SINT Committee Meeting

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

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

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, November 25, 1997

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[English]

The Chairman (Mr. Bob Speller (Haldimand—Norfolk—Brant, Lib.)): Colleagues, this is the ninth meeting of the trade subcommittee regarding the Multilateral Agreement on Investment. Before us today are groups representing all parts of Canadian society. From the Business Council on National Issues we have Stuart Carre. From the Canadian Federation of Agriculture we have Don Knoerr and Jennifer Higginson. From the Information and Technology Association of Canada we have Norine Heselton. From Citizens Concerned About Free Trade we have David Orchard and Marjaleena Repo. And we have Paul Hellyer, a former constituent of mine and now a constituent of Bill Graham's.

The purpose of these committee meetings is to give an opportunity to Canadians to tell us their views on the MAI. We've heard from a large of number of groups so far. We have another two days of hearings on this, at which time we will be writing a report that will go to the government prior to negotiations on the MAI continuing in January. It was at the request of the Minister of International Trade that we hold these hearings, and our view is to make sure he's aware of Canadians' views on the MAI before the negotiations start again in January. I want to assure members of the panel today and all Canadians that we will continue to follow this issue even after this report is submitted. We will be following right through the point of it being signed, or not signed for that matter. We will continue to call on you for your advice as these deliberations continue.

I want to start with Stuart Carre from the Business Council on National Issues. I guess you've been told about ten minutes or so.

Mr. Stuart Carre (Senior Associate of Global Trade and Investment, Business Council on National Issues): Thank you, Mr. Chairman. It's a great pleasure for the Business Council on National Issues to have the opportunity to address the committee today. The Business Council is comprised of the chief executives of Canada's largest enterprises, enterprises that collectively are responsible for the great majority of the country's private sector investment, exports, and research and development.

Tom d'Aquino, the president and chief executive officer of the Business Council, asked me to pass on his regrets to you for not being able to be here today. The BCNI has just hosted a meeting in Vancouver—it concluded yesterday—and that has prevented him from being here today.

I'll address the specific theme of today's discussion in a moment, but I did want to take the opportunity to outline for you the Business Council's general views towards investment and the MAI in particular. The Business Council strongly supports Canada's participation in the ongoing negotiations in Paris. The principles that Canada is pursuing there are, we believe, the right ones.

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As a mid-sized country, highly dependent on both trade and investment flows for its continued economic development, Canada stands to benefit from appropriate international rules that would both increase the security and protection of investors and their investments. As a country, Canada is in near balance between being both a major capital exporter and a major capital importer; I'm sure you've heard the figures many times before. With regard to inward investment, recent studies have indicated that for each billion dollars invested over a five-year period in Canada, something in the order of 45,000 jobs are created.

In our view, Canada's attractiveness as a location for foreign direct investment would unquestionably be improved if Canada were to be a party to a multinational agreement on investment that incorporated non-discrimination as its main principle. The gains in terms of the acquisition of advanced technology, new knowledge, and management skills are much harder to quantify, but they are probably of even greater importance.

Non-discriminatory treatment for Canadian firms investing abroad is just as important. In order to remain competitive both at home and abroad, Canadian firms need to be more and more active globally. Discriminatory investment barriers against our firms will harm their ability to compete and therefore to grow. A multilateral agreement on investment could help to remove some of these investment barriers.

The Business Council knows full well that the negotiations under way in Paris are extremely complex and that many of the details are still being worked out. Nonetheless, the core objectives we feel should be sought in the negotiations remain the following, that for inward investment the MAI contribute to: job creation; income growth; transfer of technology and management skills; and increased government revenues. For outward investment the MAI should contribute to a significant reduction in the barriers to investment facing Canadian firms, allowing them to remain competitive in the international economy, and in the process create more and better jobs in Canada.

I'd like to flag a few of the problem areas we see in the agreement that still need to be worked out. The first is the so-called Rio clause. As I'm sure you know, the European Union has been pressing for a general exception for regional economic integration agreements in these negotiations.

That kind of exception would permit the European member states to discriminate against non-members in the treatment they accord investors and investment. Were such a clause to be included in the MAI, it would undermine a critical rationale for Canada to participate in these talks. We want to see it rejected firmly.

Linked to this—in a negotiating sense at any rate—are the calls from European members, in particular, for sub-national levels of government to be included in the agreement. Canada, the U.S.A., Australia, all federal states where sub-federal levels of government have jurisdictional authority over broad areas of investment policies, have yet to indicate their intentions clearly here. From our perspective, the exclusion of the so-called Rio clause, combined with the inclusion of sub-national commitments, would be the optimum negotiated result possible. We would hope that Canada's negotiators are working in this direction already.

Another problem area, of course, is the ongoing dispute over the United States' Helms-Burton Act, how it might be played out within the MAI, and what we see as disappointing commitments—so far, at any rate—with regard to taxation issues.

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Finally, a very major stumbling block at this point is the recent postponement of the vote on the U.S. fast track, which would have granted the U.S. President authority to negotiate trade and investment agreements. This has cast a pall of uncertainty over the ability of U.S. negotiators to deliver on any negotiated trade and investment agreements, and that includes the MAI.

I'd like now to turn briefly to the sectoral implications we see for business. I'd first like to start with a look at some of the possible implications for the services sector as a whole as a result of a possible agreement.

We are concerned that the possible overlap in commitments and rules between the World Trade Organization and new commitments and rules in the MAI might lead to a situation where the end result is no new liberalization commitments in the services area. Over 60% of new investment flows take place in services industries, and the greatest bulk of investment barriers are in these much more regulated services industries. We already have rules in this area under the rubric of the WTO's General Agreement on Trade in Services. Now, one of the very few general obligations of the GATS is the requirement on the part of all parties to extend most favoured nation treatment to all WTO members. In essence this means that any liberalization measures granted to any other country will also have to be granted to other WTO members.

There are only two ways to avoid compliance with this general obligation. The first is to have taken what is called an MFN exemption at the end of the Uruguay Round, or at the end of some of the extended negotiations. The other is to be part of an economic integration agreement, such as the European Union or NAFTA.

In our view, what this rule overlap could lead to is that many, if not most, OECD delegations may feel that they simply cannot afford to bind, in a legal sense, any liberalization in services industries, since they would be required to provide that same measure of liberalization to other non-OECD—but WTO—members. In addition, they would have to do so without obtaining anything in return from these non-MAI signatories.

Just as problematic is the fact that this rule overlap may in fact serve as a disincentive for some non-OECD countries to accede to the MAI. They may well calculate that as far as services are concerned, they can get all the benefits of an MAI—MAI liberalization—without having to meet any of its obligations. We know that efforts have been made to resolve the problem, but it is still outstanding, and we would certainly urge a speedy resolution to the problem.

In specific business sectors, we know that the Canadian government is going to be requesting similar types of exceptions and reservations to those it obtained in the NAFTA. These include those related to agriculture, the automotive business services, energy, uranium, fisheries, transportation, telecommunications, and financial sectors.

With regard to the question of barriers to Canadian investment abroad, it's difficult for us to come to a final judgment here, since we have not been able to see or analyse the proposed reservations and exceptions of other OECD players and how they might impact on Canadian business interests. It's only when we know what the final lists of the other players comprise that we will be able to give a fully informed judgment as to the impact on the Canadian business sector.

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We do want to see real improvements in the treatment accorded to Canadian foreign direct investment abroad. This is particularly the case as Canada appears ready to offer to its other OECD partners essentially NAFTA treatment. This represents a significant liberalization on the part of Canada vis-à-vis its OECD partners. We therefore expect balancing liberalization commitments from our negotiating partners.

Chairman, that concludes my formal statement, but of course I'd be happy to participate in the discussion afterwards.

The Chairman: Thank you.

Now we have Don Knoerr from the Canadian Federation of Agriculture. Welcome, Don.

Mr. Don Knoerr (Trade Representative, Canadian Federation of Agriculture): Thank you, Mr. Chairman. I would just note that we're the largest farm organization in Canada, representing a sector that makes a major economic contribution to Canada.

Since the public circulation of the draft MAI text, there's been a lot of public discussion about investment treaties, and particularly the MAI. That's a useful democratic process. However, in our view, it's regrettable that it happened so late, because it's at least one major agreement after it should have happened.

In effect, through NAFTA and around 30 bilateral agreements, Canada has already accepted the main commitments we anticipate making in the MAI.

As an organization, we, like many people, didn't monitor the NAFTA investment negotiations. The people who were from the agricultural side, who were either dealing with the agricultural SAGIT or with our organization, did not discuss the investment provisions, so we're playing catch-up now. Essentially we're trying to understand our government's mandate in an MAI, which is NAFTA and no more.

The first job is to understand what NAFTA means and what that mandate means. Basically we think two questions need to be addressed, and that's what we've been trying to do. We take Canada's participation in an international investment agreement as a given. We already provide secure investment opportunities to foreign investors. It's evidenced by the high level of foreign participation in investments in the agrifood sector. The question now is that we want to obtain equitable treatment for our investors in a host of other countries.

We think the two most important questions are these. Are there any agricultural problems associated with NAFTA investment provisions that should be avoided in the MAI? Have we learned something about it?

Second, what elements of any of the NAFTA provisions are particularly sensitive to changes either in wording or context when they're incorporated in the MAI?

It's important to realize that the MAI is a stand-alone agreement, where the NAFTA investment provisions are part of a larger trade agreement, subject to other provisions of that agreement, with definitions elsewhere that affect it. It would be naive to believe that in a negotiation involving, what, approximately 30 countries, you're going to be able to clone the exact wording in NAFTA.

To this date we haven't been able to complete our review of NAFTA, partially because we discovered that.... In fairness, I don't think that, either on the government side as well as our side, anybody ever really walked through the NAFTA investment provisions and thoroughly understood those implications. We regret there isn't a better understanding in government. It's been a slow process.

So far we haven't found any problems. But we have identified a number of areas where certainly changes in wording or context—what we call sensitive items—could have serious implications as you go down....

There's one bit of NAFTA that doesn't belong in the MAI, and we'll talk about that.

What happens in the future also needs to be watched somewhat, because we never know what agreements mean until someone makes a legal interpretation; it's the experience of the agreement.

Our recommendations are contained in our brief. The basic recommendation is, first, that the mandate must be nothing more than NAFTA. That means in terms of the specific effect as well as in spirit.

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The areas we think are particularly sensitive to change in wording and context are, first, the definition of the term “investment”. At this point the draft definition in the MAI is much looser than NAFTA. It needs to be tightened up.

We give you an example of one part of the draft definition of the MAI that isn't in NAFTA and that we think very definitely should not be there. That includes concessions, licences, authorizations, and permits. It gets much too close to the type of things on which we often apply performance conditions in our normal regulatory activity, at least in agriculture.

The other area we identify as being sensitive to changes in context and wording is the provisions regarding performance requirements. They are somewhat unique in the investment agreement, because they aren't designed to ensure that foreign investors have the same treatment as domestic investors. That's a provision that says, this is something you shall not impose on any investor within your country. I understand the logic for it, but the concept of performance requirement again, is related.... It occurs in a lot of the normal regulatory activity we do in our country. We have to be sensitive to what happens.

Our particular concern is that it has to be very clear that the provisions in the MAI do not proscribe the normal activities of Canadian agriculture marketing bodies and the regulatory functions, particularly regulation of the volume of domestic product marketed, the operation of a central-desk selling agency, and the pooling returns.

Again, we note that in the draft MAI there is one performance requirement to achieve a given level or value of production. That is not part of NAFTA and does not belong there.

The one part of NAFTA that's identified in the draft MAI agreement as an alternate—and the footnote says it's supported by Canada—is the funny little provision in chapter 15 that proscribes anti-competitive behaviour of monopolies in a specific narrow circumstance, without any comparable proscription on the anti-competitive behaviour of anyone else in the marketplace.

We agree that there is a need for development of international rules on competition law in the development of common standards. There is a process in the WTO for doing that. That's where we think the process should occur.

The MAI is not an agreement on competition rules and, unlike NAFTA, does not even contain any process for consultation and at least the soft resolution of disputes over interpretation of the application of competition rules.

I can't see when this particular form of behaviour could occur, but assuming it's possible that it occurs, the MAI doesn't proscribe the same kind of behaviour if it's done by a private firm in the same monopoly. Simply put, it's a loose cannon, the effect of which.... You don't know what the consequences will be, and it doesn't belong there. Let's do it right in the right place.

Lastly, we note our observations about how you always have to retain some reservations about the meaning of something until it's tested in legal processes. I was in a meeting last week where Canada's negotiator said, “Well, we knew we had soft wording on that provision; we couldn't get any better agreement. We just hoped that when a dispute settlement came up our interpretation was right.” Fortunately in that case it was, so we were in great shape.

The one that we note particularly is the case of the Ethyl Corporation before NAFTA, which lost the right to market lead additives to gasoline because of our ban on the use of leaded gasoline in Canada. To my knowledge, the Ethyl Corporation never got compensation for that lost market.

More recently, since NAFTA, the Ethyl Corporation lost the right to market MMT, another gasoline additive, because of its, at least, alleged damaging effect in catalytic converters. The Ethyl Corporation thinks they're entitled to compensation because that loss of market was the equivalent of expropriation. They've lodged a complaint and are in arbitration under the NAFTA expropriation and compensation provisions.

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I don't think they will or should win, but that's not the point. The point we're making is that the expropriation and compensation provision is something you don't make exceptions to, because it doesn't apply particularly to the provisions of the NAFTA agreement. It's intended to ensure that a foreign investor has the same protection from arbitrary expropriation and the same right of compensation as a domestic firm, and that's reasonable.

The problem is that we have a very complex set of jurisprudence on that. As a non-lawyer, I can't explain it to you, but I've certainly been looking, because of our interest, at where the boundaries are between normal regulatory behaviour and expropriation. It's not a simple question. All I can observe is the effect of an agreement that provides a different avenue for dealing with it when it moves it to a different jurisdiction. Again, undoubtedly, these are very competent people, but there's no reason to believe that they necessarily will rely on Canadian case law to settle the case.

All I'm saying is that if by chance it turned out that a foreign investor somehow had a right to compensation that was not available to a domestic investigator, obviously we'd have to go back to the drawing boards, because that wasn't what was intended.

I have no negative examples on performance requirement, but I would suggest, because of its proximity to the sort of things you normally do in a regulatory structure, and the fact that it's a proscription that applies to everybody....

This is not the end of our international negotiations on investment rules; this will be a dynamic process. This is an area in which we're going to have to be very sensitive to what happens if by chance someone challenges something and there are legal judgments made.

In summary, Mr. Chair, I again want to thank you for the opportunity to appear before you. It's important that the Canadian public understands why we're negotiating investment agreements. But I would suggest to you that it's even more important—it has been demonstrated in the recent dialogue—that Canadians have confidence that we can pursue our legitimate investment goals in a manner that does not inadvertently interfere with the things we need to do in a responsible manner domestically. That's what we really tried to address.

We hope you will give thoughtful consideration to our recommendations, and we seek your support for them. Thank you.

The Chairman: Thank you, Mr. Knoerr.

From the Information and Technology Association of Canada, we have Ms. Norine Heselton and Douglas Gregory. Welcome.

Ms. Norine Heselton (Vice-President, Policy, Information and Technology Association of Canada): Thank you very much, Mr. Chair.

The Information and Technology Association of Canada thanks the subcommittee for the opportunity to be here today to present our views. I would like to begin with brief introductions.

I'm Norine Heselton, vice-president of policy for ITAC, which is shorthand for the association. I'm here today with my colleague, Douglas Gregory, who is senior adviser, international trade and investment, at IBM Canada.

ITAC is the voice of Canada's information technology industry. Together with its partner organizations across the country we represent 1,300 companies in the sectors of computing and telecommunications hardware, software, services, and electronic content. This network of companies accounts for more than 70% of the 415,000 jobs, better than $65 billion in annual revenue, almost $3 billion in annual research and development expenditure, and nearly $20 billion in annual exports that information technology contributes to the Canadian economy.

The key to further development of the information highway in Canada and abroad is open markets that are receptive to foreign investment and worldwide suppliers of goods, services, and information. Open markets enable real competition, stimulate innovation, and promote economic development.

Countries that seek to limit foreign investment or access to domestic markets will slow the develop of domestic infrastructure and deprive their economies of success and access to products and services at competitive prices, ultimately undercutting their own competitiveness and quality of life.

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Canada is an important source and destination for foreign investment. International companies investing in Canada bring not only capital but also technology and expertise to encourage innovation. No country in the world has the capacity to develop all the goods, services, capital, and technology that its citizens need and demand, and must as a result rely on trade and investment from other countries.

Current World Trade Organization rules do not establish a stable, comprehensive framework for investment. The MAI under negotiation by the OECD would provide fair, transparent, and predictable...ensuring that Canadian industry can participate on an equal footing in the international marketplace for investment.

ITAC has some concerns, however. We are convinced that successful conclusion of an international investment agreement will be to Canada's advantage. However, a number of important issues must be addressed.

For instance, on the definition of investment, ITAC believes that the objectives of the MAI would best be served if the agreement used a broad, asset-based definition.

In terms of national treatment and most-favoured nation treatment, the MAI is about setting rules to prevent discrimination that Canadian companies may face when they enter foreign markets. The principle of non-discrimination is enshrined in the twin concepts of national treatment and most-favoured nation treatment.

In terms of workers, Canadian investors need to be assured that they can transfer essential executive, managerial, and specialist personnel to their foreign operations. For ITAC members the last category, that of specialist, is of increasing importance. The success of most knowledge-based partnerships is dependent not only on traditional managerial expertise, but also on people who possess a special expertise. Temporary work authorizations therefore must be provided expeditiously.

ITAC also strongly encourages the signatories to grant work authorization to the spouse of the person who has been granted temporary entry under the key personnel provision.

In terms of the movement of data, Canadian information and communications technology companies must increasingly rely on the ability to communicate freely within and outside their corporate structure in order to remain competitive. The unimpeded flow of information and ideas has become critical to future economic growth. Business also must have adequate assurances that they can transmit and receive data without compromising or disclosing proprietary information.

Performance requirements: MAI signatories must be prohibited from requiring foreign investors to undertake obligations not required of domestic companies. ITAC believes that the NAFTA rules on performance requirements and those from the Uruguay Round of the world trade negotiations should be considered as a sound starting point for the MAI.

Multimedia technologies are critical to successful implementation of the information highway. Unfortunately, existing trade and investment law offer different treatment to each of the components of multimedia—audio, data, image, and video.

Some argue that because Internet service offerings have the capability to transmit radio and television signals, they must be treated like a cultural industry and exempted from international trade and investment disciplines. ITAC opposes this perspective.

ITAC urges the Canadian government to reject cultural reservations that are too broad or self-judging in nature. The interests of Canadian culture will be well served by incorporating the definition of cultural industries found in NAFTA.

The combination of new technology, open-market forces, and Canadian ingenuity have allowed Canadians to boost awareness of our nation while leading the global charge to take advantage of the emerging electronic marketplace. As long as we maintain an environment in which Canada can compete, we will continue to be known as a major global player with a distinct and vigorous cultural voice.

The MAI must also ensure full protection of and remuneration for intellectual property, reflecting the rights and obligations of international agreements negotiated under the World Intellectual Property Organization.

The MAI must also ensure that foreign companies are free to organize capital structures as they see fit, and to take a local partner—or not—under terms that are freely negotiated without undue pressure or obligation.

In conclusion, ITAC believes that the notion of a Multilateral Agreement on Investment is positive for Canada. Canadian companies do much better internationally when transparent and enforceable rules, rather than the whim of a more powerful nation, govern the way business is done.

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We'd be pleased to work with the government to identify trade practices of other economies that should be modified in exchange for adjustments to Canada's position to ensure that the benefits of trade liberalization are widely shared.

ITAC maintains that increased market access is the best way to ensure competitiveness. The driving force for all information technology market access negotiations must be the enabling effect that comes from the availability and use of those products and services in nations at all stages of development.

A multilateral framework of rules to govern investment is necessary to facilitate Canada's success in a dynamic, highly competitive global economy.

I thank you for your attention. There's a longer version of these oral remarks in your package.

The Chairman: Thank you.

Now from the Citizens Concerned About Free Trade, we have David Orchard and Marjaleena Repo.

Mr. David Orchard (Chair, Citizens Concerned About Free Trade): I'm appearing here in a co-presentation with our national organizer, Marjaleena Repo.

I'm a farmer, an author, and chair of Citizens Concerned About Free Trade, which is a national, non-partisan organization with members all across Canada.

We began in 1985 to fight against Brian Mulroney and his free trade agreement. We carried on that fight for eight years, and we find ourselves now fighting against a continuation of the same policies by those who have replaced Mr. Mulroney in power.

The MAI, as has been pointed out here, is an extension of the investment chapter of NAFTA with a few key changes.

Under NAFTA we can at any time give the Americans six months' notice and withdraw from the agreement. The MAI proposes a lock-in of 20 years. This is completely unacceptable. It goes beyond anything the people can get hold of in terms of accountability.

On this whole right to sue, which was mentioned here a little earlier, NAFTA has a provision for the first time in a multilateral agreement on trade. Corporations are given the right to sue nation states directly, and we're seeing the Ethyl case go ahead for the additive MMT for $347 million against the Canadian government.

The second case is the Metalclad case out of California. They're suing the Mexican government for the right to reopen a toxic waste dump in Mexico that the citizens of the area closed down with machetes in their hands.

This gives a tremendous lever over public policy to foreign corporations, because it's only foreign corporations that are given the right to sue the national government in this provision. It's not domestic corporations. Foreign investors and foreign corporations are given greater rights in Canada than Canadian corporations or Canadian citizens are.

There's a section in the MAI called standstill and rollback, in which Canada agrees, as we do in NAFTA, not to pass any new laws or regulations that are not in conformity with the NAFTA. But the section on rollback commits us to over time—and I'm reading from the section itself in the MAI. It says:

Rollback is the liberalisation process by which the reduction and eventual elimination of non-conforming measures to the MAI would take place.

We have restrictions in Canada on the foreign ownership of our media, foreign ownership of our banks, and foreign ownership of farm land in some provinces. We have the Canadian Wheat Board, we have medicare, we have public education. These are all non-conforming measures.

Now the government is saying that's okay, we're going to have reservations, we're going to have exemptions. But that's what this is all about. This rollback section is a commitment to roll back those exemptions over time.

The fatal flaw in the MAI of course is the assumption that we need more foreign ownership in Canada. We're the most foreign dominated of any of the industrialized countries in the world. We have too much foreign ownership right now, and this agreement is going to extend that.

Before we extend the investment chapter of NAFTA, it's important to look at what NAFTA has brought us.

We were promised by Brian Mulroney—we all remember the promises when he signed the Canada-U.S. Free Trade Agreement—that we were going to get jobs, jobs, jobs. What's happened?

At that time our unemployment rate was roughly equal to the U.S. level and for years it had been about the same or lower. Now our unemployment rate in this country is twice the U.S. rate officially, and since we entered the free trade agreement we've had the longest period of sustained high unemployment since the 1930s.

We were going to have secure access to the largest, richest market in the world, Mr. Mulroney told us. We've had less secure access to the U.S. market than before the free trade agreement was put in place. We've got caps on our exports of timber; we've got caps on our exports of wheat. I'm a farmer from Saskatchewan. I know very well we were promised this new market in the United States. It didn't stop the Americans from putting the cap on. We have less secure access than when we traded with the Americans under the GATT rules.

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We were going to have richer social programs, Mr. Mulroney told us. If we had free trade with the United States, we would have richer social programs in Canada because of increased prosperity. We all know what's happened. We have seen the cutting and slashing of virtually every program in this country. We have no money any more for medicare. We have no money for shelters for battered women. The cupboard is bare.

It was going to have no effect on our sovereignty, Mr. Mulroney said, as a nation. We're seeing the increased Americanization of all aspects of Canadian life to the point at which Canadians are completely losing their sense of identity.

We've seen the takeovers of companies all across this country. CN Rail, the link that held us together, was sold, for half price, mind you. It's now 70% U.S. owned, and they're selling off parts of the line to other U.S. corporations. All the rail lines in northern Manitoba and the port of Churchill have been sold to Omnitrax out of Denver. Two rail lines in my province of Saskatchewan were sold to Omnitrax as well.

Even the Bauer skate company—if Canadians can do anything, surely they can make skates—was sold off to Nike. They've closed their plant and are moving down to southeast Asia.

Now the Wall Street Journal is calling on Mexico and Canada to adopt a common currency for the North American free trade zone.

This is what's happening to our sovereignty as a nation. John A. Macdonald in 1891 said free trade with the United States would inevitably mean the annexation of Canada to the United States. What he said then is coming true today.

John Turner called the free trade agreement the “Sale of Canada Act”, and he was right. Pierre Trudeau called it a monstrous swindle. He was right. The tide is turning for those of you who are proposing this kind of stuff for our country.

I spoke to the Teamsters convention two months ago in Washington, on Capitol Hill, and it seems sure that Bill Clinton's fast track would go ahead. The banner under which I spoke at that convention was “no more NAFTAs”, and the Teamsters and the labour movement across the United States, Ralph Nader and all those other organizations, worked around the clock. Clinton couldn't even get his own Democrats to pass his fast-track proposal for it.

The question of mandate, which is what we have led to, I'm going to turn over to my co-presenter, Marjaleena Repo.

Ms. Marjaleena Repo (Representative, Citizens Concerned About Free Trade): Thank you.

Chairman and members, the definition of “mandate” is: (a) judicial or legal command from a superior; (b) commission to act for another; and (c) political authority supposed to be given by electors to a party in Parliament. These are the dictionary definitions most Canadians recognize as valid. According to them, this government has no mandate to proceed with a multilateral agreement on investment.

This lack of mandate starts from the 1988 free trade election in which the Liberal Party under John Turner fought against the free trade agreement, heart and soul. It was the fight of our lives. For those MPs who got elected in 1988—and I can see three or four of you here; a lot of you are in the House—and for the 55% of the population who voted against Mulroney's trade agreement in what he himself called “a referendum on free trade”, Canadians did not accede to giving the levers of economic and political power to a foreign country. The only reason Mulroney was able to go ahead with the free trade agreement was that the anti-free trade vote was split between the Liberals and the New Democrats. This was not the people's fault. We rejected free trade, and our undemocratic electoral system gave Mulroney the seats, although clearly not the mandate, to proceed.

The Liberal Party in opposition then fought against the free trade agreement's extension into NAFTA. It was an extension Mulroney had said he would, under no circumstances, consider. The Liberal Party's track record in opposing NAFTA and promising to cancel it and the free trade agreement, if they could not be renegotiated in Canada's national interest, is crystal clear.

This was the official party policy, strengthened by motions in the House, policy statements. They were restated vigorously in the red book. Look at the statement on page 24—an absolute commitment to cancel the free trade agreement and NAFTA if they could not be renegotiated.

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It was repeated on election hustings by the Prime Minister and by all the other candidates running for election. The promise was crystal clear: you would cancel if you couldn't get it renegotiated. Make no mistake about it, the promise to cancel the central accomplishment of the much-hated Mulroney regime was key in bringing the Liberals to power and in decimating the Mulroney Tories in 1993.

The fact that Jean Chrétien, once elected, quickly signed Mulroney's NAFTA without any changes must stand as the greatest one in the annals of political betrayals in Canada's history. It's akin to a man promising to help a battered woman—in this case, Canada as a country—to escape from a brutal spouse, only to start administering vicious blows to the woman who thought she had found a sanctuary.

The lack of mandate is thus utterly clear. With this extension of the NAFTA investment chapter into the MAI, there is no mandate. The Liberals' own iron-clad promises to cancel NAFTA deny them this mandate.

Furthermore, last summer's election campaign did not see one Liberal campaign on the MAI. In fact, the ministers on the campaign, such as Hedy Fry and Art Eggleton, denied that there was such a thing. Hedy Fry said there is no such a thing as an MAI, and Art Eggleton said there was not even a draft. Meanwhile, we were holding the draft in our hands. That was a counter-mandate, if there ever was one, because it was never discussed.

The rest of the Liberal candidates did not have a clue about the MAI and did not promote or advocate it in any way. I guarantee it, because I went to numerous political meetings across the country. It was not raised. Neither was it raised by the Reform Party, who is now supporting the MAI fully, and I don't think the Bloc Québécois advocated it either in its meetings. This is completely missing in their advocacy as well.

Canadians over the last 13 years—and you have to remember that Mulroney also rejected free trade when he got elected—have been betrayed over and over again by two parties in power. The two opposition parties, the Bloc and now Reform, have made no effort to make the Liberals accountable for this major broken promise. On the contrary, the Reform in particular, despite its pretences of being democratic and the voice of the people, merely mocks the Liberals in their past rejection of free trade but has not once to my knowledge raised the issue of mandate in the House.

The reason is clear: it's own—and this is the Reform Party's—rush to globalization policies cloud its commitment to truth, justice, and democracy. The Reformers, I want to tell you, were not elected to push the Liberal line on MAI but as an official opposition to demand a full debate, which you have not done to date.

In conclusion, these betrayals result in the electorate's contempt and hatred of all politicians and everything political. This is the Liberals' true legacy, which the Bloc Québécois and Reform are actually contributing to. But mark my words: your chickens will come home to roost if this committee gives the government the green light to proceed with the MAI. The only mandate you have from the population of this country is to proceed with the cancellation of the free trade agreement and NAFTA. That is your true mandate. Thank you.

The Chairman: Thank you.

Now as an individual, a former Member of Parliament, and a former constituent, we have Mr. Hellyer.

Hon. Paul Hellyer (Individual Presentation): Thank you, Mr. Speller and members of the committee.

I appreciate the opportunity to appear before you today, because I think the Multilateral Agreement on Investment is the most frightening proposition to face the Canadian people in my lifetime.

The MAI is not about establishing rules to ensure that international investment and trade continue to mean jobs and prosperity for Canada, as the Minister of International Trade told you on November 4. It has nothing to do with trade, which is so important to Canada. It is about power and control. It is a treaty on investment that is being crafted as a bill of rights for multinational corporations and the international banks that finance them. It is designed to afford problem-free and relatively risk-free expansion on a worldwide basis, a bill of rights with no corresponding bill of obligations.

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The MAI would be nothing but trouble for Canada. We certainly don't need the MAI to encourage foreign investment. As the minister pointed out in the opening statement, foreign investment has doubled in ten years to $180 billion. Would anyone seriously suggest that we should increase that rate? There's no immediate problem as long as foreigners reinvest their earnings in Canada, but when that is no longer attractive to them and they take their profits and dividends and royalties, has anyone calculated where we will get the foreign exchange required for the payback?

We have been told that foreign investment is essential to create jobs, but that is not necessarily true. Many of the investments of recent years have been takeovers of existing Canadian companies, and this has usually resulted in downsizing and a loss of jobs with a reduced demand for Canadian accounting, advertising, and other services.

The minister quoted Industry Canada and his own department to the effect that $1 billion of new foreign direct investment in Canada creates an estimated 45,000 new jobs over five years. As I have just pointed out, that would only be true in the minority of cases where no takeover is involved. The whole question of job creation has to be put in perspective.

On that same scale, the Government of Canada's reduction in program spending and transfer payments of more than $10 billion over four years has resulted in the elimination of about half a million jobs. The point is that the level of job creation in Canada is determined largely by domestic monetary, fiscal, and banking policies, and these are far more important than foreign investment. Canada is not heavily reliant on foreign direct investment for capital. That is a myth.

We have also been led to believe that the government will negotiate the same reservations in MAI that we obtained under the free trade agreement and NAFTA. Frankly, I don't believe those assurances. In my opinion they are just an ether to dull our senses until negotiations are complete and we are faced with a fait accompli.

Let there be no mistake about it. The Americans intend to use the MAI to capture all of our hold-outs in financial services, telecommunications, and the cultural industries. What do you think President Clinton had in mind when he held out Canada as the prize to congressmen when he asked for fast-track authority to negotiate treaties? He had in mind everything the U.S. failed to get the last time around.

The minister told you that Canada would not accept any general commitment to freeze, the so-called standstill, or phase out, roll back, restrictions on foreign investment. It would be nice if we could accept that assurance at face value, but we can't because that is exactly what other countries, including the United States, will insist on. Charles Ritchie's new book Wrestling with the Elephant tells us what happens in a contest between an elephant and a mouse.

When George Bush signed the free trade agreement in 1987, he accomplished what American armies and generals could not do in 1776 and 1812. He conquered Canada. He stripped us of all our protective outer garments and left us standing in our underwear. Now the U.S. wants our underwear as well.

Jack Valenti, the powerful movie lobbyist, has made it very clear that Canadian restrictions in cultural industries are not acceptable. U.S. investors want the same unrestricted rights in Canada that they have in California.

Canada is indeed fortunate that the conquest wrought by the FTA and NAFTA is still tentative. If push came to shove, we could abrogate the treaties in six months. The MAI is designed to make the conquest permanent. The five-year abrogation period with grandfather rights for an additional 15 years would mean game over for Canada.

You have been told by others about the loss of sovereignty in key areas. I will not repeat those arguments except to say that I would not like to see a Canada that would be prohibited by law from barring goods made by children working ten or more hours a day for 10¢ an hour in a barbed wire enclosure sealed by armed guards, a compound where they can be subjected to physical and sexual abuse. Yet this would be the case if the MAI is extended to other countries as planned.

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In a letter to U.S. officials on March 21, 1997, the president of the U.S. Council for International Business wrote:

We will oppose any and all measures to create or even imply binding obligations for governments or business related to environment and labour.

The loss of sovereignty that I want to talk about is the loss of our right to restrict foreign investment if the survival of our country is at stake. Under the MAI we would not be able to say enough is enough. We could not say that foreigners could not buy more than 50% of our forests. They could buy them all. We could not say that foreigners cannot own more than 80% of our oil and gas reserves. They could own them all. We couldn't say that American agribusinesses could not buy more than 50% of the farms in Elgin County. The MAI treaty would say that they can buy them all.

There are people who say the MAI could be made acceptable with adequate safeguards. That is not my view. The MAI is irredeemable because the idea of allowing foreigners “citizens rights” is wrong—very wrong. There should be some advantage to birthright or citizenship earned by people who come to Canada to help make it great. In most cases these citizens care about Canada and would be inclined to preserve and protect its interests.

The citizenship acquired through investment treaties is a hollow mockery of citizenship. Its only allegiance is to the almighty buck. It is a citizenship that wants to cherry-pick the best of the world's resources and industries and consolidates its power in all the major sectors of economic activity. This pursuit of world oligopoly will result ultimately in less competition, fewer jobs, and an almost impenetrable barrier to new entrants in the major fields of economic activity. It is the embryo of an evil empire representing capitalism's ugliest face.

The Hungarian-born American financier George Soros is not alone when he warns that unfettered capitalism is replacing fascism and communism as the greatest threat to open societies. That is exactly what is happening. We are spawning a world where the managers of industry and money, and shareholders in their enterprises, get the lion's share of the world's wealth and where the rest get little, if anything. It is an empire where the division of wealth becomes increasingly unequal and ordinary citizens count for nothing at all because it won't matter whom they elect. The real power will lie in the hands of unelected, unaccountable bureaucrats and autocrats.

Canadians have become increasingly cynical about the parliamentary system, and for a good reason. Members of Parliament are elected every three or four years, but then they seem to forget about the interests of their constituents and become merely spokesmen or apologists for the party line, a line which all too often has been foisted on them by bureaucrats. A few examples.

When Bank of Canada Governor Gerald Bouey brought on the 1981-82 recession that put half a million Canadians on the breadlines, his action would never have been approved by a free vote of the Liberal caucus. It was done without their knowledge or consent, yet they soon found themselves being expected to defend the indefensible. When Governor Crowe perpetuated a similar crime in 1990-91, the Conservative caucus defended a policy that they had rightly described as “insane” 10 years earlier. The infamous GST was another case of faceless officials imposing their will on a helpless electorate.

The MAI will be the supreme test. It was not part of the platform of any party in the last election. In fact, most members of Parliament had never heard of it last May, even though negotiations had been under way for two years at that time. You might not have become aware at that time if someone hadn't leaked a copy of the draft treaty, which shocked and alarmed those of us who read it first.

The minister mentioned the advantage of transparency in international rules, yet there has certainly been no transparency in respect of the MAI. When I raised the subject with a reporter in April, she phoned the Prime Minister's office for clarification and drew a blank response. It makes you wonder who is running the country.

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The MAI is an American invention that may be in its perceived short-range interests; it is not in Canada's interests, nor is it good for the world. Canada, which is a small country next to its elephantine neighbour, must oppose the MAI with all its might; first on its own behalf, because its very survival is at stake, and next on behalf of other small countries that will be jaw-boned into joining the evil empire.

I feel so strongly about this that I have written a book entitled The Evil Empire: Globalization's Darker Side, which puts the MAI in the wider context. I have a copy for each of the members of the committee. I hope you will read it and conclude that you should recommend to the government that it should withdraw from negotiations forthwith.

Thank you.

The Chairman: Thank you, Mr. Hellyer.

We'll now move to ten-minute question-and-answer spots. Members of the panel who may want to speak on a question to another member of the panel can also contribute to the questions.

I'll start with Mr. Penson.

Mr. Charlie Penson (Peace River, Ref.): Thank you, Mr. Chairman.

I'd like to thank the members of the panel for being here today. It's certainly a lively panel, but it's not the only panel we've heard from in this process. We have been going through this for approximately one month and have had a lot of Canadians presenting evidence on why they do or do not want to see the MAI approved.

I would just remind the panel, Mr. Chairman, that Canada doesn't have to sign the Multilateral Agreement on Investment. It's not necessary. We are not legally obliged to do that. We are negotiating.

But the question I would have for the panel is, what happens if we don't sign it? What if we decide to walk away from this and not be part of this agreement?

I guess I would go on to remind the panel that we still have NAFTA. I would take exception to what Mr. Hellyer said in terms of investment policy. I think Canada's investment policy has to a large extent been governed by NAFTA. Chapter 11 of NAFTA, which we had in place since 1988 under the free trade agreement, was changed in 1993, but we still have NAFTA.

Most of the foreign investment in Canada comes from the United States, so that's governed by NAFTA. But what about the substantial amount of Canadian investment, where Canadians invest outside our country? There's about $170 billion of Canadian investment that doesn't all have protection in terms of rules such as national treatment or a dispute settlement process.

Maybe we're doing a disservice to those Canadians who are looking for investment opportunities. Of our GDP these days, 40% comes from exports. In most cases exports and trade require some type of investment before that happens. So Canadians are out there competing in the world market. It seems to me that they're doing a pretty good job of bringing a lot of profits and pay cheques home. It's helping Canada to have a great standard of living. But what about some protection for those people who are out in the world economy making those kinds of investments?

So those are the questions I would have for you—what are the options if we don't sign the MAI, and what protection do our Canadian investors have?

The Chairman: Mr. Penson, have you directed it to anybody or just the panel in general?

Mr. Charlie Penson: No, to anybody who wishes to answer.

The Chairman: Mr. Orchard first.

Mr. David Orchard: Part of the problem that NAFTA has brought to us, and which your party is supporting, is that—you talked about 40% of our GDP coming from trade. That's dramatically escalating. We're becoming a banana republic, and that's the problem. As north-south trade is increasing, east-west links are being cut in this country. We're having far less trade east and west in the country. When you have less trade east and west, the cultural, political, and social links are all cut. It increases regionalism in the country. Each region says they don't need the rest of Canada any more because they're trading with the United States to the south of us. If Ottawa doesn't give us what we want, we'll split. That's what north-south trade is doing to our country.

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Your second question was, what happens if Canada doesn't sign? What Canada should do is get out of the NAFTA, which the Liberal Party promised to do, and get out of the FTA. What would happen is the sky wouldn't fall in. We would return immediately to the GATT rules that governed our trade for the previous five decades and under which Canada did far better than we're doing today.

When there was a dispute under GATT, as you know, it was adjudicated by an independent body. Those who were involved in the disputes didn't sit on the panel. Now we're locked into a panel with the United States, a country 10 times bigger than we are, and we adjudicate those disputes based on U.S. law. We're far worse off in terms of access.

We would simply return to a system that had been better for Canada than the system we're in now.

The Chairman: Mr. Hellyer.

Mr. Paul Hellyer: The first thing is you have made the case that our investors are doing very well already, which they are. They're skilled in negotiating with foreign countries and they have succeeded brilliantly.

The other thing is a matter, again, of general principle. I've been a capitalist all my life and I always thought that capitalism involved taking some risks. If you were lucky, a little bit intelligent, and things went your way, you made a handsome return. If you weren't as lucky, you might lose a little money.

It never occurred to me that government should guarantee my investment, nor would I have expected them to. The whole idea of governments collectively saying we're going to provide risk-free investment for the richest people in the world is just totally inconsistent with what I used to think was the principle of capitalism.

The Chairman: Mr. Carre.

Mr. Stuart Carre: It's always difficult to answer a question that is still, in effect, a hypothetical question, because we really want to see the definitions a little clearer of what might be in the agreement. If it's a bad agreement in our view, then we will recommend to the Government of Canada that they walk. If we think it is something useful, both in terms of attracting greater inward investment and in terms of reducing the barriers to investment of Canadian firms abroad, then we will likely recommend that we go with the agreement.

What's interesting about this debate, and you've obviously gone through this in spades already, is that in many ways it isn't about the MAI at all. This debate is about FIRA; this debate is about NAFTA.

You know our views on FIRA and NAFTA. Let's look at the real scope of the MAI. It is dealing with investment, one part of NAFTA; it is dealing with flows of investment to and from Canada for perhaps a 20% coverage, when you look at the OECD countries and you X out the United States where we're already covered. It's a smaller coverage.

To answer your question directly, if we were to walk away from a reasonable agreement the big problem Canada would face would be that we would simultaneously send a very clear signal to foreign investors that they were not wanted in Canada. We would not be in a position to take advantage of protections that were signed in that agreement.

Further, to the extent that the Paris agreement, if it comes to be, serves as some kind of a base or a model for a broader agreement that may cover economies growing at far greater rates than the OECD nations, we would also likely be cutting out our own negotiating credibility to participate in that kind of a negotiation.

The Chairman: Thank you.

Mr. Knoerr.

Mr. Don Knoerr: You have to remember what's happening, as others have said. First of all, the MAI negotiations right now are within the OECD for OECD members. We certainly have at least a bilateral investment agreement already with most of those countries; we have about 30. Besides, we have the MAI.

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We're talking here about a model that Canada has an interest in, and in other countries it is spread farther. The mandate of our negotiators is quite clear. At least this is our understanding. It's NAFTA and no further.

Unless you accept that there's a limit to how far you go, your extension is that we will accept anything as long as we get an investment treaty. I'm sure that's not what you're saying.

We're clearly saying that subject to the identification of a problem with NAFTA that we're not aware of at this time, as long as the MAI does not impose unneeded conditions on Canada...because we have a favourable investment out of it, it does not impose conditions that are not contained in NAFTA. It's clear that the type of exceptions we have in NAFTA are secure in the MAI, which means it's clear that they're accepted by the other parties signing. If not, don't sign it.

Mr. Charlie Penson: Mr. Chairman, what I am asking here and what I want to address is—

The Chairman: No, I know.

Unfortunately, colleagues, with the large number of panellists today and the large number of members who want to get involved, I'm going to have to cut people off at 10 minutes. We have a vote at 5.30 p.m., which we have to go to.

So I will call on you first next time, Mr. Penson.

Mr. Reed.

Mr. Julian Reed (Halton, Lib.): Thank you. There have been some comments made about sovereignty and investment. I'd like to simply submit to this debate the argument that Canada's sovereignty has been in greater jeopardy in the last decade than it probably could be under any international agreement.

The perpetual deficit budgeting and running up of debt put us for all of those years in the unenviable position of having to borrow internationally—not desiring to borrow internationally, but having to borrow internationally—and we did. It's only been in the last year or year and a half that we haven't had to borrow. I would suggest that is a threat to sovereignty in any country.

I will restate the comment that the serious negotiations will not be starting until January. The ideas have been thrown into the hat for the last two years or so. We are not bound to accept them. You never enter into a negotiation that you're not prepared to walk away from, and any negotiator who feels bound would then be the victim, if you like, in the negotiations.

I'd like to clear up a small myth too. There is a myth that somehow multinational corporations are large conglomerates that have a foot here and a foot there, and if they desire they can put a foot over there and so on. If you look at who are the multinationals at the present time, the majority are small and medium-sized business.

I had the occasion to attend a once-in-10-years convention of mining exploration companies in Canada a few weeks back. I learned that there are 700 mining exploration companies in Canada. Canada is the technological heart of mining in the world. Many of those companies are multinationals.

I put it to you that the average complement of people in those companies is 15. To suggest that any one of them is somehow a great powerful conglomerate that can dictate policy to a government, it rather concerns me.

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At the same time I understand that these small and medium-sized companies would also appreciate equal protection in countries where they deposit their talents and their capabilities.

If I'm a small company and I want to do business in another country, I perhaps don't have the resources to fight in the jungle the way a very large conglomerate would be able to. Therefore, a set of some sort of rules that are commonly accepted among nations would be of some value.

I don't know; perhaps I'm wrong. Here is the experience that we had with the Nova Scotia investor in Russia recently. The sum of $60 million was invested with two other Russian partners to build a luxurious hotel, and everyone here knows the experience. There are no rules for dealing in the Wild East since the collapse of communism, and as a result the Canadian investment there is very much at risk.

A comment, too, was made about jobs and about the fact that there are a million people unemployed in Canada. The reality has to be recognized. The question should be asked, what kinds of jobs?

There are a million jobs going begging in Canada. Even during the height of the recession there were half a million jobs going begging, because there weren't the people with the skills necessary to fill those jobs. Today, we are looking at an increasing shortage of manpower/womanpower to fill those skills that are required in the new economy.

The old days of the hewers of wood and drawers of water are over. Even in terms of our exports, everybody will agree that we're not just exporting widgets any more. We're exporting grains. We're exporting talent and expertise as well as agricultural goods and manufactured goods.

At the very least there is an argument to be made to stay in the game and to continue these negotiations until we get to the end and we find out where it's coming down. If it's good for Canada, it should be good for Canada. If it's not good for Canada, we shouldn't be there.

Ms. Marjaleena Repo: You haven't dealt with the mandate.

The Chairman: Excuse me. I'm sorry, you have to work through the chair.

I was going to give it to Ms. Heselton first.

Ms. Norine Heselton: I would just like to respond to a couple of your points.

On the issue that no one should enter into negotiations unless you're prepared to step away from them at some point, I don't think you will have any disagreement from ITAC. What we're talking about for the information technology industry is a high-standards MAI. If we can't get that, if it would be damaging to Canada, certainly, we don't stay in the game.

On the point about the small and medium-sized businesses, we have a lot of members in our association that are small and medium-sized enterprises. They develop and deliver very high-quality, innovative products and services to their markets. However, it's known that in Canada especially the small and medium-sized enterprises do not export and invest as effectively abroad as they might.

An MAI that provides consistent, stable, and predictable rules would in fact be a boon to these companies to break into new markets in foreign countries.

The last point on the skills issue is very right. It's not an employment issue; it's a skills issue. We hear all the time from our members that they simply cannot tap the skills in science and technology that they need. It's a problem that is much more fundamental than the post-secondary system. In fact, it begins in kindergarten to grade 12. Students simply are not being inspired and motivated to pursue that when they leave high school.

Thank you for your comments, and Doug would like to make a couple of points.

Mr. Douglas Gregory (Representative, Information and Technology Association of Canada): Just very quickly I have two points on the bilateral issue.

The Chairman: I would like one comment from each organization, because unfortunately we have quite a few people.

Ms. Repo wanted to comment.

Ms. Marjaleena Repo: Before we get into the nitty-gritty, what makes you think you have a mandate to negotiate the MAI? That is the fundamental question I put out to this committee. I think you personally have to respond to it here and to your constituents. What mandate do you have? Where did you get it from? That's number one.

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Second, I don't know whether you pay attention to the news, but recently there were 45,000 workers lining up to try to get maybe 1,000 auto worker jobs in one of the plants in Ontario. Maybe 1,000 will get a job, but what about those others? That is the reality we are speaking to.

But the mandate is the first and number one question. Where did you get it from?

The Chairman: Ms. Repo, generally in this committee, the committee members ask the questions and panellists are here to answer them and to supply us with the information.

Ms. Marjaleena Repo: Well, it has to go both ways.

The Chairman: The time is up.

I'll turn it over to Mr. Sauvageau.

[Translation]

Mr. Benoît Sauvageau (Repentigny, BQ): I will try by all means to be brief and I would ask you to do the same since ten minutes are a very short time.

My first question is directed to Mr. Carre. You made somewhat ambiguous statements in your answers to my friend, Mr. Penson, on the desirability to sign or not to sign the Multilateral Agreement on Investment.

You said we obviously need to reach agreement on clear rules, that Canada must stand firm in the negotiations etc., but on the other hand you said we cannot abstain from signing. If I were the opponent, I would feel my adversary is in a position of relative weakness, to say the least. Do you maintain that we must sign the multilateral agreement at any price? This is what your statement boils down to.

Mr. Stuart Carre: If I gave the impression that Canada should sign the agreement at any cost, I gave the wrong impression. What I meant is that Canada should not sign a bad agreement. We should not say, as some people do, that we should sign the MAI unconditionally. It is not something that we should do in a negotiation.

I meant that if the agreement is reasonable and if Canada decided not to sign, this would send a signal to foreign investors that they are not welcome. We already have enough problems getting these investments. This would also create problems for us in future negotiations.

Mr. Benoît Sauvageau: You say this would send a signal that investors are not welcome. We do not have a multilateral agreement on investment at the present time but we nevertheless had $180 billion of foreign investment in Canada in the last ten years. This fact must be recognized.

I also understand that we already have signed bilateral investment agreements with our major partners. I do not think—and this is my own opinion and not a question—that we should tell our negotiators that our refusal to sign would send an ambiguous message, a signal that investors are not welcome.

You represent the Business Council on National Issues and you say that we should not sign at any cost, not sign if the agreement is not satisfactory. Could you tell us what the deal breakers would be for the Business Council on National Issues? What would be the issues over which Canada should walk away from this agreement?

Mr. Stuart Carre: As I tried to say at the beginning, we have big difficulties with some members of the European Union over a general exception.

Mr. Benoît Sauvageau: On culture?

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Mr. Stuart Carre: No, it is the clause where Europeans want an exception from MAI disciplines so as not to provide other investors the same levels of liberalization; there is also the issue of the Helms-Burton Act. I outlined four or five problems that need to be solved.

Mr. Benoît Sauvageau: No, we should not sign this agreement.

Mr. Stuart Carre: I tried to explain that these are big issues and that we need to see the agreement before making up our minds.

Mr. Benoît Sauvageau: Thank you.

[English]

The Chairman: I want to allow Mr. Hellyer and Mr. Gregory to respond to that, if they want to.

Mr. Gregory.

Mr. Douglas Gregory: On your issues, Mr. Sauvageau, Stuart has articulated a number of concerns that the business community at large share, whether it's the Business Council on National Issues or the Information and Technology Association of Canada.

Also, Stuart is being absolutely upfront and honest with you when he says it's very difficult to look at an agreement until you see the agreement. What we see before us are proposals. We in the business community have not seen the reservations of other countries. So it's very difficult to assess the value and the benefits of an agreement until you understand what people are going to carve out of the agreement and what's going to be in the agreement.

That speaks to the importance of ongoing discussions, as this committee is doing, to encourage Canadians at large, including members from labour and business and others, to understand fully what's happening in the context of negotiations on an MAI.

I'll leave my comments at that.

The Chairman: Mr. Orchard wanted to comment.

Mr. David Orchard: We heard the same kind of thing: that we could walk. You point out that we can walk away from these talks; the BCNI is saying if there's a bad deal, we'll walk away; Mr. Penson is saying we don't have to sign; and Mr. Reed is saying we don't have to accept. That's exactly the same line I heard when I negotiated with John Crosbie, Simon Reisman, and all the others in 1986, 1987, and 1988 on free trade. They all said, “We're just there at the table. We're just going to talk. It doesn't mean we're going to have a deal.”

You don't walk away from these tables. After all the statements that are being made by Sergio Marchi and Jean Chrétien right now, binding yourselves before your committee has even reported.... Mr. Marchi is in Vancouver saying we're going to do the MAI. He's supporting the MAI body and soul. He's committing himself in a very foolish way to these talks. So as for this idea that we can simply walk out of these talks if we don't like it, it doesn't happen historically.

I would be very happy if your government had the backbone to turn around and walk away, because you're going to see a tremendous storm of protest across this country. It's going to cost you your jobs in exactly the same way Mr. Mulroney's Tories lost their jobs. You guys weren't elected to carry out Brian Mulroney's policies, and that's exactly what you're doing. And the Reform Party was not elected to carry Brian Mulroney's can either, and that's what they're doing. There's going to be a payback time for this.

The Chairman: Mr. Sauvageau.

[Translation]

Mr. Benoît Sauvageau: My other question is for Ms. Higginson. You stated, Madam, that we must sign a quality agreement. I would like to ask you the same question I asked Mr. Carre. A quality agreement is a vague notion for me. What stumbling blocks would prevent the association that you represent from signing this agreement?

If I understood you correctly, you said that this agreement would facilitate the transfer of managers from one country to another. Since the MAI is not yet signed, are there members in your association that are encountering this type of problem or are managers quite free to go and work in a head office situated in another country?

You stated, to my great surprise, that in your view, the definition given in NAFTA for the cultural exemption clause was sufficient. The Minister told us that it was a minimum that Canada supported up until very recently and that we were going to wait and see France's proposal. The cultural groups that we met with last Thursday suggested language that is clearer and stricter yet.

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Are you maintaining that the cultural exception clause as it appears in the notes would be sufficient or do you believe that it could be clearer and stricter? That is what all of the witnesses have said, if I am not mistaken.

[English]

The Chairman: Mr. Sauvageau, you left the witnesses one minute to answer.

Mr. Douglas Gregory: With respect to our comments on cultural reservation, we are greatly concerned by the proposed French cultural reservation. This is a very complex issue.

When one looks at the convergence of the information technology, broadcasting, and telecommunications industries, one has three distinct public policy paradigms in terms of regulation. It is highly regulated in broadcasting, regulated to a degree in telecommunications, and by and large, except for broad framework rules in the Competition Act, it is largely unregulated in the computing areas.

What we have, from a technology perspective, is the ability to watch television and listen to radio over the Internet. These are issues that we're going to be forced as a country to deal with in the upcoming round of GATT liberalization on services that starts in 2000 as we get into the whole issue of advanced telecommunications and audio-visual issues.

The concern the industry has is that as these industries continue to converge, we as Canadians are going to have to come to grips with understanding where we want our cultural policy to go.

These industry associations support a cultural reservation, but we would not want it to arbitrarily or uniquely broaden out the definition of culture to include the Internet. That's because we believe that would spell disaster for all the small-content deliverers in Quebec and the rest of Canada. As you know quite well, particularly when one looks at French-language Internet content, Quebec leads the world in terms of the number of French-language web sites.

So clearly there is not a problem about the representation of Canadian content on the Internet. To develop a regulatory and foreign investment regime that would model the broadcasting regime and then try to apply it to the Internet would spell disaster for the Canadian high technology community.

The Chairman: Thank you.

Mr. Blaikie, ten minutes.

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

My apologies to the committee and witnesses for having to go in and out this afternoon, but I'm also the House leader for my party and there are negotiations going on that I have to attend to.

I wanted to say I was particularly sorry to miss Mr. Orchard's presentation. I know him from 10 years ago. He was an eloquent critic of the free trade agreements.

I want to ask this of everybody, but particularly the representatives of the business community here: it seems to me that the Canada many of us have come to know and like was a Canada that was built as a result of a combination of the very kinds of policies that the MAI sets itself against and rules against philosophically in a general way. So it therefore sets up a philosophy that we then enter reservations against.

But we are basically saying that this is the way the world should be, we Canadians apologize for not conforming to the rule, and we would like to stay the way we are in this number of respects.

I want to ask the representatives of the business community, but of course others can respond as well: Why is it that we should give up the ability to be the way we have been, to continue to be the kind of country we have been, all in the name of making it easier for you guys to make money in some other country? That's what this is all about, at least on the face of it. It's also about what the international investment community can do to Canada.

Look at the harmless, wolf-in-sheep's-clothing argument. These poor Canadian companies invest in a hotel in Russia and get fleeced. As if the MAI would have anything to do with corruption in Russia in the first place—but never mind.

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They just want to make a decent dollar in these other countries, and they're having a hard time of it, so they think the entire country should give up its ability to be the kind of country that it has been just so these guys can make more money in other countries.

Where do you get the nerve, for starters?

Mr. Stuart Carre: I'm not entirely familiar with House of Commons procedure, but where do you get the nerve to ask a kind of question like that?

Mr. Bill Blaikie: I can ask any kind of question I like, and you can answer.

Mr. Stuart Carre: The business community is out there trying to create jobs and employment.

Mr. Bill Blaikie: Yes, somewhere else. You're making money somewhere else and exploiting cheap labour. Yes, you guys are great citizens.

The Chairman: Mr. Blaikie, please let the witness answer.

Mr. Stuart Carre: You were not here earlier when I did make the point that—

Mr. Bill Blaikie: Maybe he won't answer the question.

Mr. Stuart Carre: No, I do want to answer the question, and I was in the process of answering the question.

Mr. Bill Blaikie: Okay, things have changed: I'm listening now.

Mr. Stuart Carre: First of all, clearly this is much more than a debate about the MAI; it's a debate about people's views about things like FIRA and NAFTA.

It's our position and view that moving away from FIRA and entering into NAFTA have been very beneficial for Canadians. We created jobs. We were able to position ourselves so that we will be able to take advantage of things like globalization.

So as for the view that we take as a business organization, clearly we have a different view from that of Mr. Orchard or you perhaps. My point is that, in addition, we have been able to create and generate more sovereignty for Canada in effect than we would have had if we, for instance....

I'm going back to what I think is the essence of what Mr. Orchard and perhaps you were trying to get at: whether NAFTA is good or not. We have been able to set up rules and disciplines that can protect Canadian firms, and thereby Canadian workers and employees, by negotiating rules through NAFTA.

Now the MAI's investment dimension is in effect a small element moving from the NAFTA model, covering perhaps 20% of our investment gross. So that's what we're talking about.

Mr. Douglas Gregory: Mr. Blaikie, I would disagree with your premise that the MAI is against the founding notions of Canada. I would argue that it's very difficult in today's economy to look at....

One can draw this in a very stark perspective and say that companies, irrespective of their ownership, should only exist in the countries in which they were founded. When you have this type of model, you start to build barriers between nations. We have leading-edge applications of information technology and financial services that are developing a global economy. Wars in the past have been driven because of differences between nations, such as cultural differences, economic differences, or anything.

It's my contention, Bill, that if we recognize that our economies are integrating, there'll be less opportunity down the road for some of the terrible frictions that have caused problems in the past.

Canada can succeed. We have the natural resources that can take us into the economy of the 21st century. Those natural resources are the brains of every single Canadian. We are extremely well positioned to take advantage of this.

If we simply limit Canadian companies to working, selling, and dealing only with Canadians, a market of some 30 million people, we write off what I believe to be our opportunities for the future. I can't understand why we would want to do that.

Why would we not want to take our leadership on a global scene, as we have in the past, as we continue to do now, and as we should do in the future?

Mr. Paul Hellyer: Personally, I think it's the right of every country, especially very small countries like Canada, to decide who should invest in their country and who should not, and on the terms and conditions under which they should be allowed to invest. I don't believe in a lot of restrictions, but I do think we have the right to make some decisions and to say, “You are welcome, but you are welcome under the following circumstances: that you do certain things that are beneficial to the Canadian economy, rather than just taking advantage of our resources and running away with the profits.”

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It's difficult to discuss this whole issue in the absence of the wider discussion of monetary policy and neoclassical economics and the extension of monetarism, which the Bank of Canada adopted in 1974.

Mr. Reed was talking about how we had to go abroad to borrow to finance our deficit. That is not so. We had to go abroad to borrow because the Bank of Canada adopted this foreign economic religion, which it has perpetrated on the Canadian people at tremendous cost to the Canadian people. It's the Bank of Canada that put us into debt, not overspending by the governments as alleged, except to a very small degree.

The Bank of Canada used to buy Canadian bonds. In 1974 it owned 20% of Canadian federal government debt. It has gone out of that in accordance with this economic religion it bought and now owns less than 5% of Canadian government bonds. What happened was, when it stopped buying its share of bonds, it then had to bribe foreigners to buy the bonds it didn't buy. So that had nothing to do with us being reliant on foreign investment. It was just a very bad policy decision on the part of those who I think really run this country—the Bank of Canada and the Department of Finance, and I think to our detriment.

They are responsible for the job situation in Canada, too, the way they have operated. It's true that there have been some jobs available in high-tech industries. I can think of six or seven close friends who are unemployed at this moment who all have university degrees—one of them I think has four or five university degrees—and they cannot find jobs in this country. We have unemployed nurses and unemployed doctors and unemployed scientists. We're talking about exporting. We're exporting a lot of the very best scientists that we've had in this country because there are not opportunities available to them here in the scientific field.

I really think you have to look at the MAI as an extension, really an extension, of this whole process that began with Friedman and the Chicago school of economics in the 1970s, and what it has done to the world. It has slowed down economies. It has put millions of people out of work. It has done all sorts of damage—probably more damage to more people than any other idea to come on the world stage in this century. We fell for it, and we're in a mess as a result of it. You have to look at the MAI as an extension of that.

The thing that bothers me most about the MAI is the length of time you're setting the thing in concrete. It is binding future governments to a situation that they very well may want to escape from. If it had a six months' abrogation, then you could maybe—maybe—make a case for it. But with a long-term abrogation, I think you're setting in concrete a system, a philosophy, a religion, as I call it, which is going to prove to be an evil religion and which will ultimately self-destruct. About that there is no doubt, because it is part of what's happening in Asia today. That sort of thing will become more and more frequent as the result of what's been happening.

The Chairman: Thank you, Mr. Hellyer. Our time is up.

Ms. Bulte.

Ms. Sarmite Bulte (Parkdale—High Park, Lib.): Thank you, Mr. Chairman.

I have a question for each one of you on specific topics. If you don't mind, Mr. Chairman, I'll ask them all, and then....

First of all, Mr. Orchard, one of the things you said was that we were better off with GATT. I believe that this latest decision of the World Trade Organization on the split-run magazine decisions was actually a result of GATT, the GATT trade barriers that we negotiated in 1947. So we're not obviously in a better position. What I'm asking for your assistance on is what can we do to try to make this agreement better?

One of the things you also said was that the standstill and rollback provisions should not always be there. Some representatives from the arts community are advocating unbound provisions, which wouldn't take those rollback and standstill provisions into effect. Is that something you can live with? How can we continue or build on those? That will be my question to you.

The Chairman: Mr. Orchard.

Ms. Sarmite Bulte: Mr. Hellyer, with respect to—

The Chairman: Let me—

Ms. Sarmite Bulte: Do you want me to go one at a time?

The Chairman: Yes, please.

Mr. Orchard.

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Mr. David Orchard: Under the GATT we had all kinds of mechanisms we could put on. We could put on export taxes and do all kinds of things to get around problems, if we had them. We had that in the fishing case, but under the NAFTA those are all prohibited. So our hands are bound. That's what the problem is. As long as we're locked into this NAFTA agreement, our hands are bound in terms of controlling our own destiny. As far as making it better, the only way you can make this thing better is by getting Canada out of negotiating it altogether.

The NAFTA and the FTA are illegitimate agreements. Canada twice voted against them. Clinton rode to power in the United States campaigning against George Bush's NAFTA. He got into power and ratified it anyway, and Salinas imposed it on the people of Mexico without consulting them, and now he's on the run. If he sets his foot back in Mexico, he'll go to jail. In our country, of course, Brian Mulroney should be in jail, but instead the Liberals are paying him $2 million for damaging his reputation.

The point is that none of these men had a mandate to proceed with NAFTA. That's the problem—

The Chairman: Mr. Orchard, those are very interesting political views, but we're here more so—

Mr. David Orchard: The point about the WTO is to simply go back to the WTO. Get out of this MAI agreement and the NAFTA, which are totally dominated by the United States.

Ms. Sarmite Bulte: Mr. Hellyer, one of the things you stated was that you didn't feel the government should guarantee investment. I'm an entrepreneur myself and I come from a very entrepreneurial family. Don't you also believe the government has a role in protecting investment? We're not talking about multinational corporations. When we look at investments, these investments also cover the investments of our pension funds, our individual citizens who invest in RRSPs through their mutual funds. Do you not see any benefit there?

Second, you talked about our loss of right to restrict investments. I strongly believe—I agree with you—that there are certain areas and sectors of our economy, notably culture, that we must protect. We must protect our national broadcasting corporation. If we find those sectors that we think are important and exempt them from the agreement, is that not a solution?

The Chairman: Mr. Hellyer.

Mr. Paul Hellyer: I think the most worrisome sector is financial. As you probably know, the banks are lobbying hard to have the 10% ownership rule taken off. There is some reason to believe that they've already discussed this with the government and now the task force is trying to come up with recommendations that say bigger is not necessarily bad.

My fear, of course, is that first our banks will merge and there'll be less competition, then they will be taken over by American banks, and ultimately we'll have no control of our monetary policies. We'll have no leverage to provide financing for small Canadian business and small Canadian entrepreneurs.

The whole thing opens up to such an extent that you can't even see where it's going. I can see down the road. I can see Bell Canada being bought out. I can see our banks being bought out. I can see the day coming when there will be nothing left and we can't service the cost of it. We will have to run down our flag and run up somebody else's because financially we will have no alternative.

Coming back to the banks, they could get so big that you have the kind of problem the Japanese are facing today. You have to face whether you bail them out or not, because they're too big to be allowed to fail and because of the domino effect. As long as you have a partial reserve system of banking or a no-reserve system of banking, as we have in Canada, you're going to have that kind of crisis, and it could bring the whole western system crashing down again. Ultimately it will because we're creating too much credit.

Finally, on the MAI, and this is one of the things I mention in the book, whoever can create the most money, and banks, as you know, create money out of thin air—they don't admit it, but they do and that's how our money supply is increased—can buy the world, and that certainly isn't Canada. That is my fear. I fear that the people who are able to create the most money in some of the bigger countries will just say here are some wonderful resources—whether mining, forestry, agriculture, water, or whatever—and we want it. We're going to buy it and it's going to be ours.

Ms. Sarmite Bulte: Mr. Carre, you were talking about wanting to get the sub-nationals to also be part of this agreement. Is that correct?

Correct me if I'm wrong, but isn't one of the things that happened under NAFTA that the sub-nationals—the states had a strong lobby and they were exempted by reservation from the agreement. If that's the case, how do you see us getting over that if we want each individual state in the United States to buy on to the agreement we make? I'm just looking for your advice and direction in this area.

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Mr. Stuart Carre: It's my understanding that the United States has put forward a whole range of very detailed exceptions and reservations. What I was trying to get at in my statement is that we'd like to see those exceptions and reservations whittled down and limited so that we can at least partially cover the so-called sub-nationals under this agreement. However, we know that the United States wants to protect large parts of their states' jurisdictions. I also know full well that here in Canada the federal government has not concluded its own consultations with the provinces.

The Chairman: Mr. Knoerr.

Mr. Don Knoerr: I haven't seen the wording of the U.S. exemption, but the Canadian exemption for NAFTA is all provincial measures existing at the time we entered the agreement that conflicted with provisions of most of the main elements of the NAFTA provisions.

I'm still trying to figure out this business, but I think we could rewrite the NAFTA exemption so that it would be more useful to us in the long run, because this is a standstill. It doesn't affect any new measures, but it would be less restrictive to an investor because it would be more clearly defined and transparent.

My organization is saying that on the assumption you can't change NAFTA—that's a given and that's where we sit—we would not want any exemptions that did not go as far as NAFTA. We don't want any existing provincial measures, non-conforming, on these main elements—national treatment and performance requirements. We want that same exemption in the MAI. If we can have a rational dialogue about how to get good long-term exemptions more clearly and narrowly defined in both agreements, fine, but that's the bottom line.

The Chairman: Thank you.

Mr. Nault.

Mr. Robert Nault (Kenora—Rainy River, Lib.): Thank you, Mr. Chairman.

Mr. Carre, one of the areas that seems to be lacking in the focus we haven't placed on the MAI up to now is the whole issue of the environment. I would think that if there is one area we could all agree on it would be that the stronger the agreement as it relates to the environment and the environmental structure we put in place, the better for Canadian business in a foreign environment.

There's no stumbling block to an agreement here as it relates to the BCNI, and I'm curious as to why the Business Council does not feel this is important. Shouldn't we be pushing for that, considering the fact that we probably have some of the highest environmental standards in the world? If we are to do business in another country, would we not want them to recognize that fact and work towards it?

Why is that not a stumbling block and why can't we work towards that? As much as we want to play around with money, as Mr. Hellyer talked about, in the end it will be who has the nicest land who will exist and survive. You can play around with paper all you like, but if we pollute everything we put our hands on—you can have a fat wallet, but it won't do you a lot of good. I can understand from the business community's perspective that labour would be a bit of a concern and not wanting to have a binding process, but why can't we have one on the environment?

The Chairman: Mr. Carre.

Mr. Stuart Carre: We did not include anything on the environment in our so-called stumbling block section. First of all, we don't consider that anything to be negotiated in the MAI will in any way lower standards. I'm not sure, but I've heard some fears from different parties that by signing on to the agreement's draft provisions now, we're somehow going to lower environmental standards. I don't think that's the case.

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Second, I don't think if we were to look at some kind of provisions on the environment in this kind of agreement that would pose an enormous difficulty to the business community. But we don't have anything to look at, and therefore to comment on, yet. So it's a little difficult for us.

It wasn't in there, because we don't see the issue as a stumbling block.

Mr. Robert Nault: In his presentation Mr. Knoerr has a section on expropriation and compensation. The bottom of that section deals with the Ethyl corporation and the difficulties that may occur as these relate to this whole compensation for expropriation. I would assume that it fits in very nicely with the lack of commitment or direction of the Business Council.

The last section says:

This outcome would be unacceptable and could seriously interfere with Canada's ability to carry out necessary regulatory practice.

In those circumstances the wording would have to be changed. What's being referred to here obviously is our environmental standards and our interest as a nation in protecting our water quality and our air. That's one of the reasons we got rid of the lead additives of gasoline. Now we're being sued for it.

So my question is, if that's going to become a major stumbling block for governments, would it not be in the interest of our negotiators and organizations like yourselves to put forward some wording that would make people feel more comfortable, if—and this is a big if—in fact we do lose the case involving the Ethyl corporation?

I'm trying to get a sense of this, because this is one of the issues the opposition is using to suggest that we're going down the wrong road here. There must be a way of protecting our own environment. I'd like to get some information from you in that respect.

The Chairman: Mr. Knoerr.

Mr. Don Knoerr: You may be asking me for a level of wisdom I don't possess. We're very nervous about using this ammo.

First, under the NAFTA rules because both parties haven't agreed, there is no information available about the case. I spoke to one of the government lawyers and he said he just.... Once the decision is made, it will be public. You can look at it. You can decide.

Obviously Canada doesn't think the Ethyl corporation is entitled...under that to that end.

I can't suggest to you that there's any significant risk. The point we were trying to make is that.... I can give you plenty of examples outside the MAI where we've dealt with....

When you go into agreements, new areas, when you have many countries defining the words, it isn't even the same. You have enough trouble domestically when a lawyer defines one stated intention for something. So you always have the problem.

We pointed out two sections, but we have an example. We're going to have to be very watchful. That's all I can say.

But I would point out that we do a lot of regulatory.... It might have environmental...but that wasn't the only thing.

We do things that limit people's ability to do business. Rightly or wrongly, British Columbia introduced government auto insurance. Now, I'm not aware of any company getting formal compensation. Sure, they accommodated people the best they could.

The point is that first, it's unacceptable that you give a foreign investor a right or a benefit a Canadian doesn't have. That's the reverse.

It doesn't prevent you from doing it in that case, but you don't want to impose an additional cost that government has to consider in doing the regulatory activity that wouldn't have occurred if you didn't have that.... It's a watching brief, and that's all we can suggest.

In terms of your concern, I've never looked at it, and I don't necessarily have the competence. I think if I wanted to answer your question about the environmental implications, I would go through the performance requirements side from an environmental point of view.

I'm not aware of any problems, but that applies to everybody. That deals with the types of things you're doing in environmental regulation.

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Mr. David Orchard: I wonder if I could comment on this. We don't see the labour and environmental clauses in here having any teeth at all.

On this question about what's happening under the NAFTA, this Ethyl case is not going through the Canadian courts. What happens in that case is that Ethyl gets to choose one of the panel members, the Canadian government gets to choose one, and the two of them agree on the third.

As Mr. Knoerr pointed out, it's a secret process until we get the final result. They're adjudicating on the basis of NAFTA law, not Canadian law, and what they'll do under the MAI is exactly the same thing. It will be based on the laws that are written and the regulations in the MAI, not the domestic laws of Canada. That's where we're giving up our sovereignty.

The case of what could be done to.... Norway voted to stay out of the European Union in 1994. There was a raging debate. People told Norwegians their economy would go down and they would be in bad shape. They stayed out. Norway now has the lowest unemployment rate in Europe, it has a growth rate that's twice the European rate, they have free health and dental care for everyone in the country, they've just lowered the retirement age from 67 to 64, and they're talking about lowering it to 62 with full pension. That's what Norway has achieved. They have to use their oil resources to finance the richest social programs in the world.

Under this we're selling out all our resources, and then we're saying that we're raising our retirement age, and we're saying we're broke. That's because we've given away the natural resources of this country.

That's the problem, and these environmental and labour clauses are not going to do anything at all to change that, as we found out when Clinton introduced them in NAFTA. They're absolutely meaningless.

Mr. Robert Nault: I have one more question of Mr. Carre, and that's on the whole issue, again, of sub-nationals.

I'm having a really tough time understanding this agreement if in fact the provinces, of course, in this case the sub-nationals, similar to the states in the U.S.A.... If there is no sign-on by these particular governments, they don't agree, or they get their own specific reservations, then just what are we signing here? It has very little impact because of the amount of jurisdiction and power each province has in our federation.

I get the sense that in your brief, in the third chapter on stumbling blocks, without the provinces signing on, you don't see it as much of a serious agreement as far as moving forward is concerned.

The Chairman: Mr. Carre, briefly.

Mr. Stuart Carre: The Business Council would like to see sub-national levels of jurisdiction included, because in many cases that is where one finds investment barriers.

More broadly, the Business Council is not the group that is trying to make out the MAI as this enormous panacea or great evil on one side or the other. It is our view that good rules will increase investment in Canada and lower barriers abroad.

But a whole range of other issues are involved in ensuring inward investment and in fact in cutting barriers to investment for Canadian firms operating abroad. So it's not a panacea, but it's an important first step. The sub-nationals are an element of that that we hope can be dealt with.

The Chairman: Thank you, Mr. Carre.

Your time is up, Mr. Nault.

I have a question for both Mr. Knoerr and Ms. Heselton or Mr. Gregory in regard to your definition of investment.

Mr. Knoerr, you say:

The term “investment” must be tightly defined, not go beyond NAFTA and must not include “concessions,” “licenses,” “authorizations” and “permits”.

Ms. Heselton, you say it should go beyond that; it should be:

intellectual property rights

any other tangible and intangible property, and any related property rights such as leases, mortgages and liens.

There's a real difference of opinion here.

Mr. Knoerr, can you explain, first, why you think it could be tight, and Ms. Heselton or Mr. Gregory, why you think it should be so much broader.

Mr. Don Knoerr: Very simply put, first, I may point out that I think it's a fair statement that you couldn't go into government now and find anybody who has thoroughly analysed even NAFTA investment provisions in terms of the specific implications for the very wide variety of regulatory things we do in agriculture, many of which we think are useful, properly done, and should continue.

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On that background, as I say, we have not found any problems with NAFTA. We always reserve a right to identify them if they occur.

But there are a lot of activities in marketing structures in agriculture where permits, licences, and quotas are issued. Those, by their nature, have conditions imposed on them. Unfortunately, from my point of view, the performance requirements go beyond what you ask for. It doesn't just assure a foreign investor does not have any more performance requirement than is imposed on a Canadian; they impose a list much longer than the TRIMs agreement and in a different context, without the qualifiers that TRIMs have on their purpose. They impose that on all investors.

So on the one side you have a draft text that says, well, investment will include permits, licences, and so on, and then you have a draft text that begins to expand the number of performance requirements, for example, to produce a certain amount of goods. You know as well as I do, in a regulated marketing system, in order to retain the right to the quota right or the right to market at a given time, you have to live up to your commitments; you have to produce an amount of goods.

Always saying that to make sure this thing is manageable and we don't get caught up, and we also know what our American friends do...let's make sure we tightly define the one side, and unless somebody can demonstrate a clear and safe need, let's stick to what we know—at least until we thoroughly understand that—which is NAFTA, on the other side. We're just reinforcing the importance of our current mandate.

The other point we're trying to make is that you have a new context; you have new wordings—not only for the specific options we're identifying, but those are areas, exceptions, performance requirements, definitions, in which you have to make sure we have the equivalent effect in the MAI, in that context, with whatever wording is there, nothing beyond what we have in NAFTA.

The Chairman: Mr. Knoerr, what you're saying is you're worried that the Americans are going to use this to really attack marketing boards, or the Canadian Wheat Board, or—

Mr. Don Knoerr: That's a good example, but there are other things.

Responsible regulation...it could get into the environmental area. Again, we don't like to be overregulated; you know farmers as well as I do. On the other hand, we need a stable environment in which to operate. A certain amount of regulation is at times useful, and sometimes it's necessary. We just want to make sure it works sufficiently.

The Chairman: Ms. Heselton.

Ms. Norine Heselton: ITAC's comments were predicated on the new knowledge-based economy, not on the economy based on natural resources that built the country back in 1867.

As a result, we've argued for a broad definition of assets, because it's not just the bricks and mortar and the tangible property, but it's also the unique partnerships and alliances that typically are formed among companies. The issue of intellectual property protection is very important in order to develop markets and give companies assurances that their rights and obligations will be protected.

As to points of other sectors, where you're concerned about the rules that are being advanced now, then perhaps carve those sectors out in order to preserve and protect.

The Chairman: Colleagues, that brings an end to our time. You'll be happy to know that there are 18 votes to look forward to in a few minutes.

I want to thank the guests who came forward today. This committee will be continuing on and, as I said, following this issue through, not only to the point where we report but also afterwards, after the issue is talked about in January, and we may call on you again for your information.

Thank you, colleagues. This meeting is adjourned.