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

Thursday, November 6, 1997

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[English]

The Chairman (Mr. Bob Speller (Haldimand—Norfolk—Brant, Lib.)): Colleagues, we can begin.

This is the fourth meeting of the subcommittee on international trade, trade disputes and investment regarding the MAI.

We have with us today, and welcome, the Canadian Labour Congress, represented by Bob White, president; and the Canadian Council for International Business, Bob Keyes, senior vice-president of the Canadian Chamber of Commerce.

Today we will go with the witnesses in order. I think Mr. White was first.

If you could present first, then, with a 10- or 15-minute presentation, we'll let Mr. Keyes present after that. Then we'll go to questions from the members.

Mr. Bob White (President, Canadian Labour Congress): Thank you very much, Mr. Chairperson. We appreciate the opportunity to appear before the committee today.

The CLC's involvement in this issue is at both this level and the level of the trade union advisory committee to the OECD, for which I'm the representative. We raised the issue of the MAI in a letter to the trade minister, Mr. Eggleton, in April of 1997. We raised a number of our concerns about the MAI. We received a reply to that from the current trade minister, Mr. Marchi, as of July 31, in which he appeared to agree with a number of our concerns. Then, of course, we circulated a letter in September to all members of Parliament, urging that parliamentary hearings be held.

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I want to say that the hearings are within a very short timeframe. A lot of people across the country I think would like to have this committee in their community so that they can make a presentation. I'm not sure what the rush is here in terms of a deadline.

Before I touch on the brief, let me say that I think the whole idea of this agreement is based on the wrong premise. If you look at what this agreement's trying to address, are we saying that currently multinational corporations and international investment are being severely restricted in their power; that mobility of capital isn't taking place, both in our country and around the world; that governments are demanding too much from multinational corporations and investors in terms of locating in the various societies; that Canada is severely restrictive in terms of regulating investment coming into Canada, demanding too much from foreign investors; and that Canadian investors are severely restricted from investing in other countries?

That's not the case at all, I think. In fact, you can make the argument that when you look at the mobility of capital and what's happening with multinational corporations around the world, they have incredible power. We have been signing trade agreements and other agreements that cater to corporate rights and investment rights. They never seemed to be balanced off by the rights of communities and the rights of people. So we think it starts from the wrong premise.

Having said that, let me also say that we live in the world or reality, and realize that there are discussions taking place. There are negotiations going on around a multilateral agreement. We are going to participate. We're going to make our viewpoints known, both here and elsewhere, on the basis of what's being discussed. But I did want to say that we think the premise of all of this is wrong.

Let me highlight some of the things we say in our executive summary. We recognize that the process of negotiations has begun. I do want to say, again, that I was in Paris when people we saying maybe this was going to get done last year, and it hasn't. I'm not sure what the deadline is to say that it has to be done by next April. The world's not going to go away. There's a lot of time for this. We need to take time in Canada in terms of what the implications for this are for a wide section of Canadian society.

The MAI marks another important stage in the progressive dismantling of the power of democratic governments to regulate the market in the interest of citizens, workers and communities. We think it takes us even further down the road than either FTA or NAFTA.

Our experience with both FTA and NAFTA has taught us that agreements designed to secure and promote the interests of mobile capital don't promote the interests of workers and communities. Wages, working conditions and social standards have been subject to continual downward pressures. The MAI is explicitly designed to promote still greater mobility of capital, yet the evidence shows that there have been large net capital outflows from Canada in recent years and disinvestment in many sectors and communities.

We're greatly disturbed that the MAI negotiations have taken place in, up till now, the absence of broad democratic scrutiny and in the absence of a meaningful public debate here in Canada. This is really only the start. This thing is just starting to see the light of day. That's why we don't think trying to close this debate by December makes any sense.

The issues raised deserve examination by this committee. We think this committee should play an important role as to what the Canadian government should accept under any MAI agreement.

We're concerned that MAI negotiations are taking place almost exclusively among the advanced industrialized countries, which are the capital exporters, and largely excluding developing countries, which generally still seek to regulate foreign investment in the interests of national economic development. I think that's an important point.

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Somebody asked why this is taking place at the OECD and not at the WTO. The reality is that if you have this taking place at the WTO you're going to have a number of developing countries who want to have the right to some regulation and who want to demand certain conditions for investment, which will improve their economies and allow their economies to develop—the same way, quite frankly, as Canada did for several years.

I can tell you, for example, that I believe had we had MAI we would not have an auto industry in Canada today. The Auto Pact of 1965 required investment in Canada to meet with certain conditions of domestic content, certain assembly-to-sales ratios, and a requirement for investment in this country based on exports and based on sales.

I support the argument of those countries that say to a corporation like Boeing, for example, which makes a major sale of airplanes to some country.... That country has an absolute right to demand something in return rather than just buying the airplanes. That country has a right to demand something in return that would require jobs and investment in that country.

So I think the idea of a lot of countries being excluded from this.... The reason this has been tried at the OECD is that if it gets done, then they think it gives them a better chance to sort of haul the other countries in.

We appreciate the fact that we live in an increasingly integrated international economy, and we are not in opposition to some form of international agreement on investment. In fact, for example, we have argued before several committees in the G-7 and in other countries that we should have something like a Tobin tax on international speculation.

If you look at what's happening in Asia now—which I don't think anybody would have contemplated six months ago—with the speculation and the other things happening to the currency, there's going to have to be a discussion about some regulation of international capital. But that is much different from what's being proposed here.

Also, with the international labour movement we have pushed for international agreements that would establish a common floor of core workers' rights and secure environmental standards. And let me take a couple of minutes to talk about that, because I know there's a lot of misunderstanding about what we're asking for.

We're not talking about core workers' rights for a minimum wage or for wages that would be the same in each country or for legislation that would be the same in each country. What we are saying is there should be a core of workers' rights that includes a number of conventions adopted at the ILO, which are uniform to countries around the world; that is, the rights of free collective bargaining, freedom of association, no forced labour, no child labour, and non-discrimination in employment in terms of equality. Those are basic minimums of ILO standards.

When we talk about something being included in this agreement, that's what we're talking about. We're not talking about the same wages, the same benefits, and the same health and safety conditions.

And we have great difficulty with this, because every time we're talking about a new trade agreement or new investment agreement, somehow we can put all these rules in for investors and somehow we can put all these rules in to protect capital, to protect rights of corporations and to protect intellectual property rights, but we can't put in something to protect workers' rights and environmental standards. But I think you can, and I think that ultimately if this agreement is made, it should be very clear that they're in there, that they're enforceable and that there is some mechanism to deal with it.

We are also raising our concerns about the broad definition of investment in the MAI. There are still unknown implications of the agreement in many areas, like the binding nature of the agreement if it were to be concluded and the fact that the power of investors and corporations to directly challenge government policies will be greatly increased. Again, we can deal with some of those; they're laid out in our brief.

We think the MAI challenges our ability as a country to maintain not-for-profit public and social services, particularly services delivered by a not-for-profit sector in areas of mixed public and private delivery. We think that whole area should be set aside from any agreement.

Again, I think that if you're taking a look at the future in Canada, we have child care, but elder care, for example.... With the demographics of our society, the cutbacks in health care in the country today and the numbers of older people who are now being taken care of in the privacy of their own homes, there has to be some discussion in the country about elder care. We're concerned about what the future means in terms of this agreement for setting up a not-for-profit elder care section of our economy that would be under Canadian control.

We think MAI undermines the polices needed to ensure that direct foreign investment increases employment and economic activity here in Canada as well as undermining the policies that help build our economy and create jobs by supporting Canadian-based enterprises.

All of these concerns have to be addressed, and we are unconvinced that proposed reservations will satisfy these concerns. Even reservations that are not negotiated away before an agreement is finalized will most likely freeze existing regulations and will be subject to removal over time.

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I know the minister appeared before the committee, and let me say that we have had meetings with Mr. Dymond in order to get briefed on what's going on over there. There's a long list of what appeared in their brackets or their reservations, but if you want to talk about negotiations today, this is really a wish list, not a final list. I've been in negotiations several times, and this is like a lot of other things: where you start and where you end up. It's easy to come before a committee today to say that we have excluded culture, we have excluded this, we have made reservations on this. The reality is what the final agreement will look like. I think that's the key here. This committee should be very clear about what the final agreement should look like.

That's basically our summary presentation. I don't want to take too much time. We can come back on the brief, on certain sections of it, and Mr. Jackson can deal with some of the technicalities of it. But that's really a sort of broad-brush approach that we take about this proposed agreement. We think it needs much wider consultation in the country, and the process has to be opened up much more on the impact of it. And we would make an argument that this kind of agreement today is not necessary.

Thank you.

The Chairman: Thank you, Mr. White.

Just to address your committee concerns, in terms of the timeline, we were given the timeline by the minister. On his request, he wants to have something before January, when he goes back into the negotiations. That doesn't preclude this committee from continuing to look at this issue at all. I'm sure that, with the agreement of committee members, we will follow this issue to the end. We are a permanent subcommittee, so we will be sitting through here.

You are right in terms of the timeline. It was set up in order for us to report on the concerns of Canadians, and we would have wished to travel across the country. Unfortunately, given the time restrictions and given the nature of the House and the numbers of committees in the House, we weren't able to do so. We have asked for briefs from Canadians across the country, and we've looked at the lists of issues and felt that there were representatives such as yourself who were able to make it here to Ottawa to put forward those views. But certainly that doesn't preclude this committee from continuing these discussions over the weeks and months ahead until a final deal is signed.

Mr. Keyes.

Mr. Bob Keyes (Senior Vice-President (International), Canadian Chamber of Commerce; President, Canadian Council for International Business): Mr. Chairman, thank you for the opportunity to be here today to talk to you about the proposed MAI. I'm Bob Keyes. I'm the senior vice-president of the Canadian Chamber of Commerce. I noted that in your introduction you mentioned the Canadian Council for International Business. That is an organization with which the chamber is affiliated, and I'm president of that organization.

I have three colleagues with me here today. David Hecnar is the chamber's director of international policy. Also with me is Doug Gregory, of IBM Canada, and Milos Barutciski. Milos is a partner with the law firm of Davies, Ward & Beck, and has practised extensively in international trade investment and competition law.

Both Doug and Milos are business ambassadors for the chamber, and are very active on our behalf on a host of international trade and investment issues, including the MAI. I should point out, too, that through the CCIB affiliation, both Doug and Milos represent Canadian business on issues at the business industry advisory committee of the OECD, as well as various working commissions of the International Chamber of Commerce. They are eminently well qualified to talk about the MAI.

Both chamber staff and the business volunteers have been very busy over the past several months, meeting with a variety of groups and individuals to discuss our views in support of the MAI. We've met with federal and provincial government officials, MPs, provincial and local chambers of commerce, and a variety of industry groups and associations.

As most of you know, the Canadian Chamber of Commerce is Canada's largest and most representative business association. We are very broad-based, representing small, medium, and large companies, and we represent these businesses regardless of either the sector or region of the country. Our core strength is our grass roots, as the national body is representative of 500 community chambers of commerce and boards of trade across Canada.

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Our key mandate, and one of the reasons we are so interested in the MAI, is to advocate a federal policy framework that promotes a healthy and vibrant economy in which all Canadian businesses can grow and prosper. With this mandate in mind we want to emphasize to the subcommittee the importance we place on the negotiations to conclude an MAI and our opportunity to discuss it with you today. We'll keep these formal remarks brief because I think we need to have ample time to engage both the subcommittee and our partners from the labour community in an open dialogue on the issues.

We stress that we view labour as a partner in this debate because we certainly believe a successfully concluded MAI will be of substantial long-term benefit to both Canadian business and to labour. It may sound a bit clichéd, but we do believe that Canadian business and labour have an unprecedented opportunity to work together to meet the competitive challenges of the global economy that is unfolding and will continue to unfold.

Our main objectives here are twofold. First is to outline the important of the MAI to Canadian business and emphasize the key benefits we foresee. Hopefully, in outlining these benefits we can achieve our second objective, which is to dispel some of the misinformation that seems to surround the current MAI debate.

On that note, I'll ask David to comment briefly on some specific issues and points.

Mr. David Hecnar (Canadian Council for International Business): Thank you, Bob, and thank you, Mr. Chairman and subcommittee members.

I'd like to begin by providing a brief overview of why Canadian companies that create employment for Canadians support the MAI negotiations. However, we also recognize that the negotiations are not completed and as such we base our remarks on the developments today, as well as on a number of the underlying principles that continue to drive the whole concept of an MAI. I'd also like to point out that we remain strongly supportive of the spring 1998 deadline the OECD has extended for itself.

As some of you may know, the Canadian Chamber of Commerce has been a long-time advocate of the need to develop a multilateral set of investment rules and disciplines. In fact, we've been calling for such a framework in one format or another for over a decade now. Since 1991 both the OECD business and labour communities have supported the OECD feasibility study on such a wider investment instrument and also the 1995 decision to launch formal negotiations.

I'd like to point out that trade and investment are two sides of the same coin. A multilateral framework of rules to govern investment is necessary to facilitate Canada's integration into what's becoming a highly competitive global economy, where most of the new high-paying jobs will be based on knowledge-based technologies and services. Increasingly, Canada's manufacturing sector is adding services to its products to help differentiate them in this global competitive market.

As we all know, the global economy is going through unprecedented transformation. We firmly believe this transformation has made the MAI a very important and critical first step toward the development of a multilateral framework to govern commerce in this brave new world to which I'm referring. Branching out into this new reality will be supported by an open, transparent, and rules-based trade and investment framework.

The negotiation of international investment agreements, however, is not new. In fact, according to the United Nations Commission on Trade and Development, UNCTAD, report of 1996, a new investment treaty is actually being signed on average almost every single day. At the beginning of 1997, that number actually totalled over 1,330 plurilateral, regional, and bilateral investment agreements.

So why do we need an MAI if we have all of these investment agreements out there? The answer is very straightforward from our perspective. The MAI represents an opportunity to provide a multilateral framework for this patchwork quilt of existing agreements. We hope the MAI will result in a state-of-the-art investment treaty that incorporates the best elements of all the existing agreements out there.

We've heard some of the critics who claim that the MAI will be nothing more than a charter of rights and freedoms for multinational corporations that will limit the capacity of national governments to regulate their own economies. We don't share that perspective. Companies doing business in Canada will continue to be bound by Canadian laws. Let's make that point very clear up front. However, for the first time, the 29 national governments of the OECD will agree among themselves to commit to a framework of rules to govern an increasingly important element of global commerce, i.e., international investment. The result, we hope, will be a much-needed level of transparency and predictability in the global investment arena.

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For the business community in Canada, our stakeholders, the MAI is all about eliminating discrimination—eliminating the discrimination that Canadian companies face when they enter foreign markets.

The two concepts that underpin international trade and investment are national treatment and most favoured nation. I know most of you are familiar with these terms, but I'll provide just a brief explanation once again. National treatment means Canadian businesses will be treated no worse than nationals of the countries in which they invest. MFN, on the other hand, allows Canadian businesses to benefit from the highest levels of protection and liberalization that our stronger trading partners are able to negotiate. Call this piggy-backing if you will. Both of these principles put Canadian businesses on a level global playing field with their foreign competitors.

It's interesting to note that Canada is the most open and integrated economy in the G-7. If you take our total imports and exports and divide these by gross domestic product, you end up with a figure of approximately 73%, which is three times more open than the United States economy and almost four times more open than the Japanese economy.

Unlike our other G-7 partners, we don't have a big enough domestic market to fall back on should we, in unfortunate circumstances, fail to succeed in the global market. Furthermore, as we've stated before, the principles embodies in the MAI already exist between Canada and many countries around the world, particularly the U.S. and Mexico through NAFTA.

This brings me to the one point that I cannot overemphasize enough to you today: the real value of the MAI to Canada will be an outward-looking one. Those who focus solely on the implications of inward investment in the Canadian economy are forgetting that Canadian companies are expanding and hiring more Canadians because they are actually out there in the global marketplace succeeding.

Canadian companies, more than the companies of some of our larger trading and investment partners, need the multilateral rules-based framework of an MAI. Canada and Canadian companies don't have the political or economic clout that other nations and their multinationals do. For this very reason, Canadian companies need rules that will help constrain the mercantile interests of others. It is the establishment of a more predictable, secure environment for Canadian companies that really underlies our support for the MAI.

While Canadian companies do generally well within the OECD economies, it is our longer-term hope that non-OECD members will see the value of adopting these types of investment disciplines. If you look at where most of the investment barriers are for Canadian companies, they're not in the OECD; they are in fact in the developing world, in the non-OECD countries. However, if you believe, as we do, that the MAI framework will eventually form the basis of a broader multilateral framework, perhaps in the WTO, perhaps through accession to the MAI, then the MAI is important, even without the upfront liberalization we had been calling for back in 1995.

MAI is especially important for the Canadian SME community. We heard earlier about the role of large multinational corporations and flows of capital and so forth, but we have to look at the small business community, which really needs to have stronger disciplines globally if it's distinct in its role as an engine of job creation here in Canada. The goal of establishing greater predictability for Canadian investment in high-growth markets outside the OECD is critical, and the MAI is the first step in this lengthy process.

I'd like to touch very briefly upon a number of the other aspects of the MAI for which we have already indicated our support.

We believe that performance requirements run contrary to the concept I mentioned earlier: non-discrimination as articulated in the principles of national treatment and MFN, most-favoured nation. Canadian companies, particularly those within the SME community, need access to a dispute settlement provision such as the one being discussed in the MAI.

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Some unfortunate misinformation has been floating around out there about the investor state dispute settlement mechanism. Let us be clear: this provision does not make companies the equivalent of a nation-state, as some would claim. It is simply the business community having the option, particularly for these smaller companies, to take an investment dispute to a neutral third party for arbitration.

In fact the investor state dispute settlement concept being discussed by MAI negotiators will bring to a multilateral level the same type of fair, transparent, impartial legal framework and structures for settling company-state disputes that exist in virtually all OECD countries, including Canada. The only difference here is that these companies will be entitled to have their day in court in a multilateral and international forum.

We have confidence in the fair and mutual third-party arbitration processes currently being discussed by the MAI negotiators. This type of arbitration, we believe, facilitates a fair and expeditious settlement of the types of disputes that may be in question.

As with any other international treaty or agreement, Canada has a number of unique concerns that our government would like to have recognized. All of these concerns, we believe, can be handled through MAI's reservation and exception process. It's our hope and request that the Canadian government and its negotiating partners clearly spell out these reservations through listings, appendices, and so forth.

We continue to believe there are dangers inherent in the types of broad carve-outs that are being discussed, which can open up many loopholes for governments to bypass some of the basic and fundamental obligations that the MAI is intended to bring about.

Canadian companies need the flexibility to transfer certain management, professional, and technical skills to help manage strategic investments in foreign lands where we invest. These transfers, I might add, are of a temporary nature. As our economy continues to globalize, this flexibility is crucial to the survival and success of Canadian companies.

In the public debate around the NAFTA, the business community was concerned about and fought the inclusion of environment and labour provisions in an international trade and investment agreement. Since then our views have matured considerably on this point. The debate now for us is no longer about whether the MAI should include provisions on environment and labour, but how. We'd be happy to discuss this at great length, following my formal remarks, with our partners from the labour community and the subcommittee members.

In conclusion, the MAI will not be the corporate free-for-all that some of the critics have suggested. In fact, quite to the contrary, the MAI will be about rules, discipline, security, predictability, and fairness.

Thank you, Mr. Chairman and committee members. We look forward to engaging you and our labour friends on these and other issues.

The Chairman: Thank you. We obviously have some differences of opinion here. It makes for good debate.

Mr. Lunn.

Mr. Gary Lunn (Saanich—Gulf Islands, Ref.): Thank you, Mr. Chairman.

I'd like to thank both of the people from the community for their submissions. I want to state that in British Columbia, where I come from, a lot of hysteria has been created by the MAI, and I have gone through the MAI and I do not see the basis for it.

Mr. White, we hear things such as the multinationals are going to decimate our forests and investment is going to leave Canada and stampede to Third World countries. We hear those types of comments, and I appreciate from your submission that you're not in support of this. I would like to ask you if you see anything positive, any benefits for Canadian people, in this multilateral agreement.

I would like to put on the record that I do support your proposition that we get this out to the public so they can see actually what's in there, because I believe a lot of misinformation is creating this hysteria on something that could be a good thing.

I'd like your comments on whether you see anything positive in this agreement, anything that would benefit Canadians.

Mr. Bob White: Again, we've said we don't have a problem with some rules-based trade system. The problem we have is that the rules-based trade system is really very much in favour of international capital and international corporations, and not very much in favour of workers or communities. Really, it is an attempt to take power away from national governments.

So in terms of where you end up here, if you're putting together an agreement and all of the things people say are going to be excluded from it, then it may have some benefit. I don't know. Quite frankly, I don't know what the benefits are.

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What's the problem we're trying to solve here today? Why are we in such a rush? What is the protection for workers and other people in our society? We keep rushing to put together agreements that give immense protection to capital and corporations.

In terms of hysteria, some people call it that. Some people would say there's a real concern about what the implications of this are. We heard in trade agreements that we would no longer have any actions taken against us by the United States. That hasn't been the case. There have been actions on softwood lumber. British Columbia has a bit of a fish problem today with the United States. We're supposed to have favoured nation status, but we have the Helms-Burton Act against Cuba.

Some people raise these issues, and a lot of them are legitimate. I can't speak for all those in British Columbia who are raising concerns, but certainly there are concerns being raised by a number of people across the country.

I'm not prepared to call it hysteria. I think some of it may be a lack of information, but a lot of it is based on what history has shown in terms of what people were told when we entered into these agreements and what the ultimate results were.

Mr. Gary Lunn: Thank you, Mr. White.

I'm going to ask two questions of Mr. Keyes or any of his other people. I'll put them both to you so you can maybe combine them in your answer.

First of all, do your members have anything specific that they would like to see opened up for Canadian investment? There are presently only 29 countries in the OECD involved in this. Are there other countries from which you're getting feedback that you would like to have signed on later down the road?

Here's the second question. I'll put this out to you again because I see this is from British Columbia. Do you see a need for greater communication to your members and the public so that they know exactly what's in there? Are you aware of any misinformation that's out there that's creating some of the negatives we're getting? I put that out to you.

Mr. Douglas Gregory (Senior Adviser, International Trade and Investment, IBM Canada Limited; Canadian Council for International Business): Thanks very much. Those are two very good questions.

With respect to whether there are any particular areas in which we're looking for investment liberalization, I think by following the negotiations since 1995, it's clear that there isn't a great deal of desire by the 29 member nations of the OECD to involve themselves in a significant upfront liberalization effort in the MAI. I think this is largely predicated on ongoing discussions in the WTO.

For example, right now we're in the midst of negotiations on a financial services agreement in the WTO. The question is, why would you negotiate in both forums at the same time on the same thing?

Likewise, we just finished negotiations on telecommunications in the WTO last February. Again, why would we open up negotiations in the MAI in that context?

I think with the built-in agenda of the WTO on services, that's going to reinstitute a series of broad negotiations in the services area of GATT in 2000. A lot of countries are keeping their negotiating poker chips in their pockets until that year.

With respect to other countries that are possible accession candidates for the MAI, I think one should commend the OECD, the secretariat over there, and the governments of the OECD member nations for the work they've done in talking with those in developing economies in non-OECD countries about the benefits of a rules-based investment framework.

The OECD has met with countries from Latin America, Asia, and Eastern Europe. All of this outreach is extremely beneficial for countries that are looking to understand more about why the countries of the OECD are negotiating this.

Further, I think this will help dispel some of the misinformation that's out there about that. I know that it's almost ironic that Maude Barlow, through her activities on behalf of concerned Canadians, has been able to deliver transparency through the OECD process that businesses and other groups, such as labour, haven't been able to deliver over the years.

That being said, I don't want to be critical of our own government in particular, because when we enter into negotiations in a multilateral context we end up talking and making agreements about what the degree of transparency will or will not be. So one wouldn't want our negotiators or officials to break that confidence they have with the other countries. But I and the business community are very pleased that Ms. Barlow was very successful in her attempts to bring an additional degree of transparency to these very important discussions.

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I don't know if my colleagues would like to add to that in any way.

Mr. Milos Barutciski (Canadian Council for International Business): No, I'll pursue a couple of other issues that I'm sure will come up.

The Chairman: Mr. Baker.

Mr. George S. Baker (Gander—Grand Falls, Lib.): Mr. Chairman, just a couple of questions.

First of all, I have a general question. In terms of the free movement of capital between nations, are the witnesses concerned, or do they see a concern developing, regarding the ability of Canada, in this particular case, to collect taxes to the same degree that we collect them today from investors who invest in Canada?

I'm asking you that question because given the fact that obviously an agreement has to be reached on where taxes will be collected in the free movement of capital, is it in the country of location of where the investment takes place? Is it the head office? To the multinational, obviously, it would be the place where the taxes are the lowest. Wouldn't that then lead...given the reality of transfer pricing and given the fact that over half the trade in the world today, the movement of capital, takes place between related companies?

Isn't there a danger, and wouldn't you be concerned, that Canadian companies that do not take part in the international community of investment would be on the receiving end of perhaps a raw deal in taxation? That is, they would not be in a position to take advantage of those arrangements that perhaps the branch plant or a subsidiary would.

Any of the witnesses.

Mr. Andrew Jackson (Senior Economist, Canadian Labour Congress): I guess in fairness, at the OECD there have been some discussions around international tax arrangements. Clearly in a world where we have more and more corporations operating across national boundaries there is an enhanced ability to avoid taxes in one country, or to ship profits to low-tax countries. So in fairness, there have been some discussions around that at the OECD.

One interesting question is why that set of discussions around how we effectively tax transnational corporations is taking place completely separate from the MAI. Really, there's a lot of progress on the MAI but much less progress on the tax-site discussions.

The second part of the answer is that in the OECD guidelines for multinational enterprises, which we've called to be annexed to the agreement and to be related to it, there's in fact a lot that bears on what should be the responsibility of corporations in terms of where taxes should be declared.

I think the problem you're pointing to is a very real one. It's unfortunate that it's not really part of the MAI discussions. That's really what we're getting at, that if you started in a different way—you know, what are the positive things we want to accomplish in terms of bringing some regulation to what corporations are doing internationally—the tax area is an interesting example.

Mr. Milos Barutciski: I feel to some extent a bit of pleasure; I think to some extent I might even be in agreement with Mr. Jackson's comments. The business community would like to see tax measures addressed at the MAI, and has put it on record through BIAC, the business and industry advisory committee to the OECD.

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I'm not speaking here for just the Canadian Chamber of Commerce or the CCIB. The international business community has recognized that one easy way to race to the bottom, so to speak, is through not just incentives, which is another issue we would have hoped to have seen addressed here, but also through tax measures.

That being said, the specific issue the honourable member raised about the transfer pricing issue is something that is being addressed. As we speak, at the OECD there has been an ongoing study of transfer pricing.

I venture very cautiously into tax law. I'm a feeble-minded trade and investment lawyer, and while I have some familiarity with it, some of my tax partners might take issue with that claim. But in fact if I'm not mistaken I believe Revenue Canada has recently announced some new policies on transfer pricing. It's certainly an issue. I don't deny that.

Mr. George Baker: As a trade and investment lawyer, you're aware in regard to trade and investment that the tax on royalties has been substantially diminished in preparation of this agreement. In terms of tax on trademarks, trademarks have been bifurcated so that there's a cut there, and that's been standard I think in most tax agreements between large nations. Given the fact that there is no withholding tax left after next year, as you are aware, isn't there a real danger that Wal-Mart, with a subsidiary in Canada, would certainly be in a better position, unless we had some good advance transfer tax agreements made with the Canadian government, to compete with Laughton's Drug Store in Gander, Newfoundland.

Mr. Milos Barutciski: I honestly can't answer that question because I haven't really looked at those particular changes. I wish I could give you an answer to it. I simply can't.

Mr. George Baker: But surely you realize that is perhaps the key question.

Mr. Milos Barutciski: It might be, and if in fact the tax agreements and the treatment of transfer pricing is going in the direction you're suggesting, there would be issues. There's no question the whole idea of regulating transfer tax, the underlying principle, is to make sure that income is recorded with some degree of objectivity relative to where that income is actually generated.

I think what our perspective on this would be is that while it's an issue that impacts on investment, as competition policy impacts on investment, as labour standards impact on investment, as a number of other areas of regulation impact on investment there are also other fora where these issues are being addressed.

It's easy to suggest that the risk of throwing everything into this basket is it would dilute and remove the emphasis from the fundamental principles that my colleague was talking about, the MFN and the national treatment, by distracting the intention from some of the core principles about what is ultimately an investment treaty not a tax treaty.

To the extent that as an investment treaty it might impact on taxation or taxation might impact on investment directly, the issue is really more from the standpoint of discrimination and the discriminatory tax treatment of foreign investors in the host country vis-à-vis nationals, but that's not to say that the treatment of transfer pricing isn't going to have an effect, of course it will. I agree with you completely, but I don't think that the MAI is necessarily the forum to deal with that because we do have a fairly established mechanism both within the OECD, which as I mentioned has been studying this, and there is a study by David Ward, who is one of the senior tax partners in the country and probably one of the most prolific as an author. I was sitting in his office a few months ago and he was trying to educate me about the intricacies of transfer pricing. He sat there and showed me the latest of the bricks that the OECD has generated on this issue.

I have to confess I didn't understand most of what he said.

The Chairman: That's nothing new around here.

Mr. Milos Barutciski: There we go, but the point being is this an issue that is being addressed elsewhere.

The Chairman: Mr. Gregory.

Mr. Douglas Gregory: Thank you. I'd just like to echo Milos' comments by saying to the hon. member that in the way that we talk about building a framework of rules to govern global commerce in an integrated global economy, we're going to have to build disciplines on a whole variety of subjects.

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Would we have any credibility if we said to you that nation states are not competing on their tax preferences, that they are willing to provide investors? Absolutely they are.

In October of last year I had an opportunity to speak to the United Nations commission on trade and development, to the G-77, on the need for a multilateral framework, and I remember that the ambassador from one of the countries of western Europe stood up and actually said that her country's economic strategy is derived from desiring not to tax corporations. Her country is generating its revenues through downstream taxation of consumption taxes and personal taxes.

These things are happening out in the world. These are things Canada is going to have to come to grips with in a multilateral context. They are issues and they need to be dealt with.

The Chairman: Thank you, Mr. Gregory.

Mr. White, did you want to comment on that?

Mr. Bob White: I think Mr. Baker makes a good point. This agreement is about investment, mobility of capital and multinational corporations, but doesn't attempt to address the tax thing at all.

Let me just say this about partners. Before we establish partnership, we should have some discussion. We don't just come in and declare ourselves as partners. I'm not saying we're partners of the Chamber of Commerce. We're not enemies, but we're certainly not partners.

Some hon. members: Oh, oh.

Mr. Bob White: This is a new sort of extension to me today. I don't want anybody to leave the room with the idea that we've had some discussion and that we formed a partnership. We haven't and we didn't.

Some hon. members: Oh, oh.

Mr. Bob White: Mr. Baker, you touched on a key point, and this is a problem, I think. There are a lot of other key points and we want to again emphasize the whole question of public services. The question of public services is really important here.

People have talked about culture around the table, and we're very strong on that as well, but when you're talking about mobility of capital.... We've talked about a Tobin tax, for example, speculative tax. There is a whole range of other issues, but the problem with this agreement is that this really does establish a certain number of rights for business, for capital, and for multinational corporations. But then somebody said about these other issues that they will take care of them somewhere down the road. I don't think that's good enough.

The Chairman: Mr. Sauvageau.

[Translation]

Mr. Benoît Sauvageau (Repentigny, BQ): I have a question for the Canadian Council for International Business or the Canadian Labour Congress.

At one of our previous session, two days ago, if I'm not mistaken, the minister answered one of my questions by saying that he would prefer side agreements on labour and environment standards, rather than including those in the MAI.

I would like to ask you, Mr. White, what is your position regarding labour and environment standards. In your view, would side agreements be adequate?

I would like the representative of the Canadian Council for International Business to answer the same question, and tell me whether he believes that it is important to have side agreements dealing specifically with environment and labour standards; or whether it would be better to have these standards included within the Multilateral Agreement on Investment.

So I am asking the same question to both groups of panelists.

[English]

Mr. Bob White: Again, I think it's interesting that the Chamber of Commerce says its views on the NAFTA are different and now they've moved towards saying they should be included and the only question is how. That's always been a debate.

We see the labour and environmental provisions of any agreement, including this agreement if it ultimately comes to fruition, as having to be included in the agreement in a way that makes it clear what we are talking about, along with some dispute resolution mechanism for violations. It should not be outside the agreement. It should not be like we've done in NAFTA because, again, in the NAFTA thing, I do not know of a case.... There might one case that has been successful in NAFTA in terms of raising violations of workers' rights or environmental rights.

So again, we're saying that in any agreement that's ultimately concluded these things should be in the agreement; it should be very clear what we are talking about and there should be a dispute resolution mechanism and a procedure to deal with them, the same as you do with a number of other issues in any multilateral agreement.

Mr. Douglas Gregory: On labour and environment, we'd be comfortable with side agreements similar to those in the NAFTA, in that both side agreements in essence argue for and require countries to enforce their own domestic labour and environment laws.

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I think we can all appreciate that the OECD labour centres are by and large much higher than those in many other countries, with some exceptions. I think the question we're ultimately going to have to deal with is not a question of whether countries enforce their own laws but whether or not there is a core set of common, fundamental human rights—call them core labour centres, call them whatever you'd like—that we as a global community can agree on.

I would like to offer an opportunity and invite you, Mr. White, if you can, to sit down with the chamber. We've worked on investment disciplines in the OECD for the past eight years, and even longer, and we have a good understanding of those investment disciplines. I think it would be helpful if we could sit down with our colleagues—rather than call you partners, if that makes you uncomfortable—from the Canadian Labour Congress and understand the specific proposals you have.

In the context of the ILO—and I have heard people talk about the ILO core conventions—we have some concerns in the business community about the efficacy of the ILO, about the way the ILO works. The ILO has been here since 1919, and they have promulgated some 76,000 labour centres, and we still haven't fixed the core labour problems. So we have to look at that, and perhaps you could help us understand exactly what principles and disciplines you would like to see in that, at some time down the road.

Mr. Bob While: I am having a hard time, really, thinking that you are that naive on this issue. We have been to the WTO. We have been to the ILO. We have been to every trade agreement.

Our position is really very clear, and it is not a position of protectionism. It says there are core conventions of the ILO, not 97 of them or 3,000 of them, but there are basically six of them that are important and have been accepted by over 100 countries around the world. That says that those countries who participate in agreements like this have to have legislation that allows for the freedom of association, free collective bargaining, no child labour, no forced labour, and no discrimination in employment between men and women. Those are not very revolutionary.

And when you talk about the NAFTA situation, the problem we have in NAFTA today, the exploitation that goes on in the maquiladoras, the Mexican government will say they are living within their own legislation. But the facts are that in Mexico today, if you try to form some democratic labour movements in some of those places, the exploitation is incredible.

So we're not saying they have to adopt the Canadian system or an American system or some western system, but a core of standards that have been accepted in the ILO by over 100 countries.

But we will be glad to meet with the Chamber of Commerce.

[Translation]

Mr. Benoît Sauvageau: That's good, Mr. Chairman, because we could have a parternship here. We hope our discussions will be productive and I have no doubt that we shall draw upon them in the very near future.

I would like to know what is your position regarding the lowering of national standards. There is a clause which is still not resolved. We have heard of the possibility that some countries could lower their current national standards to attract foreign investments. I think that on this issue, both sides must have a rather clear and similar point of view. I would like to know what kind of restrictive language Canada should suggest be used in the agreement regarding the lowering of national standards.

[English]

Mr. Andrew Jackson: I guess there are really three different aspects to the position that has been taken by the trade union advisory committee. But with respect to not lowering standards, what we have said from the labour rights perspective is there should be two components in that clause. Firstly, the countries should not violate the core conventions of the ILO, which Bob just mentioned. There would be a reference to that in the preamble of the agreement as well. In addition to that, a country should not relax its own normal domestic labour standards in order to attract foreign investment.

• 1640

I guess an example of that would have been something like the Michelin bill in Nova Scotia, where in essence they set aside the normal provisions of their own labour code to attract Michelin to make an investment, or where jurisdictions establish free trade zones if they were contemplating setting aside normal labour laws or health and safety laws in order to attract investment.

I guess that provision about not lowering your normal domestic standards in order to attract a foreign investment would apply to environmental standards as well. So that's the essence of our position on the not lowering standards. It's both the core labour rights and then domestic labour standards with respect to attracting investment.

[Translation]

Mr. Milos Barutciski: First, I would just like to understand better the previous question regarding standards. Were we talking about domestic labour standards exclusively, or about standards in general?

Mr. Benoît Sauvageau: I was talking about standards in general.

Mr. Milos Barutciski: Ok. In principle, what is first at issue is to know whether a country is free to lower standards in a discriminatory way, to attract an investment.

Of course, if the host country lowers its standards for the foreign investor compared to the domestic investors, there is no violation of the "most favoured nation" and "national treatment" principles. Such a move will not be the cause of a dispute regarding the MAI. There would be no violation of the MAI. If you are talking about a more general principle, whether we are in favour of such a possibility... Maybe I did not understand your question.

Mr. Benoît Sauvageau: I' m going to try and clarify it. In some countries, to attract foreign investments, there might be a tendency to lower national standards. However, included in the negotiations are two restrictive clauses which prevent countries from lowering their national standards to encourage foreign investments. We are talking about standards in general.

Mr. Milos Barutciski: Ok, I understand.

Mr. Benoît Sauvageau: Both in terms of the environment and labour, these are general standards.

Mr. Milos Barutciski: We agree with the principle in general. We do not favour a process which allows countries to lower their standards only to attract investments.

Mr. Benoît Sauvageau: Is the language restrictive and are sanctions planned, or is it only a question of urging countries and wishing that they are not going to lower their standards?

Mr. Milos Barutciski: I believe our position would be not to use a restrictive language but rather to let countries decide themselves, locally, according to their own system and policy framework. We do not wish to impose policies on any country.

I would like to explore the subject a bit further. Our labour friends have raised the possibility that the MAI become a charter for international corporations, or whatever. What is important for us is that, indeed, this agreement does not restrict the rights of countries through such issues as standards. The main points are the principles of the "most favoured nations" and non-discrimination.

Remember our experience following the implementation of NAFTA in Canada and in the United States. Some critics of the agreement thought there would be a sudden wave of actions by corporations against the countries involved, i.e. Canada, the United States or Mexico. Quite the contrary.

I often have a chance to talk to a lawyer who advises investors on these issues when remedies from Canada or the United States are sought. As you know, such actions are rare. I know of only one against Canada and its about the MMT business, an additive in gas.

So three years after the implementation of NAFTA, especially considering the resources American corporations have, there was not any outbreak of court actions in that country.

• 1645

[English]

The Chairman: Mr. Blaikie.

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

I'd just like to pick up on something that was said by Mr. Barutciski. He said that they don't want to dictate to other countries what their labour standards will be, but they do want to dictate to them through the MAI what their rules and conditions will be with respect to investors and investment.

It seems to me that is a bit of a double standard. You can't have it both ways. You can't invoke national sovereignty when it comes to labour and environmental standards but then say when it comes to capital and investment that we live in an entirely different moral universe—or an amoral universe, as the case may be.

Mr. Gregory talked about investment discipline. I'm trying to unbundle the language here. It's interesting, because it's really not investment that's being disciplined, it's governments that are being disciplined with respect to how they deal with foreign investors. So when we talk about investment disciplines, one shouldn't get the impression that it's investment that's being disciplined; it's the ability of governments, democratically elected or otherwise, authoritarian perhaps, to regulate investment in their own countries that is being disciplined.

If corporations are going to be able to take governments to court to dispute settlement processes established outside their own domestic courts, these international dispute settlement processes, do you not look forward to the day when we have a world order in which a trade union movement is able to take a government to court for not respecting core labour standards? Why not a world order like that?

Why not a world order in which a trade union movement in Indonesia, for instance, would be able to take the Government of Indonesia to an independent trade dispute settlement process, globally supervised, for prohibiting free speech and for arresting—and trying him for his life, I might mention—a trade union leader in Indonesia for advocating that the minimum wage be increased?

It seems to me that this gives the lie to all this rhetoric about the level playing field. You don't have a level playing field if workers in one country get sent to jail for exercising certain rights and workers in another country don't. It just seems to me that the argument of the business community would be much stronger if they were standing shoulder to shoulder with those who are saying that everything is related to everything else and that working people should have as much right to challenge governments who are trampling on their rights as investors have to challenge governments who are trampling on their rights, their alleged rights.

Mr. Douglas Gregory: Bob and Bill were with us in Singapore when we went to the WTO ministerial last year, and if I remember, Bob, you did a lot of very good work to raise the issue of core labour standards in the context of the WTO, and Canada supported a working program on trade and labour standards for that largely because of your efforts. And you did not see the business community before or during or after that WTO meeting opposing a discussion and work program in the WTO on core labour standards, at least certainly not the Chamber of Commerce.

When we're talking about developing a framework of rules for global commerce, we have to recognize that the WTO is very different from what the GATT was. The GATT really dealt with trade between nations. What we're really talking about now is developing a framework of rules for global commerce and we're going to have to look at and understand and develop disciplines on a whole variety of subjects.

The work the OECD is doing on an MAI is the developing of the investment disciplines in the context of a multilateral global economy. That's what their focus has been for the last seven years and that is where they have made significant progress. The progress that we have made on labour and environmental standards is far less than what we've done on investment. There are a variety of reasons for that.

• 1650

Mr. Bill Blaikie: I asked you a question. I asked you whether you would like to see a world in which a trade union would be able to take a government to court for violating core labour standards. Is that part of your vision of the future?

Mr. Douglas Gregory: It's tough to say, because we haven't talked with a lot of...but I can give you my own opinion. The answer is, it would be very difficult and not credible for many elements of the business community to say down the road that if we develop rules for all the factors of production and leave one out, that's an honest and credible answer to the world's problems. I don't think it is.

Mr. Bill Blaikie: Why do you think at this point—

The Chairman: Bill, Mr. White wanted to respond.

Mr. Bill Blaikie: Go ahead.

Mr. Bob White: Again, I don't want to spend all day on the labour rights issue, because there's a lot more, but the business community in Canada has never come out—this is the first time I've even seen them recognizing that there are some rights that may be different here—in support of the so-called social clause in any trade agreements that I know of.

In the WTO, Canada took a position of trying to reach a consensus. There was no consensus. It really got shifted to the ILO. The problem we have with all of these issues around the world is that we established rules for intellectual property rights. We established rules for investment. We say that in terms of other issues, you can't intervene in workers' rights, because you can't intervene in the marketplace.

Well, what happens when the Mexico speculation starts? Do we intervene in the marketplace? Of course we do. We raise billions of dollars to prop up the currency. What's happening in Asia today? Do we intervene in the marketplace? Of course we do.

The IMF is going to make major loans to Indonesia. I said to the IMF that when you go to Indonesia, one of the conditions is not just interest rates and what you do in terms of restructuring the economy; what about releasing trade unionists who are in jail in Indonesia?

So there is a place for it in this agreement, if we get there. There doesn't have to be any fuzziness about it. We're trying to establish rules.

Again, I think you put your finger on the pulse here, Mr. Blaikie. These are rules that protect investment. These are rules that protect intellectual property rights, protect multinationals. There's nothing in here that protects workers' rights, or protects the environment.

We're prepared to say, well, we'll talk about it; it's maybe not the place. But where does it belong? The Mexican example is a very good example. Where does it belong? A lot of Mexican workers would like to have it.

We're not saying they have to have the same wage or anything as us, but when you talk about reducing standards, we're talking about minimum basic standards. Again, we also think countries should not reduce their standards, if they're above that, to try to attract investment. We're in a big enough rush to the bottom now in a lot of parts of the world in terms of wages and social benefits. Multinational corporations are saying they don't have to do that in this or that country, and therefore won't pay those kinds of benefits here.

We're going to China, taking trade missions there. We're lining up with bureaucracies and all kinds of problems there. We're getting trade deals but don't seem to be concerned about workers' rights there.

We're not saying sanctions. There is no place where we've talked about sanctions. We're saying there has to be a dispute mechanism. There has to be a proper finding. There has to be a way to determine what the results of that are. They're just as important as any other rights. But this is not what this agreement's about.

Mr. Bill Blaikie: Just to change the topic for a minute—I think it's clear where everybody is, or isn't, on this—I wonder if either Andrew or Bob could elaborate on this whole question of public services and how and why the exception the government has filed, which is basically the same as the NAFTA's, is inadequate.

Mr. Andrew Jackson: First of all, one area where the MAI does break new ground is the whole area of government subsidies. I guess there's basic agreement that national treatment will apply. In other words, if governments extend a subsidy it has to be available equally to foreign companies.

If you accept that principle, I think there's then a very specific area of concern that the committee really should look at, which is that...I mean, on a daily basis and in all kinds of areas in the public and social services area, government-subsidized, not-for-profit deliverers of social services.

For example, in many provinces we provide subsidies to not-for-profit child care to ensure that...and quite often those not-for-profit deliverers might exist along public sector child care, for-profit child care. It's a very mixed system. Most of our health care isn't directly delivered by governments at all. A lot of it's delivered by not-for-profit agencies.

• 1655

I think the whole reality of the MAI is rather excluded. It says you can't discriminate on subsidies. It does say that if you want to set up a government monopoly and deliver something, or through the public sector...if you want, you can do that, but there's a huge grey area that hasn't really been addressed.

I guess the second part of the concern, which adds to it, is the reservation that was filed under NAFTA for public and social services, and the identical reservation has been filed for the MAI. There's a lot of legal opinion out there; most prominently, Bryan Schwartz from the University of Manitoba did an extended legal opinion on the issue.

What the court says is that if a public or social service is delivered for a public purpose, then it's outside the terms of the agreement.

When it came to the process, when the American states and the Canadian provinces were supposed to be listing areas to be reserved under NAFTA, the U.S. government sent the advice to their states that the only areas covered by that NAFTA provision were those where governments were directly delivering the service; i.e., it didn't include not-for-profit services, if there was mixed delivery they weren't covered.

Schwartz said maybe that wouldn't stand up in a tribunal, or maybe it would. It's just a very grey and uncertain area, and we're potentially vulnerable, even under NAFTA.

So it's really the question of non-discrimination in terms of subsidies, and subsidies going to the not-for-profit sector, in conjunction with the fact that the NAFTA reservation is very vulnerable, I think creates really major grounds for concern.

Perhaps I'll add just one further point. When you take the whole agreement, really two big areas are being carved up. There is the whole national security area, and we're saying that shouldn't be covered by the agreement at all. There seems to be an emerging agreement that culture and cultural industries should be completely set outside this agreement as well.

I guess the question is, why don't we say that public and social services should be completely outside of the agreement? Basically, if you listen to what our government is saying, everybody else is saying the intention isn't really to cover that area anyway, so let's have a really crystal-clear exclusion and make sure that we're not running those risks.

Mr. Milos Barutciski: I would like to respond to just a couple of points.

One, in terms of the scope of the public service perception, as Mr. Jackson indicated, there are a number of legal opinions, but I think the consensus of legal opinion would suggest that certainly to the extent that we are talking about services provided by governments for a public service these would be covered and would be excluded.

What he raises, and what you raised as well, is a very important issue. What do we do with the not-for-profit sector and how do we treat subsidies of the not-for-profit sector? There you have to go back to what this agreement is about. Fundamentally, it's about non-discrimination with respect to measures that impact on investment. To the extent that the government chooses to pass laws, measures, subsidies or otherwise that are conditional, that should clearly apply also in the context of not-for-profit. If that is one of the conditions that is available, it's a condition that should should apply not just to a not-for-profit Canadian agency but also to somebody who is a non-Canadian agency that wants to promote these kinds of objectives in Canada.

Leaving that aside for a moment, going back to the point you made earlier, you spoke to me specifically about not just reducing standards but how the business community doesn't want to see standards imposed on governments. I think that is absolutely correct. The whole idea here is not saying you have to pitch your social standards or your environmental standards or your labour standards at this level, this level, this level or, worse, this level.

The idea here is that, whatever level you, as a government, choose to pitch them at, you impose them—and we're talking about the inbound side, but let's not forget that it works the other way around—on the national businesses in the same manner as you imposed them on the foreigners. In other words, its a non-discrimination. It says nothing about at what level you want to pitch your environmental, labour, or other standards.

• 1700

I stick very firmly to the position—

Mr. Bill Blaikie: It could say all kinds of things about what you can and cannot do in respect of requirements for investment.

Mr. Milos Barutciski: It does say certain kinds of things—

Mr. Bill Blaikie: That's my point.

Mr. Milos Barutciski: No, that's a little bit of a different issue.

Mr. Bill Blaikie: That's the debate, isn't it?

Mr. Milos Barutciski: That's right, but let's talk about performance requirements and these kinds of things. That's not the same as saying how businesses are going to carry on in Canada or whatever the country might be if you have a labour standard or an environmental standard that has nothing to do with the extortion—and that's what it turns out to be, not in Canada perhaps, but in other countries.

And speaking again as counsel to a number of investors abroad, what you find yourself in when you're going aboard is you have countries that are ultimately leaning on you heavily and trying to extort from you as a condition of the investment the divestiture of your property, the full wholesale transfer of intellectual property. It's the wholesale transfer of know-how, etc. This is the kind of thing that's really aimed against, not the issue of saying whether Canada should have low labour standards or high labour standards.

That is a non-discrimination issue, and it should apply equally to a Canadian business as well as a foreign investor, and likewise for Canadian businesses abroad.

The Chairman: Thank you. We have to move on. Mr. Nault.

Mr. Robert D. Nault (Kenora—Rainy River, Lib.): I will address my question to Mr. White, because his background and mine are a lot more similar than those of the rest of these gentlemen around the table.

I'm trying to get a sense of this whole issue of transparency as it relates to negotiation. Of course, when we talk about it in the labour movement in Canada negotiation is normally done behind closed doors between two parties. You get into it, you make some form of compromise—you never get everything you want—and then you do your best and at the end of the day you go and try to sell it to your membership. In this case it's almost identical: we go and sell it to the general population when we're finished, and if they think we're absolutely off the wall they throw us out as a bunch of bums and go get another government to do it.

I'm trying to get a sense of why people are making the kinds of remarks you and others are making, that there should be a different process because this one is too closed-door. Can you tell me what that process would be? I don't think you're advocating that we should tell our competitors exactly what our position is before we even start. I hope you're not, because if you are that puts us at a distinct disadvantage. I would like to start with this, because if there is a different process we should be using in Parliament I'd like to know about how you'd see us doing that.

Mr. Bob White: Let me just say this is a much different scenario from sitting down and bargaining collective agreements for one, two, or three years. This is a 20-year agreement, has ramifications for the broad sector of society, and perhaps it might have been started with consultations about whether or not we need this kind of agreement at all.

Obviously at some stage you're going to take certain positions around a table in meetings with other government ministers, but our position should be very clear as to what our bottom line is, what it is we're trying to achieve by this.

Quite frankly, I think there should have been much more discussion about this before it started to get the public view a few months ago. This really was going on without discussion in Parliament. I don't think it's good enough to say that if we screw up here somebody throws us out. They're not going to throw people out on the basis of one issue. This is a large issue affecting a lot of society. A lot of people aren't paying attention to it. It's incumbent upon people like ourselves, Maude Barlow, and other people to try to raise the level of awareness. And this is why this committee is taking place.

This is very different from sitting down and negotiating a collective agreement for one, two, or three years with a limited number of workers, in which you put demands and everybody knows what the demands are going in. They're passed first of all by the membership before you get there. Canadians have had no discussion about what was going on here. What was the reason for trying to get a new agreement? We know what that is in collective bargaining. You give reports in collective bargaining at certain stages: either you're making progress or you're not, and you come back with the final deal.

Again, this is very different from that, but even with the collective bargaining system there are many more checks and balances. This is longer and it's much more exclusive. It's dealing with much higher stakes than any collective agreement is, and it has impact on a lot of people in this country, much more than one collective agreement.

Mr. Robert Nault: Based on that, can you give me an example of any other country in the world that does it differently in a way that says...? Let's use Britain as an example. It has a Labour government now. It might be a different government from the Conservative government they had before. Do they go into negotiations in a format like this and say “Look, you guys, we're just starting off, but here's my bottom line. I'm not going to change this one iota. I don't care. If I don't get this I'm walking away from the deal.” Does anybody you know in the world do it that way?

• 1705

Mr. Bob White: Again, I don't know how they conduct this in the U.K. under the Tony Blair government and whether or not it differs in any relation from Margaret Thatcher's government. If you look at trade discussions in the United States as an example, there's quite a debate going on about fast track with a lot of information coming up and a lot of presentations there.

This is quite far down the road here. This committee is working to a deadline. Who determined the deadline? Why does this have to be done by April 1998? What is going to change in the world that means everybody has to rush to meet a conclusion?

The fact is if a lot of people hadn't started to raise these things there would be no hearings, and not just in Canada. This thing would have been done at the OECD and brought back.

Mr. Bob Keyes: I've been a part of a number of international negotiations on various subjects. I can honestly say that the way the Canadian government approaches negotiations, consultation, and inclusion is far better than a lot of other countries. It's a much more inclusive process than other countries have. I've had this point made to me by other countries that point to the way we do things and wonder about it.

This agreement has been under way since 1991. The principles were even endorsed by BIAC and TUAC, which you were on in 1995. The labour union knew about this and endorsed the principles and the direction in 1995. As I understand it, the OECD does not negotiate on the front page. That's not the way OECD's international negotiations are handled, and they do move through a process.

The final point I'd make is that only yesterday I heard about the Australian example where it has now put into place a very specific and transparent set of guidelines for negotiations. I just got the web site address last night and I haven't had a chance to see how Australia's doing it. I know when we worked there from 1988 to 1991 it certainly wasn't the most open of processes in some cases. I think it has undergone some fundamental reforms. So I'll pull it off and be glad to send it to you. It's a model we might look at.

Mr. Bob White: I have to respond. I think it's very clear because I'm now the president of TUAC. The original deadline for this was last May. I was there when the chair of the negotiating committee made his report to our committee that they couldn't find enough consensus. It was going to take longer than they expected.

The TUAC position today is if this agreement is going to be done it has to include the labour. But at that meeting it was also very clear from a number of countries that a lot of other issues were wrong with this. Again, we asked for the parliamentary hearings to make it transparent. We're having them, but you asked me how this differs from negotiations and I think it differs significantly from regular negotiations.

Mr. Robert Nault: I accept that it's a lot larger. But the point is that somewhere someone has to negotiate on our behalf. Just how much do you want their arms and hands tied behind their backs by telling the rest of the world what our position is? If it's so ideologically different that it's so obvious what our position should be because we're boy scouts, here's our position in the window and let's just get on with it and walk away if we don't get that.... Based on what you've seen so far and the fact that you don't agree the draft reservations give us the kind of comfort we need in Canada, do you believe we should just walk away? If we do walk away, what do you think the ramifications of walking away will be? You've been in the international scene as the Canadian representative on the labour side for some time now. What are the effects of us walking away from these kinds of agreements?

Mr. Bob White: I doubt the OECD would put an agreement together without Canada. Secondly, in the opening remarks I said I thought this agreement was based on a false premise. I said we're in agreement with some multilateral rules, in terms of both trade and investment. We've talked about that.

We want much more emphasis on what's happened to workers in communities and what's happening to governments around the world that are being more limited in terms of intervening in the economy on behalf of the citizens of their countries and what happens to public services. If you're asking what happens in terms of taxation, what happens in terms of speculation, or if you want to talk about an agreement on investment, there's a whole range of issues we would bring to the table that are much different from what this is.

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Mr. Robert Nault: Mr. Chairman, based on the agreement that's in front of us, we're a small country in the scheme of things.

Mr. Bob White: No, we're not.

Mr. Robert Nault: Sure we are.

Mr. Bob White: No, we're not, we're one of the G-7.

Mr. Robert Nault: Well, we might like to think we are a lot bigger than we are. But my point, first of all, is that I disagree with you. I think they would carry on if Canada said we're not signing. I think we're going a little too far to suggest that Canada has enough power that everybody's going to say that if Canada doesn't like it, they're going home. I don't think that's fair to say. I wouldn't agree with that, and I'd like to know how you come up with that conclusion.

But let me switch gears. I just want to ask one more question, and then I'll let some of my colleagues ask. My question relates to page 3 of your brief. It says:

Put bluntly, it is clear why Canadian businesses, which are making large investments outside the country, support an MAI. It is much less clear why Canadian workers and communities should support an agreement which would, in all likelihood, accelerate capital outflows.

The last part of that sentence is the key part. We are a trading nation. I come from a trading region, northern Ontario, where we of course sell all products somewhere else. Quite frankly, northern Ontario would shut right down if we didn't ship our softwood lumber, our pulp and paper, and our mining products to someone else in the world, because we certainly can't use them all in Canada. To me, those are goods.

Now, the same argument would be made for this whole issue of capital outflows. I can't get a handle on what you mean by that. Are you suggesting that we keep them at home, or force businesses to leave more of them home by some form of mechanism? This kind of agreement allows people to in fact have more excitement about sending their money to places like Finland, Denmark, Germany. I'm trying to get a handle on that little section there, what it means, and why the labour movement would suggest that there's something wrong with outflows.

Mr. Bob White: When you talk about sending products outside the country, that's not what we're talking about at all. In fact, that's the argument that we support—that you export products outside the country. I'll let Mr. Jackson deal with the numbers in terms of capital outflows, though.

I might say that in the discussion with the Chamber of Commerce, I think a lot of their presentation today was about how Canadian companies should be treated in other countries for investment outside the country.

Mr. Andrew Jackson: We did annex to the brief some data on foreign investment flows for the last four years. What is striking—and I think it's sort of commonly accepted—is that there is actually a lot more foreign direct investment leaving Canada these days than is coming in. Last year we sent $12 billion out of the country as foreign direct investment, and $15 billion the year before.

Not to be simple-minded about it, I think there are certainly some foreign investments by Canadian companies outside Canada that can support jobs in Canada. If Bombardier sets up an operation in Mexico and is producing there because the Mexican government wants to have the production there, but we're securing jobs in design or specialized machinery and equipment here, there can be jobs for that. But I think it's pretty hard to make the argument that dollars invested here at home wouldn't create more jobs than dollars invested outside the country. An awful lot of those foreign investment outflows of recent years have been Canadian investment in real estate in the U.S., bank investments, which really don't do much in the way of job creation here.

So as I say, not to be simple-minded about it, the fact of the matter is—and I've been trying to chase this down—that there is actually very little research that's been done on job impacts of foreign direct investment. If you read the latest UN trade and development report, it summarizes some of the research, and actually says that very little is known, but that there's a lot of evidence that what you lose as foreign direct investment you are losing as investment at home.

I must admit that I was struck, as well, in the presentation. If the argument for steel is that it's going to make it easier for Canadian companies to invest abroad by breaking down barriers in developing countries, that's fine for Canadian companies. But to assume that's in the national interest or is going to create jobs does involve, I think, rather a large leap of faith that we really don't have the evidence for.

The Chairman: Do any of you other gentlemen have a comment?

• 1715

Mr. Milos Barutciski: I was going to talk about a blinkered perspective, but we'll just leave that.

Here's what I think we're talking about. I agree with Mr. Jackson that a lot more work needs to be done in studying and understanding the flow of investment, both outbound and inbound. Fair enough. Fair point. I appreciate his comment that we shouldn't be simplistic about it.

Speaking as someone who advises Canadian businesses and deals with their concerns for why the Canadian business community feels it needs a clear discipline and non-discriminatory treatment abroad, it really gets down to what today's economy is about and what being successful in a global economy in the 1990s and in the next century is about, as opposed to what it was about 20 or 30 years ago.

On the one hand, if we invest at home, we'll be able to ship boxes and crates full of widgets abroad that can then enter into a black box of a distribution system that is not our concern. All we would care about is what goes on here behind our border in terms of jobs.

But that is not today's economy. As for today's businesses, first of all, consider the shift away from manufacturing to services. I'm not just talking about McJobs here, I'm talking about some of the higher-paying and more advanced services.

Canada excels in these areas. These are not businesses or lines of business where you simply put something in a container and send it abroad, these are businesses where you need to establish a presence there to nurture, feed, promote, and integrate your activities and the production that goes on in Canada, as well as the development of ideas, know-how, and products both tangible and intellectual.

That's something that Canadian businesses are talking about. What they need are clear rules so they can be established abroad with a degree of security and integrate their Canadian operations in an outbound manner.

Mr. Bob White: But isn't that in fact going on?

Mr. Milos Barutciski: That is in fact going on. The problem is that when you don't have these kinds of disciplines we're seeking in the MAI, that security isn't there and you can't establish yourself. You find yourself facing governments that are not quite as pristine as ours and most of the OECD governments in their treatment of investors.

That is where the integration of Canadian business is. And ultimately, the creation of Canadian jobs depends on the ability of Canadian businesses to participate in the global economy in a non-discriminatory fashion.

The Chairman: Mr. Reed.

Mr. Julian Reed (Halton, Lib.): Thank you, Mr. Chairman.

I just want to pick up on that. You're talking about the export of services, which of course is increasing greatly. It's interesting to observe that many of the companies that become multinational now are small businesses.

I was at a once-every-ten-years convention of mining exploration companies a few weeks ago. Some 700 exist in Canada and most of them are multinational. So it puts a very different kind of perspective on just what constitutes a multinational corporation. We used to think of them as IBM, General Motors, or whatever, but that is taking a lesser and lesser role, and small businesses appear to be on the increase.

We also know that Canada has learned that, as a country, we work better with rules than without. Working in the jungle for Canada is not.... We just aren't a country of kneecappers, and so on.

We're also a federation. And as a federation, of course, we have provinces, and any of these agreements require the input of the provinces. When the negotiating team first started its work, it had a constant, running conversation with all of the provinces. Every time there was a meeting, reports were made to the provinces, the provinces could respond, and so on. That has been going on.

As a matter of fact, the Maude Barlow exposé was a leaked copy of a February report this last year. That's one of a whole series of reports that reflects what 29 countries are putting into the pot at any given time.

• 1720

I noticed, Mr. White, you underlined that need to communicate with provinces in a big way in a letter to the minister last summer, and I'll quote from it, if I may:

I urge you to closely involve the provinces in the negotiating process in which they have jurisdictional competence.

I couldn't agree with you more, and we would like to do more. I just wondered if you might, to help us, enlarge on those very important lines in that letter.

Mr. Bob White: We've done little or no consultation with the provinces. We have with the provincial labour movements, obviously, in terms of our position here.

The issue that's coming out regarding the provinces, if I got the gist of the minister's presentation yesterday, is that somehow we have to put a hold on labour and environment, because we don't have a consensus among the provinces.

Canada can take a position. If you look at what happened under NAFTA, decisions were taken on labour and environment that we didn't think were strong enough, but Canada took them and signed the agreement. Some provinces signed on and some didn't sign on.

A voice: And still aren't on.

Mr. Bob White: Yes, and still aren't on. So I don't think that should be any inhibition for Canada taking the position of including those issues in the body of this document with a dispute mechanism.

Again, what we were saying was the provinces obviously had some concerns about what was going on here in terms of community development and a whole range of issues, and we thought it was important to consult the provinces. We know there is dialogue going on.

Let me say again that we didn't come here to criticize investors who are investing outside the country. That wasn't the.... We haven't been running around yelling about that. We know the importance of investment in other parts of the world as well. But when you start to charter an agreement for the purpose of protection, I want to know what's the problem today.

Again, I really think it's easy for us in Canada to be just talking about ourselves. A number of developing Third World countries need to have some domestic content regulations; they need to have commitments from multinational corporations or domestic corporations that may be different. We did, to develop our society, so it's extremely unfair to think they should have to live by the same rules.

A lot of this is being driven by the United States, but the reality is the United States lives pretty well by whatever rules they determine, regardless of what you sign in a multilateral agreement. They'll always be depending on the situation in a given state. You either can sell wheat or you can't, or softwood lumber's cheap or it isn't.

We didn't come here to attack people who are investing outside the country, but if you're making the case that you have to do all this because that's the problem, I don't think that's the problem.

Mr. Douglas Gregory: On the provinces, one of the things we've tried to do in our trips as business people around the country is meet with the various provinces, because as we liberalize and continue to liberalize, particularly as we get into the services area, we're getting into areas that are more and more of either exclusive provincial jurisdiction or certainly shared federal-provincial jurisdiction.

It was important for us to meet with provinces and provincial officials to understand some of their concerns, what they think is beneficial in the MAI or in any investment framework of rules, and what they're concerned about. We have had an opportunity to meet with officials from three governments: British Columbia—who we've met with twice—the Quebec government, and the Government of Ontario. We shared our perspective as much as we have today with members of this committee. That's a process we would endorse.

In my discussions with provincial officials, they are all attending the meetings that federal government officials host in the process.

Mr. Milos Barutciski: If I can just pick up the second point about investment, I'm glad to hear Mr. White say they are not concerned specifically or upset about Canadian businesses investing abroad, because if we have the understanding that that is an essential part of the growth of the Canadian economy, we're on pretty—

Mr. Bob White:

[Inaudible—Editor].

Mr. Milos Barutciski: That's right. In spite of what you—

Mr. Bob White: We'll argue about what the benefits are in terms of jobs.

Mr. Milos Barutciski: That's right. If the question, though, is what are the problems, I'll pick one example, and this really gets at what this agreement is all about. It's an agreement among OECD countries where everybody has agreed the problems investors faced are relatively modest as compared to the rest of the world. The example I was going to use is the hotel in Moscow that was established as a joint venture by a Canadian investor.

• 1725

Mr. Bob White: That's not what the man who just wrote the book, the head of McDonald's, says about it. He thinks it's great.

Mr. Milos Barutciski: I haven't read the book—

Mr. Bob White: Neither have I, but I will.

Mr. Milos Barutciski: As I say, all I know is the article. We can talk about that later; I'd love to hear about it.

That article is an example of a situation that is replicated not just in the Soviet Union but also in many developing countries.

The purpose of this MAI is essentially to weave together, as one set, as one package, a level of norms and protection of investment that the OECD countries at least, who are ultimately the major source of investment around the world, can agree on amongst themselves. That would allow, at the very least, a migration, either by other countries in the developing world adhering to the MAI...or at least when the debate gets picked up, if and when it gets picked up within the WTO, you have a consistent and coherent package of high standards that you can build from, rather than having to start from scratch with some, frankly, nightmare countries. Today many countries don't even have the basic fundamentals of the rule of law. That's what this is about.

Mr. Bob White: Yes. Again, in the former Soviet Union, Russia, somebody gets all upset about a hotel, and I don't think it's appropriate. Nobody's talking about workers who have worked for a year without any pay. Nobody's talking about putting together some great multilateral agreement to make sure that workers.... This is a new thing going on in Russia, this fight for workers to get paid for working.

We have major problems about a hotel, and I understand that, but you're not putting in this agreement to take care of one hotel in Moscow.

Mr. Milos Barutciski:

[Inaudible—Editor]...by your own figures in terms of what the outward flow of capital is.

The Chairman: If we can move on....

Ms. Aileen Carroll (Barrie—Simcoe—Bradford, Lib.): I can make this one question, because several areas I was interested in hearing the witnesses on have been covered by questions from my colleagues.

To go a little bit further on what was said by my colleague as to what would happen to the MAI negotiations if theoretically Canada did withdraw, did walk away from the table, it is interesting because he said they would indeed go on. Just to explore that for a moment, in any set of negotiations, whether we regard negotiations as a technique of statecraft or the kind of negotiations we're discussing here, the ability to walk away from the table or not is very vital. It greatly enhances the strength of the negotiator's hand if they can. It considerably hobbles that negotiator if he or she cannot.

In this case we're talking about countries, so just taking that a little bit further if I can, and throwing in just a quick one of mine that free trade should be pursued strategically and where it is in our interests, given that that too is a premise, and looking at page 6 of what the chamber has put before us, that Canada is the most open and integrated economy in the G-7, if you take the total imports and exports and divide by gross domestic product, the Canadian economy is three times more open than the U.S. and four or more times as open as the Japanese.

Just for the moment then, I'm asking the chamber and the gentleman that has come with you as a member of the team what you see as the real cost of non-participation—because we already have arrangements, as I'm sure you know, with the other participating countries. Investor protection is already extended to the United States, Mexico, Australia and now New Zealand, Europe. I know that Korea is out there. How would you respond to that?

Mr. Douglas Gregory: Thank you very much. You raised some good points.

This debate is very different from the NAFTA debate for the business community in that here we're talking simply about investment. I grant you, Bob, that by and large it's investment disciplines, investment rules that we're talking about. We're not talking about up-front liberalization in the way that the NAFTA mixed the removal of barriers in certain sectors and the removal of tariffs and all of that.

• 1730

We in the business community feel these are so important because this is a step in a process, as we said, of developing a broader multilateral framework of investment rules. The concern for us is that if the 29 member nations of the OECD cannot reach agreement on investment disciplines, then it speaks ill of our ability to work at a broader multilateral level on the same issues.

The Chairman: Mr. Nault.

Mr. Robert Nault: I have one question for the chamber. I must have been out of the country when the business community supported the inclusion of environment and labour in NAFTA, because this is the first time I've ever heard of that.

Mr. Douglas Gregory: It would be “exclusion”.

Mr. Robert Nault: Okay. I thought, “My God, I must have been...”.

Mr. Douglas Gregory: We fought the inclusion of trade and labour in the NAFTA; absolutely we did. I think what we're seeing now is a maturation of the perspective. In the MAI we're not talking any more about “if”, we're talking about “how”. The “how”, as Bob pointed out quite rightly, is extremely important, and would sewer our support if we don't do it correctly.

I think it would be unfair, though, not to recognize that business communities learned a lot coming out of NAFTA and the two NAFTA side panels.

Mr. Robert Nault: Let me ask you a very direct question, then, because quite frankly, as much as I know Mr. White doesn't believe eventually we'll get to where he wants to go, I think countries like ours are working very hard to include environment and labour as part of our practice. We would like to maintain our living standards and our quality of life. Our business practices include very strong labour codes, even though sometimes some governments like to water them down.

Why is it we can't have a position at all, then, on these two subject matters if you seem to think you've matured? It says here you've matured. I'd like to know why we can't have a position now, some position. Because as far as I can tell, we don't have any, at this point, on these two subject matters. At least they're not the ones...we've been told by the head negotiator, who was here. He wouldn't say that this is our position, even though it's somewhat watered down, on labour and environment. He basically told us we can't reach a consensus in Canada with the provinces. I assume that means with business in the provinces, because this is a business deal, in a lot of ways.

Can you tell me why we can't, among ourselves—and maybe you should get together, the labour movement and the business community—come up with a good position on this subject matter? Someone has to start this ball rolling down the hill. I certainly would like to see it be us.

Mr. Douglas Gregory: This is not to speak for Mr. Dymond, but when he said there were different perspectives of the provinces, I think he meant of the different provincial governments. It's clear in our discussion with the three governments we've had discussions with that there are different perspectives on the issue by governments.

My offer to Bob was sincere. It wasn't meant to be naive. I think in most of our discussions we tend to speak by each other. A number of Canadian businesses understand what's happening at the ILO, and follow the ILO work.

Bob, you know the people who are over there. It's not as good and it's not as robust as it should be.

Very recently the Canadian Chamber of Commerce struck an agreement to bring the Canadian Employers Council into alliance so that we can better understand the discussions happening at the ILO in that regard.

So I think that's a start. It's a step forward. But we have a lot to learn about what you want to talk about.

Mr. Bob White: The ILO is a different discussion. If you're talking about how the ILO functions, how the business lobby functions with the workers' group there...and the government sets a whole different discussion of who's going to be the next general secretary of the ILO.

What we're talking about here is that the business community understands clearly what we've been saying around the whole idea of a social clause in trade agreements. They understand the core standards we're talking about. I mean, everybody understands what those are. The point you make is that it's like somebody saying we're going to take you to Vancouver; we just haven't figured out how yet. So you think you're going to go to Vancouver, but until you know how, you're not going to get there.

• 1735

They've made some remarks about NAFTA. It's fine to say the debate is “how”, but it's very simple; you put it in the agreement, the way you do with other things. You have some mechanism for dispute resolution, some fact-finding things. Nobody's talking about sanctions. That's the way you do it.

If the business community is prepared to take that position, that's a new position. I haven't heard the business community take any position in this country in support of a social cause in support of workers' rights and environmental rights in any trade agreement, or in this agreement.

Mr. Robert Nault: Mr. Chairman, let's take environment for a minute and get away from labour, because that causes a lot of friction at times.

I can't believe we don't have a consensus in this country, in this particular agreement, with business and labour on environment. I can't understand that. I sit here every day and ask the same question. Even if it's a little bit watered down, we don't seem to have a position.

Now, I would assume our negotiators are going to put something on the table as it relates to the environment. Of course, you've noticed in the House of Commons in the last few weeks that this is all we've talked about. It must be of some importance to somebody. If we're not consistent and we're going into a negotiation at the MAI, and we're not even going to talk environment, as a Canadian population, I'm at a little bit of a loss to understand that.

Could you explain that to me? Never mind the labour code, and the social policy side as it relates to that. I can see where the divergence would occur. But on the environment, for heaven's sake, we must have some sort of consensus on that.

Mr. Douglas Gregory: In our discussions with federal officials no proposals have ever been put forward to us, whether it's side-bar agreements, similar to the NAFTA, or some common core of environmental standards.

It's awfully tough to say yes or no to something until you've seen it in writing, but conceptually, I can't see why, if we accepted side agreements on environment in the context of the NAFTA, we couldn't do it in the same context here.

The Chairman: Unfortunately, colleagues, we've run out of time.

We've had a very fruitful discussion here between labour and business on the subject. I want to assure both of you at the table today that we're still more than willing to hear any of your concerns as this debate goes on. In the final week of November we'll be putting together a report. Any time you want to contact us up until that date please don't hesitate to call either me or the clerk.

This committee now stands adjourned.