canada was the first national mining association in the world to have an environmental policy. The first line in that environmental policy states that our members are committed to sustainable development. The second part of that is that we take our standards and our policy wherever we operate, in whatever jurisdiction we operate.

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We also, within that policy, state that we obviously must meet the local laws and regulations wherever we operate in whatever part of Canada, because they vary from province to province in some instances if you're looking at the full spectrum of health, safety, and environment; we tend to look at the complete package of health, safety and the environment.

One of the issues that we've had to address is the fact that the industry has expanded worldwide. There are significant investments that the industry has made in Chile—many billions of dollars in new mining operations. Our industry takes the latest technology, the highest standards, and best practices wherever it goes, and it meets and often exceeds the regulatory requirements of those regimes because it is also meeting our own standards and taking our own level of activity with it.

Let me give you an example of one of the things that we have done collectively in response to several actions, which I'm sure you are well aware of, with respect to the Omai tailing spill in Guyana, for example, that happened a couple of years ago, in late 1995, and the Marcopper situation in the Philippines. It was at that time, in March 1996, after the Omai spill, that the board of directors of the Mining Association said that we needed to examine the engineering standards that we had in that country and that we needed to examine the operating principles and guidelines we had for tailings facilities to see, indeed, whether we had a management problem or a technical problem, and to see what was the best way of addressing it.

It established a task force to do that. It worked with the Canadian Dam Association on its engineering standards, to look at those standards within the context of tailings facilities. It looked at the international commission on large dams and at their standards.

The end result was that we prepared a guide that focused on the consistency of management of those facilities within an environmental framework, a guide that would be applicable wherever the industry operates, in whatever jurisdiction, in whatever type of ecosystem, whether it is in desert conditions in Chile, wet, temperate conditions in Canada, or Arctic conditions in Canada. We prepared the guide, published it last year, and made it available in English, French, and Spanish as part of our environmental policy; we made it available to the worldwide industry, not just to our own members, not to make it simply a practice for our own members as a matter of due diligence within environmental performance.

We have made it and have gone out and taken that through the United Nations environmental program on their website—with the World Bank and with our members—to other national associations in the industry worldwide. We have distributed copies of that document. That's one example where we're taking Canadian best practices around the world with us.

Mr. Deepak Obhrai: Can I interrupt you here? Thank you.

Would your association, your companies and possibly other companies that are doing global trading, look favourably upon having a code of conduct put in the agreement? I see you have said you want a separate agreement, but I'm saying a code of conduct that looks into many things, like environmental transparency.... Would your association be in favour of something like that coming into the FTAA or the WTO?

Mr. Gordon Peeling: I think what we have seen with respect to the Chilean agreement, for example, is that there are real benefits to having a separate focus on environment, health, and safety issues, and we have worked with Canada's labour department, so we see ways of doing it.

Our primary principle is that in whatever way we approach these issues they should be compatible with the obligations we have under the World Trade Organization general agreement on trade and tariffs. That shouldn't be a limit on what we do, because often, through separate or sidebar agreements, as we would call them, you can make reference to and bring in information from the International Labour Organization, for example, which in 1995 passed a convention on health and safety in small mines. Small mining is not an area in which Canada has a lot of expertise, but out of that particular convention, for example, there may be quite relevant parts that can be brought to some of the issues with respect to mining in South America or central America.

So in some ways you should take quite a flexible approach, because the best answer may not be found simply in a bilateral discussion. You should in actual fact have reference to and bring in those experts from other international organizations, which can actually bring quite a lot of benefits.

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The World Bank, for example, has environmental guidelines for mining, which many developing countries have adopted. Many financial institutions and many banking institutions worldwide, if they are making loans to mining companies for projects, will automatically ask and demand that you meet World Bank environmental mining guideline standards.

So there are these other references that I think we should keep in mind when we are looking at what sort of discussion we should be having with respect to environment, for example, in this particular sector. They also obviously have an effect on health and safety in the labour sense.

Mr. Deepak Obhrai: Do I have more time, Madam Chairman?

The Chair: Yes, but be very brief.

Mr. Deepak Obhrai: I guess the difficulty here is that the trade agreements have binding dispute settlement mechanisms, so you have one agreement here that would probably venture to say something else and your side agreements over there would probably venture to say something else, and bingo, you would probably have a clash. I think that's where the problem is originating here.

Ms. Michelle Swenarchuk: May I comment on that, Madam Chair?

The Chair: Yes, please.

Ms. Michelle Swenarchuk: I think you've identified a key problem. First of all, I think the Mining Association of Canada and its members are very sophisticated companies and I believe that in their international practice they see the benefit of a certain degree of environmental protection.

However, as Canadians, we cannot be in any way reassured if we're told that Canadian best practices are taken abroad. To start with, environmentalists in this country are in no way confident that we have sufficiently good environmental protection in the mining sector in Canada.

Secondly, with regard to the question of trade agreements and then side agreements, I think it's important to keep in mind how limited the environmental side agreements to NAFTA and, I believe, to the Chilean agreement, really are. They do not in any way change or affect the impacts that flow from the agreements: the increased trade, the rules that apply to that trade, or the environmental impacts that are associated with the trade.

The side agreement was a political strategy that President Clinton—then candidate Clinton—devised during his presidential campaign with regard to the political opposition to NAFTA in the United States. It hived off to one side a certain amount of environmental discussion, but it has always been our view that environmental impacts and environmental language exist in the agreements, and the side agreement does not have any effect on that.

We've argued repeatedly that the terms of the trade agreements reduce our government's capacities to manage our resources as we think they should be managed and to set the environmental and health standards that we need. The side agreements are a totally different matter that have to do with a very limited, convoluted, possible, potential, never-utilized approach to domestic enforcement. In our view, that's far removed from the actual environmental impacts associated with international trade.

The Chair: Thank you.

[Translation]

Mr. Sauvageau.

Mr. Benoît Sauvageau (Repentigny, BQ): Good afternoon, ladies and gentlemen.

Ms. Swenarchuk, I noticed your reaction to Mr. Peeling's comments and I wanted to use some of my time to let you express your views. However, you've already had an opportunity to do that. I sensed you disagreed somewhat with his remarks.

If I may, I'd like to get back to something Mr. Peeling said early on in his presentation. Like many people who operate companies similar to his, he seemed to be expressing the hope that environmental, social and health standards covered under side agreements will be addressed by either the International Labour Organization, the World Health Organization or the UNDP.

Do you support the idea of creating a kind of joint decision- making body? People have often maintained that the WTO works well precisely because it has put in place dispute settlement mechanisms and made provision for sanctions. In terms of environmental or social standards, joint committees could be established with the WTO or the ILO, for example, by using the WTO's decision-making authority to resolve disputes that could arise within the ILO? That's my first question.

• 1705

How can we make the dispute resolution mechanisms of organizations other than the WTO more effective? I believe Ambassador Weeks made some suggestions along these lines this morning.

Mr. Neuheimer, I want to thank you publicly today for submitting your brief in French. The other day, I pointed out this oversight on your part. As you can see, I'm quite willing to give credit where credit is due.

Getting back to your last paragraph, you make a very interesting observation:

A successful FTAA would produce economic, environmental and social benefits for all parties to such an agreement.

If an FTAA is good for everyone, why are some people opposed to the idea?

[English]

The Chair: Mr. Peeling, do you want to start?

Mr. Gordon Peeling: All right.

Thank you for that question. Merci beaucoup. First of all, let me start with the issue of the World Trade Organization dispute settlement mechanism.

Actually, I want to make one comment in advance of that. When we're looking at environmental issues or health and safety issues within the concept of trade or trade agreements, the other thing you didn't list, and which we would agree with, is that they be compatible. If they're in the trade agreement, they should be compatible with the provisions of the WTO GATT, and particularly with article 20, which allows good scope for governments to protect health, safety, natural resources, the environment, organisms, etc., as long as it's done in a non-discriminatory manner. That's the key for us: to do it in a non-discriminatory manner.

I think the issue of dispute settlement mechanisms is an extremely important one and I think we have seen the strengthening of the World Trade Organization GATT with respect to its dispute settlement mechanisms; we've seen a lot of disputes now come forward. That's a measure of the progress that the agreement has made as a result of the last round and is, I think, a reflection of the weakness of the prior situation.

If it's an environmental agreement or any other type of agreement that is international in scope, I would recommend that it should indeed it have its own dispute settlement mechanism.

I think the difficulty we have with respect to three multilateral environmental agreements, for example, which at first blush appear to have trade provisions within them that are not in accord with the provisions of the GATT but are not tested.... The difficulty there is that members of those environmental agreements do not have a dispute settlement process within their own agreement. I'm thinking of Basle, for example, which does not have its own dispute settlement process. That is unfortunate, because if there is a disagreement between nations at the end of the day and they are forced to go to the World Trade Organization, for example, they will not necessarily be in front of environmental experts; they will be in front of trade experts.

That's why I think it is best to have a well-managed interface, but I would encourage environmental agreements—or if we have agreements that look at other areas such as labour—to indeed have their own methods for arriving at the settlement of disputes, because that's where the real expertise will lie. To look to another forum to resolve problems when that other forum may not be the best place to do that would in actual fact weaken an agreement.

That's why we look at sidebars. We don't have quite the same view as our colleagues here. We think there are many benefits that can arise out of these agreements and, indeed, out of the overall promotion of trade liberalization. We think that with economic development, the expansion of trade, job creation, the new generation of wealth, and the ability of governments to capture additional rents.... It all leads to a strengthening of institutions, which can then play out in improved environmental performance and enforcement of environmental regulations and health, safety, and labour standards, etc., and we believe that those benefits outweigh the cost.

• 1710

I think I've answered both of your questions. Merci beaucoup.

The Chair: Mr. Neuheimer.

Mr. Joel Neuheimer: Yes,

[Translation]

thank you for your question, Mr. Sauvageau.

[English]

To try to answer your question about why people would be opposed if there would be benefits for all parties from the FTAA, let me just try to run through a couple of different areas according to our brief.

First, on the industry side, it's our belief that the only reason industries and other FTAA countries would oppose the agreement would be that they don't want to compete on a level playing field with Canadian producers; they want to retain the protectionist support of the tariffs that remain in place. That is the answer on the industry side.

On the environmental side, as laid out in chapter 2 of Agenda 21, which was agreed to at the Earth Summit, we believe that environment and trade can be mutually supportive with proper environmental policy in place domestically. We believe trade liberalization can actually benefit the environment; there is the most efficient allocation of available resources. Ideally, you'd also have additional moneys available to be reinvested in environmental protection and so on.

Quickly on the social side, if you think about the lower prices that should ensue as a result of lower tariffs and of ultimately no tariffs, that's going to make it easier for consumers to buy paper goods, and so, ideally, books for school children in FTAA countries would be cheaper. I'm thinking especially of the developing countries within the FTAA group.

I hope that has answered your question.

[Translation]

Mr. Benoît Sauvageau: Can you look back to free trade agreements that have been in place for the past decade and find some evidence that this assertion is in fact correct? People seem to be saying that the establishment of an FTAA will hopefully mean improved environmental and social standards. Do you have any proof that this will in fact come to pass? For example, have any free trade zones in the world been in existence long enough for you to maintain that after five or ten years, improvements were noted? For example, have social or environmental standards improved in Mexico or in other countries, or is this merely wishful thinking?

[English]

Mr. Joel Neuheimer: I think it remains to have that sort of data fleshed out a lot more clearly, but on the production side, on the sort of “selling side” end of things, if you look at the Canada-United States Free Trade Agreement, trade in some paper products has actually doubled in a sort of two-way trade between Canada and the U.S. With zero tariffs between Canada and the U.S., we've actually seen an increase in trade between countries on certain products, and—

[Translation]

Mr. Benoît Sauvageau: Has the level of Canadian ownership of pulp and paper companies remained steady, or has production doubled and the level of Canadian ownership declined because Canadian companies were bought up by European operations?

[English]

Mr. Joel Neuheimer: I think Canadian companies have benefited in increased production and increased sales. I'll use the U.S. as an example again; I think we've increased sales due to that free trade agreement. I think we've also actually increased sales to places like Europe with the reduction of tariffs we've seen through the zero-for-zero agreement from the Uruguay Round. I believe that Canadian industry has truly benefited from these arrangements in its ability to produce and sell more products.

[Translation]

Mr. Benoît Sauvageau: I see. Thank you.

[English]

The Chair: Merci, Mr. Sauvageau.

Mr. Calder.

Mr. Murray Calder (Dufferin—Peel—Wellington—Grey, Lib.): Thank you very much, Madam Chair.

I'd like to go at this from a different direction, from more of a general direction, and then each one of you can throw in your specifics. When we finished with the Uruguay Round, we basically came up with the game rules as to how the global economic community is going to function. Some of the rules are good and some of them are not so good, and in this next round we're going to do some fine tuning, but we've set up the goalposts.

• 1715

In every brief that I've heard, not only in the Standing Committee on Agriculture and Agri-Food but also in this committee right here, everyone has said that all other sub-agreements, being continental trade agreements, should come underneath the auspices of the WTO. That seems to be a general, consistent rule that I've heard all the way through this.

Obviously, then, with that we're talking about establishing international standards that all the countries—the 134 right now and the other 30 that want to join the WTO—are all going to start trading under; that obviously is what these negotiations are going to establish or fine-tune. The question is, how do we get there?

Quite frankly, I see right now that different countries have different standards. We have all kinds of examples here of how those standards are trying to come to the surface. Our health standards are a heck of a lot higher than those of some other countries in the world. Our environmental standards are higher. How do we come to that common set of international trading rules?

I have a supplementary afterwards.

The Chair: Mr. Peeling.

Mr. Gordon Peeling: I guess our perspective is that these sub-agreements or regional agreements are not necessarily under the auspices of the WTO, but our belief is that they should be compatible with the WTO provisions. In certain circumstances, they can be at the leading edge and can in actual fact be out in front of where the WTO is. Because you're right: with 140 members it is a lot more difficult to arrive at consensus—and that's a growing membership—and to keep up with what we can do on a free trade agreement with United States or what we can do with respect to NAFTA. Indeed, there are these other issues, which we also address with respect to the sidebar agreements and which are more difficult to capture under a World Trade Organization full round.

How do we get there? In my view, you need to have a fully-fledged round. It is necessary to do that. But you shouldn't think..... For example, article 20 does allow governments scope to take decisions within their domestic jurisdictions ; it allows them to husband their natural resources, to protect scarce natural resources, or to undertake health or environmental decisions to protect the environment, organisms, etc., as long as it's done in a particular way that results in non-discriminatory...and as long as it's not a disguised trade barrier. But that doesn't mean that you have a single set of environmental standards across all jurisdictions.

I just want to give you an example that brought this issue home for me when I was working for the government and representing the Canadian government at a meeting with a number of other governments and the Environmental Protection Agency in the United States with respect to lead in gasoline. It was part of discussions to indeed encourage other jurisdictions to move, as Canada had done, to ban the use of lead in gasoline and to move to alternatives, which, we would say, is appropriate and laudable to do.

The difficulty, as you quickly run into...and this is, “let's all just take a decision under the World Trade Organization”—for example—“and ban the use of lead in gasoline”.... That bears a certain cost, and if you were to look at some large southeast Asian nations.... As they stated at the meeting, their issue for health is potable water for a population; they're incurring so many deaths per annum. That is their health priority, and they have these air quality priorities in that they have as many cars in China as there are in California—or fewer—and lead in gasoline is about 110 on their health issues list. How can they possibly move it up? They don't have the financial resources, and it would be at the expense of one of those other—from their perspective—much more important issues.

There's always going to be some flexibility to allow countries to reflect their own social, environmental, and ecosystem priorities, which may not necessarily match ours. All you want at the end of the day is an approach that says that as we meet those environmental objectives and as we search for common areas we do so in a non-discriminatory way, and I think you can have that discussion under the World Trade Organization.

• 1720

Mr. Joel Neuheimer: I as well want to go back to your use of the word “auspices”, because as Mr. Peeling was indicating—and I think for us it's the key—if it's not comparable.... All the regional initiatives and bilateral agreements should be consistent with WTO obligations. Again, as he said, that doesn't mean that you have to do.... What we want to see there is nothing less than you already have with the WTO. If you can go further, then by all means, go further. Hopefully you'll see the multilateral level come up to that point.

How do we get there? How do we get to the same point from different points of evolution, I guess, on these different points? We're obviously not going to get there overnight. Our idea is that you're going to see continuous improvement over time for all participating countries, and this is a moving target. We're not talking about being satisfied with whatever we can agree to today. We're looking at continually improving ourselves; that's the way we look at these things.

Your point is a very important one. Within the WTO, and especially, I'm thinking, within the committee on trade and environment, to my mind one of the biggest reasons members haven't been able to move forward in that area is the difference in the abilities of different countries to live up to different standards. So when it comes to that, it's like forestry; it's like our industry pushing for a forest convention on the international scene. You go out and you negotiate what everyone can live up to today with the idea of improving that as soon as possible down the road. Apart from that, the key to all of this, for us at least, is the principle of non-discrimination within the WTO and within all of these agreements.

Regardless of the standards of different countries that industries in those countries can live up to, the key principle is non-discrimination, so the two key GATT principles of most-favoured nation treatment and national treatment are the real big priorities for us. If you need to do something in your country that we're not doing or that we don't do in the same way, go ahead and do it. To our minds, the rules allow for that, but when we're trying to ship into your country, don't treat us any differently from your own domestic industry—and Canada would obviously provide that same treatment to foreign entities coming into Canada.

The Chair: Ms. Swenarchuk.

Ms. Michelle Swenarchuk: Well, it's a huge question in a sense. In one sense—

Mr. Murray Calder: It's a can of worms.

Ms. Michelle Swenarchuk: —it's very simple. No national government, including this one, is going to sign a trade agreement in one area of the world that puts it in conflict with trade agreements it has already signed for the rest of the world. Whatever happens in the FTAA is going to be compatible with the WTO, period. I just can't imagine any other route.

I think the more important question is to keep in mind that a set of trade rules should not be permitted to usurp all the other kinds of agreements and values we need in order to have an equitable world. An organization like the WTO, which is set up to administer economic relations, is not equipped to provide for equality in wealth distribution and is not equipped to set appropriate health standards in various countries of the world. It is not equipped to deal with environmental problems which, by definition, have to be local; the environment of every part of the world is different and has to be managed in accordance with its particular characteristics. The WTO in Geneva is in no way equipped to set rules for us in Canada—or for any other country—to manage our environment.

It doesn't care, though. Let's be clear: it's there to manage economic relations, to further trade. Absolutely explicitly that's its goal, and that overrides everything else, but I think we need to keep in mind that as a country and as human beings on the planet we have other obligations. We are very wealthy relative to much of the world and we should be following through on our other international obligations to the same extent that we dutifully comply with everything that comes out of the WTO.

• 1725

With regard to the WTO, let me put out my views on some of the things that have been said here. Yes, there is article 20 of the GATT incorporated in the WTO agreements, which, as I've said before here, should have precluded any conflicts among environment policy, health policy, and economic policy, because it does permit countries to take steps to protect the environment and to protect public health.

Nevertheless, in every case that has gone to the WTO where a domestic measure has been challenged on the basis that it had trade implications, the decision that has been rendered has favoured trade implications and has required that the domestic measure be removed. It has affected the Clean Air Act of the U.S., the Marine Mammal Protection Act of the U.S., and the Endangered Species Act of the U.S. Canada, together with the U.S., has required Europe to remove its ban on hormone-residue beef, although the Europeans probably won't comply. Nevertheless, we have used the WTO to do that.

Also, although 10 years of consumer action in the EU went into putting those protective bans in place, now we're going to try to require France to accept asbestos. As well, we used the arguments of the WTO when we joined with five other countries to sink a protocol on trade in genetically modified organisms, which was wanted by 164 other countries.

So when trade rules are allowed to make policy in all the other areas, I think you have distorted policy. That's one problem.

Then, thinking back to our other international obligations, why do we put all our emphasis on complying with the WTO but not on our other ones like, for example, all the UN conventions that Canada has signed and ratified, or our overseas development aid obligations?

I will read from a speech given by the executive director of UNICEF, the United Nations Children's Fund, at Harvard on April 16. She pointed out that:

The collective overseas development aid of the 29-nation donor group known as the OECD, which includes the United States, has fallen to a record low of 0.22% of GNP, less than one-third of the 0.7% target. Since 1992, the G-7 nations' contribution to the general overseas development agency fund has plummeted about $15 billion, a reduction of almost 30% in real terms.

Ladies and gentlemen, let us call this situation by its proper name: it is a scandal. The developed world, which is benefiting so vastly from globalization, cannot be allowed to be deficient in its obligations to the developing world, which are not merely compassionate and generous but also a recognition that only by building an adequate human and developmental infrastructure in the developing world can you have a world economy that is one day stable and vibrant.

We're not going to solve all the world's problems by concentrating on only one institution, which is the WTO. I think we need to be thinking about and developing international institutions, real ones with teeth, for environmental protection, for development assistance, and for social equity throughout the world. Those problems, I think, are never going to be solved by a concentration on trade rules.

Mr. Murray Calder: Who runs them?

Ms. Michelle Swenarchuk: These are international institutions. They are run by member governments. Precisely my concern is that member governments in all of these institutions are now so constrained by the commitments of the trade rules that they have less and less room to adopt and implement good policies in all of these other areas.

The Chair: Mr. Cunningham.

Mr. Rob Cunningham: Mr. Calder, you asked how we get there. As far as tobacco is concerned, my response is, however we get there let's not imperil the tobacco control measures that we support. We're not advocating a standardization of measures of tobacco control legislation, for example, in various countries. I think a better model would be the leapfrog approach, whereby we move ahead, we advance, and then these countries can be examples for others.

The Chair: Thank you very much.

Mr. Neuheimer.

Mr. Joel Neuheimer: Can I just react to what my colleague has said?

The Chair: Yes, very quickly.

Mr. Joel Neuheimer: We're not saying that the WTO should be counted on to solve all the ills of the world. It's the multilateral organization that governs trade practice around the world, period.

As far as I'm concerned, some of the difficulties that she's talking about are questions of political will; it's a question of the governments of the world re-invigorating things like the United Nations environment program and the UN Commission on Sustainable Development in order to move forward. I'm talking about environmental issues as an example. It's up to the governments of the world to re-invigorate that agenda and, I guess, live up to the expectations that a number of people are putting on them in that respect.

• 1730

The WTO is not keeping us from protecting the global environment. It's merely out to ensure that there's no discrimination in the trade measures that are being employed. It doesn't limit the interest of the governments of the world in regard to concluding agreements that will protect the global environment.

The Chair: I have a quick question, Ms. Swenarchuk. You talked about the side agreements that we signed under NAFTA and said that they are not very effective. Correct me if I'm wrong, but haven't we recently actually been calling upon those side agreements, especially on the labour side, to try to enforce the labour standards? Is there a way to make them more effective in an FTAA?

Ms. Michelle Swenarchuk: We have other international conventions with regard to labour standards which are largely honoured in the breach. One simply has to look at the list of ILO conventions that exist, some of which Canada has signed and ratified, and many of which we have not, allegedly because of the jurisdictional split in labour jurisdiction in Canada.

I agree with Mr. Neuheimer, in a sense, that what we're really talking about here, in all of these subjects, is political will. If the countries of the world want to achieve better labour standards, the legal instruments are already there. They exist through the ILO conventions. I think what's required is better wealth distribution so that other countries of the world can, in fact, achieve better social distribution; in no way are side agreements to trade agreements designed to do that. With regard to the NAFTA side agreements, the labour one has been of some benefit, particularly to union organizing in Mexico. There have been a couple of cases where, I think, resort to the labour side agreement has been of benefit.

Really, even trying to be as fair as possible, I have trouble seeing any concrete benefit that has yet been achieved by the NAFTA environmental side agreement. In the time that the commission has existed, it has issued two reports that have been of benefit by identifying major polluting jurisdictions in North America—of which Ontario is one. Aside from that, though, looking at the record, one doesn't see much achievement. I simply don't think that's the way to go, and I reiterate that if you read the agreements and see the provisions of the agreement that bind government's capacity to set standards, that's not going to be fixed by any kind of side agreement.

The Chair: If it's not the way to go, what's the solution?

Ms. Michelle Swenarchuk: The solution is the political will to implement those international conventions that we have signed. Let's think about climate change, the UN Convention on Biological Diversity, and ozone depletion. As I say, the legal instruments are there. There are literally dozens of them in the environmental field. There are all of the UN conventions related to social equity and freedom from discrimination, and there are child labour conventions under the ILO. It's all there on paper. It would be difficult to find a problem in the world that hasn't been addressed through international law. The problem is precisely that: the political will to implement.

The Chair: Is not the problem also enforcement? One of the things in the WTO that people find attractive is that they have this dispute settlement mechanism, an enforcement mechanism, while the other agreements are lacking that. Or is that too simplistic?

Ms. Michelle Swenarchuk: Many other international agreements also have enforcement mechanisms within them. Again, it's a question of political will to implement.

[Translation]

The Chair: One last question, Mr. Sauvageau.

Mr. Benoît Sauvageau: I want to be certain that I understood you correctly, Mr. Peeling. Did you in fact say that it is somewhat difficult to promote Canadian environmental standards because these differ from province to province?

[English]

Mr. Gordon Peeling: Of course this is a shared jurisdiction—I'll use the government language—and you have both national regulations and standards at the level of the Department of the Environment.

[Translation]

Mr. Benoît Sauvageau: As part of a side agreement, could the federal government negotiate a particular provision and in the process, challenge some aspects of provincial jurisdiction over environmental matters?

• 1735

[English]

Mr. Gordon Peeling: I suppose theoretically that's not outside the realm of possibility. We've certainly seen that sort of difficulty arise in trade; I'm thinking of the beer distribution system in Canada and provincial regulations that put us offside with our obligations to GATT, which was a long-standing 20-year discussion with provinces. So theoretically, yes, but on sidebar agreements where you have negotiations for environment....

Again, I'll use Chile as an example. We had provincial involvement. There is work underway right now. I think it comes to some of the issues that have been raised by our colleague from the Canadian Environmental Law Association. There is a need for capacity building in a lot of countries. It's easy enough to write law and have comparable law to the best available standards, whether they are Environmental Protection Agency standards in the United States or the Department of the Environment standards or the standards of provincial agencies in Canada, but it's another thing to enforce them.

Certainly, I know, our industry is engaged with the Department of the Environment and CIDA and the Department of Natural Resources in working with our Chilean colleagues at improving their capacity to enforce their regulations. Equally, we're working with them on the health side in regard to health and safety issues with respect to exposures in the workplace.

I think there is an opportunity for all parties, with provinces and government.... This doesn't really get to the nub of the question about having different standards at two levels within the Canadian jurisdiction. Does that have the potential to cause us difficulties? Does that put us in a position to have a clear and single voice internationally? That is a difficulty.

Mr. Benoît Sauvageau: Merci.

Mr. Gordon Peeling: There's no quick answer.

The Chair: Thank you very much. I know we went a little over our time, but we started a little late.

Thank you all very much for coming here today. Again, as we've said throughout our consultations in the east and the west, if there are additional issues you'd like to bring to the committee's attention, please do not hesitate to do so. We say that this is the beginning of the dialogue, not the end of the dialogue; the dialogue means that we must communicate both ways.

Ms. Swenarchuk, we look forward to getting your written submission on the patenting of superior life forms.

Thank you all very much. The meeting is adjourned.