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37th PARLIAMENT, 1st SESSION

Standing Committee on Foreign Affairs and International Trade

EVIDENCE

CONTENTS

Thursday, June 6, 2002

0910

The Vice-Chair (Mr. Bernard Patry (Pierrefonds—Dollard, Lib.))

Ms. Francine Lalonde (Mercier, BQ)

The Vice-Chair (Mr. Bernard Patry)

0915

0920

The Vice-Chair (Mr. Bernard Patry)

Ms. Stacey Wilson-Forsberg (Policy Analyst, Canadian Foundation for the Americas (FOCAL))

0925

0930

The Vice-Chair (Mr. Bernard Patry)

Mr. Keith Martin (Esquimalt—Juan de Fuca, CA)

Prof. Laura MacDonald

The Vice-Chair (Mr. Bernard Patry)

Mr. Donald MacKay (Executive Director, Canadian Foundation for the Americas (FOCAL))

0935

The Vice-Chair (Mr. Bernard Patry)

Ms. Stacey Wilson-Forsberg

Mr. Donald MacKay

0940

The Vice-Chair (Mr. Bernard Patry)

Ms. Francine Lalonde

The Vice-Chair (Mr. Bernard Patry)

Prof. Laura MacDonald

0945

Ms. Francine Lalonde

Prof. Laura MacDonald

0950

The Vice-Chair (Mr. Bernard Patry)

Ms. Stacey Wilson-Forsberg

The Vice-Chair (Mr. Bernard Patry)

Mr. Mac Harb (Ottawa Centre, Lib.)

Mr. Donald MacKay

0955

The Vice-Chair (Mr. Bernard Patry)

Prof. Laura MacDonald

The Vice-Chair (Mr. Bernard Patry)

Ms. Stacey Wilson-Forsberg

1000

The Vice-Chair (Mr. Bernard Patry)

Mr. Donald MacKay

The Vice-Chair (Mr. Bernard Patry)

Mr. Keith Martin

Mr. Donald MacKay

Mr. Keith Martin

Mr. Donald MacKay

1005

The Vice-Chair (Mr. Bernard Patry)

Prof. Laura MacDonald

The Vice-Chair (Mr. Bernard Patry)

Mr. Pierre Paquette (Joliette, BQ)

1010

The Vice-Chair (Mr. Bernard Patry)

Mr. Mac Harb

Mr. Pierre Paquette

The Vice-Chair (Mr. Bernard Patry)

Mr. Mac Harb

The Vice-Chair (Mr. Bernard Patry)

Mr. Pierre Paquette

Mr. Mac Harb

The Vice-Chair (Mr. Bernard Patry)

Ms. Francine Lalonde

Mr. Mac Harb

The Vice-Chair (Mr. Bernard Patry)

Ms. Francine Lalonde

Mr. Mac Harb

Ms. Francine Lalonde

The Vice-Chair (Mr. Bernard Patry)

Mr. Keith Martin

The Vice-Chair (Mr. Bernard Patry)

Mr. Keith Martin

The Vice-Chair (Mr. Bernard Patry)

Mr. Keith Martin

1015

The Vice-Chair (Mr. Bernard Patry)

Mr. Pierre Paquette

The Vice-Chair (Mr. Bernard Patry)

Ms. Stacey Wilson-Forsberg

The Vice-Chair (Mr. Bernard Patry)

Prof. Laura MacDonald

1020

The Vice-Chair (Mr. Bernard Patry)

Mr. Mark Eyking (Sydney—Victoria, Lib.)

Mr. Donald MacKay

1025

The Vice-Chair (Mr. Bernard Patry)

Mr. Day

1030

The Vice-Chair (Mr. Bernard Patry)

Mr. Stockwell Day

The Vice-Chair (Mr. Bernard Patry)

Prof. Laura MacDonald

Mr. Day

Mr. Patry

Mr. Donald MacKay

The Vice-Chair (Mr. Bernard Patry)

Mr. George Lindsey (Chair, Nuclear Missile Defence Study Group, Canadian Institute of International Affairs, National Capital Branch)

1050

1055

1100

1105

The Vice-Chair (Mr. Bernard Patry)

Mr. Stockwell Day

1110

The Vice-Chair (Mr. Bernard Patry)

Mr. George Lindsey

The Vice-Chair (Mr. Bernard Patry)

Ms. Francine Lalonde

Mr. George Lindsey

1115

Mr. F.R. Cleminson (Member, Nuclear Missile Defence Study Group, Canadian Institute of International Affairs, National Capital Branch)

The Vice-Chair (Mr. Bernard Patry)

Ms. Diane Marleau (Sudbury, Lib.)

1120

The Vice-Chair (Mr. Bernard Patry)

Mr. George Lindsey

Ms. Diane Marleau

The Vice-Chair (Mr. Bernard Patry)

Mr. George Lindsey

The Vice-Chair (Mr. Bernard Patry)

Mr. Keith Martin

1125

Mr. George Lindsey

The Vice-Chair (Mr. Bernard Patry)

Mr. George Lindsey

1130

Mr. Keith Martin

Mr. George Lindsey

The Vice-Chair (Mr. Bernard Patry)

Mr. F.R. Cleminson

1135

The Vice-Chair (Mr. Bernard Patry)

Ms. Aileen Carroll (Barrie—Simcoe—Bradford, Lib.)

1140

The Vice-Chair (Mr. Bernard Patry)

Mr. F.R. Cleminson

Ms. Aileen Carroll

1145

Mr. F.R. Cleminson

Mr. Day

Mr. F.R. Cleminson

Mr. Day

Mr. F.R. Cleminson

Ms. Aileen Carroll

Mr. F.R. Cleminson

The Vice-Chair (Mr. Bernard Patry)

Mr. George Lindsey

The Vice-Chair (Mr. Bernard Patry)

CANADA

Standing Committee on Foreign Affairs and International Trade

NUMBER 088

1st SESSION

37th PARLIAMENT

EVIDENCE

Thursday, June 6, 2002

[Recorded by Electronic Apparatus]

¿ (0910)

[Translation]

The Vice-Chair (Mr. Bernard Patry (Pierrefonds—Dollard, Lib.)): With your permission, we will start.

[English]

I just want to let you know that first, we have as the order of the day the 12th report of the Subcommittee on International Trade. We're going to discuss it when we have a quorum so we can adopt that report.

[Translation]

Ms. Francine Lalonde (Mercier, BQ): Excuse me, Mr. Chair. Do you have any idea at what time we will have a quorum?

The Vice-Chair (Mr. Bernard Patry): Thank you for your excellent question, Madam, but I have no idea.

[English]

For a quorum there have to be 10 of us, and there are six now.

We're going to start with our witnesses, and this morning we're very pleased to have, from Carleton University, Ms. Laura MacDonald, associate professor in the Department of Political Science and director of the Centre on North American Politics and Society. Welcome, Madam MacDonald. I understand that you have some remarks to make at the beginning. The floor is yours. We await your presentation, and after that we'll have our question and answer period.

Professor Laura MacDonald (Associate Professor, Department of Political Science; Director, Centre for North American Politics and Society, Carleton University): Thank you, Mr. Chairperson and honourable members of Parliament. I would like to thank you for the invitation to appear before the committee to discuss this important issue.

Almost two years ago Carleton established a research centre to look at the social, political, and cultural dimensions of the relationship between the three countries of North America. That's the centre I direct, the Centre on North American Politics and Society. We felt that while the economic side of the relationship had received extensive, although perhaps not sufficient, analysis, this other, softer side of the emerging North American region had not received adequate attention. Since then we have held several conferences and organized numerous round tables, which have received widespread attendance and interest from academics, government, civil society, and the public at large. As director of the centre, I've had the fascinating opportunity to witness the evolution of the debate about Canada's role in North America over the last couple of years.

North America is a region that has sprung up without much thought having been put into its future outlines, its architecture, if you will. The events of September 11 require that we think much more carefully about where North America is going and what Canada's role within it will be. Prior to September 11 there was concern in Canada about the apparent decline of Canada's relevance in Washington, as a result of the rise in the power of the U.S. Southwest, Latino voters, and the growing prominence of Mexico in the United States foreign policy world view. What we seemed to be seeing was the decline of the special relationship and the creation of the uneasy North American partnership. I say uneasy because of the apparent mutual jealousy of the two subordinate partners, Canada and Mexico, as rivals for U.S. attention and affections. As we know, both Canada and Mexico entered into free trade agreements with the United States in order to gain special access to the U.S. economy, and they weren't eager to share those benefits with each other. After September 11 we've seen the return of U.S. attention to its northern ally, but we seem to be getting attention for the wrong reasons, because of the perception in the United States of Canada as a haven for terrorists. These perceptions have profound implications for Canadians.

As you know, the immediate post-September 11 response from Washington was to put the border on high alert, resulting in huge delays. The U.S. also placed armed officials at what was previously the world's longest undefended border. Peter Andreas, an expert on the U.S.-Mexico border, calls this the Mexicanization of the Canada-U.S. border, something that, of course, Canadians and Canadian policy-makers are very concerned about.

Canadian officials responded adeptly by promoting a Canadian response based on policies that had been developed under the CUSP--Canada-U.S. Partnership--process, which had been moving very slowly prior to September 11. These policies involved promotion of a North American security perimeter or a zone of confidence based on a smart border. If these measures are adopted, border controls will move away from the geographic line between the two countries to a wide range of sites inside and outside continental North America. Proponents hope to achieve what still seem to me mutually incompatible goals, to make the border disappear for the movement of what seem to be desirable goods, capital, and people, and to reinforce controls over the movement of undesirable goods, capital, and people. This option represents what might be called the Europeanization of the North American border regime, as opposed to the Mexicanization of the Canada-U.S. border. It has many appealing features. We should note, however, that there are continued debates in Washington about how to balance trade and security and which of these two options is more desirable.

¿ (0915)

On the Canadian side these measures correspond to the demands of border residents and the business community. The business community has been very forceful since September 11 in promoting these measures. However, some of these measures are highly controversial. There are widespread concerns that they entail the gradual harmonization or convergence of a wide range of domestic policies with U.S. policies, and there are concerns about their implications for sovereignty. Some are also concerned that increased focus in the United States on defence of the homeland, however that may be defined in the United States--I'm not precisely sure about that--and creation of a Northern Command will require unacceptable sacrifices of Canadian sovereignty and limit Canada's foreign policy autonomy. At the same time, Canadians have legitimate concerns about the apparent re-emergence of U.S. protectionism. There have been, obviously, tussles over softwood lumber, steel, agriculture, and problems are emerging in the auto industry.

So Canada's room for manoeuvre seems very narrow in this new emerging Fortress North America, if you will. Increasingly, it is clear that our future, whether we like it or not, lies in North America. But what kind of North America?

As I've suggested, Canada's commitment to North America and a truly trilateral relationship among the three member countries prior to September 11 was rather tepid. The importance of the bilateral U.S.-Canada relationship was reinforced after September 11, both in Canada and in the United States. Nevertheless, I would argue that this is a short-term perspective, the idea that we can do a sort of two-track approach and focus on our bilateral relationship, leaving out Mexico. I would argue that we're not going to get our old special relationship back with the United States, however much we might want it. As we know--and I think Stacey will say more about this later--Mexico will soon be the United States' largest trading partner. I would argue that it still has more prominence with Americans generally and with policy-makers in Washington than Canada. When people think about North America in the U.S., they're largely thinking about Mexico.

One sign of what I would argue is an inevitable trilateralization of previously bilateral concerns is the fact that Mexico and the United States signed a smart border accord, modelled on the Canada-U.S. one, albeit a more limited one, after Canada and the United States signed their smart border accord. So while Canada may naturally put most of its attention on a relationship with the United States, it would be short-sighted not to recognize that the United States will want to treat its two borders and two partners somewhat symmetrically. Indeed, politically it's very difficult for policy-makers in Washington to argue that they have to treat Canada differently from Mexico.

From a more positive perspective, Mexico does represent a possible useful counterweight to the United States, if we can overlook our differences and tendency towards competition and get to know each other better. Mexicans share Canadians' concerns about sovereignty, and we have many commonalities in our foreign policy perspectives. However, we need to recognize that North America is a highly asymmetrical region, and to date there has been insufficient attention to the economic and other inequalities that exist between and within nations of the region, and that may, in fact, have been intensified by the neo-liberal model of integration that has been pursued so far in North America.

Therefore, I conclude with the following brief recommendations.

First, Minister Graham has announced that DFAIT will carry out a foreign policy review. Obviously, unlike the foreign policy review that occurred under Prime Minister Trudeau many years ago, this review will have to focus heavily on our relationship with the United States and our role in North America. As well, I would argue that this process has to include extensive input from civil society, in addition to the business community. As I have written elsewhere, earlier stages in the process of North American integration were characterized by inadequate representation of a broad range of social sectors, resulting in counterproductive hostility and confrontation between government, business, and civil society. So I believe any further step towards integration needs to be accompanied by a constructive process of dialogue, such as, indeed, this committee has begun, and may even require re-examination of some aspects of NAFTA, like chapter 11, a real sore point with most elements of civil society. As well, Canada should support the development of ties between members of diverse sectors of civil society, like women and indigenous peoples, in the three countries.

¿ (0920)

Second, while economic integration has proceeded extremely rapidly, in my view, there has been inadequate attention to possible mechanisms that can be taken both nationally and at the level of North America to address the social and economic disparities and the democratic deficit that have accompanied integration. Such measures might include stronger enforcement mechanisms for the Commission for Environmental Cooperation, the North American Agreement on Labour Cooperation, and perhaps a reformed North American Development Bank, with a broader mandate and more funding.

Third, I recommend that we revisit the policy decision not to provide economic assistance to Mexico through CIDA because it's a middle-income developing country. The fact that Canada did provide financial assistance to Mexico after it went through its peso crisis shows that Mexico is in a special category for Canada and is of special interest for the well-being of Canadians. In addition, while the per capita income levels in Mexico may be relatively good, the profound and growing inequities in Mexican society mean there are large numbers of Mexicans living in poverty, particularly indigenous peoples, peasants, and women, who need assistance.

Finally, I would encourage the government to provide more support for research and education in the growing area of North American studies. We recently held a conference at Carleton discussing the creation of a network of people studying North America, because to date there hasn't been much substantive academic linkage between people who study the three countries of the region.

Thank you very much, Mr. Chairman.

The Vice-Chair (Mr. Bernard Patry): Thank you very much, Ms. MacDonald.

Now we will go to the Canadian Foundation for the Americas, FOCAL. We have the executive director, Mr. Donald MacKay, and Ms. Stacey Wilson-Forsberg, policy analyst. I think Ms. Wilson-Forsberg will do the remarks. Please.

Ms. Stacey Wilson-Forsberg (Policy Analyst, Canadian Foundation for the Americas (FOCAL)): Honourable members of Parliament, we thank you for the opportunity to appear before your committee today to discuss the North American relationship, and in particular Canada and Mexico's position within this relationship. We are very pleased that your committee has taken on the challenge of studying the theme of North American integration and that public hearings have been held throughout Canada.

As you may be aware, FOCAL is an independent organization dedicated to deepening and strengthening Canada's relations with countries in Latin America and the Caribbean through policy discussion, analysis, and the publication of research papers. FOCAL's mission is to develop a greater understanding of important hemispheric issues and to build a stronger community of the Americas. The study of an emerging North American community is a developing program area at FOCAL. FOCAL has been invited to participate in policy discussions and dialogues either already in effect or newly created.

We believe that while there are a number of individuals and institutions well experienced in many of the issues at the centre of the discussion on North America, the evident weakness within Canada remains the lack of knowledge about Mexico. It is perhaps partly because of this knowledge gap that it has been so difficult to factor Mexico into our discussions about North America. For this reason, a two-speed model of integration is gaining strength in Canada, and we believe this model could be particularly worrisome. Proponents of the two-speed model argue that Canada and the United States should proceed to increase integration bilaterally, with an invitation to Mexico to join once on a solid path to modernization. Simply put, what can be done between the United States and Canada now cannot yet be done with Mexico.

Indeed, Mexico's path to modernization is a long and onerous one. Mexico is presently in a period of political democratic consolidation. The reform-minded government must deal with outdated and undemocratic institutions and learn to negotiate with Congress and other relevant political actors. Corruption is still a major problem. The country is in dire need of judicial reform, and powerful drug cartels have wreaked havoc on Mexico's law enforcement institutions. Moreover, as Laura MacDonald mentioned, one half of the country's 100 million people live in poverty, income distribution and development are extremely uneven, and the country suffers from high underemployment, low levels of education among the poor, and an extremely low tax collection rate.

On the other hand, we have to remind ourselves that the Mexican peso has grown strong over the past seven years, and the economy has remained highly stable, because of sound economic management. Much of the other half of Mexico's population, some 50 million people, which is bigger than Canada's population, is young, urban, and bilingual, with a North American or international mindset. It is becoming a highly educated, innovative, and industrious workforce with a genuine desire to see Mexico rise to its potential. While still a country of haves and have-nots, Mexico is moving full force ahead in industry, manufacturing, and technology. It is skipping most of the 20th century technologically, and could become an economic tiger within the next twenty years. This would create an enormous consumer market for U.S. and Canadian products and services, as well as tremendous opportunities for partnerships and cooperation on a number of issues.

Canada and the United States need to give serious thought to where Mexico fits into this North American strategy. Ignoring the country at this particular moment in its history could prove to be a big mistake. Yet Canadians cannot be convinced of the value of working with Mexico if they know little about that country. Since NAFTA was implemented in 1994, the broadly based fear of Canadians that their jobs would be displaced to Mexico has been largely refuted. Numerous polls show that the Canadian public has lost its economic fear of Mexico, but that fear has not been replaced by anything approaching a broad-based understanding of Mexico, particularly in the area of social and political realities.

¿ (0925)

Economically, NAFTA has injected a tremendous amount of new energy into the Canada-Mexico relationship. There is, however, tremendous opportunity for more trade and investment between the two countries. Canadian companies need to develop a long-term strategy when setting up business in Mexico, and they cannot go for the purpose of chasing cheap labour. They need to be dedicated and not pack up and leave at times of political and economic instability.

At the ministerial level, Canada-Mexico political linkages are now informal and natural, and a book-length inventory of bilateral cooperation initiatives between Canada and Mexico could be composed. However, while daily interactions occur between some federal and provincial government departments in Canada and Mexico, most suffer from a lack of understanding or an incomplete understanding of each other. This is partly due to incomplete networks and possibly cultural, but certainly linguistic, gaps. How does one begin to increase interest and knowledge about this country within the Canadian government, the private sector, and Canadian society at large? One objective of FOCAL's work on North America is to make small strides in this area.

In the last week of February FOCAL, along with Laura MacDonald over at Carleton University and the North-South Institute, took part in a series of events in Ottawa that were designed to discuss Mexico's realities and the country's perspective on North American integration. The FOCAL round table brought together a small group of Mexican policy experts and Canadian policy-makers and researchers from a number of federal government departments. Participants discussed emerging issues within North American relations, including institutions, trade and investment, sustainable development and environment, border management, and security. Participants concluded that the two countries have much to learn from one another, especially with regard to their respective relations with the United States. Participants also stressed that while Canadian and Mexican policy-makers and researchers may concur on many issues, they often disagree on the direction North American relations should take in the long term and on the necessary steps to get there.

Along with more opportunities for debate and dialogue, FOCAL recommends that more interchanges and study tours be arranged for Canadian and Mexican working level personnel, and more opportunities should be provided for these individuals to interact with their counterparts. A stronger bilateral relationship should also be built between the non-governmental sectors of Canada and Mexico. This is particularly true of the academic and policy research areas. There are relatively few experts on Mexico in Canada, and even fewer experts on Canada in Mexico. Not unlike the case in the government sector, more interchanges between these individuals would be beneficial. In addition, Canadian and Mexican research on the opportunities and challenges involved in increased trilateral cooperation between NAFTA partners should be encouraged.

To conclude, there are many challenges to deeper North American engagement and the eventual building of a North American community. The unrealized potential of the Canada-Mexico bilateral relationship can be overcome with a combination of political will and the engagement of the private sectors and wider societies of both countries.

Thank you.

¿ (0930)

[Translation]

The Vice-Chair (Mr. Bernard Patry): Thank you very much.

[English]

Thank you very much, Ms. Wilson-Forsberg.

Now we're going start the questioning. Mr. Martin.

Mr. Keith Martin (Esquimalt—Juan de Fuca, CA): Thank you very much, Mr. Chair.

Thank you, all, for being here today.

Professor MacDonald, in the construction of a North American community one of our problems, as all of us know, is developing mechanisms to resolve differences. I would submit to you that our current dispute resolution mechanisms, particularly with regard to trade, are inadequate. Do you have any ideas on how we could create a mechanism that would resolve our differences over trade in a better way? Is there a commission you'd recommend based on two or three countries where we could actually be proactive in preventing some of these difficulties? That would be a high-level commission where we could share ideas on issues of common interest, drugs, social program renewal, economics, competitiveness.

My second question is for Ms. Wilson-Forsberg. You mentioned the illicit drug trade, which you hear much more about when you're south of the United States in Central and South America. Do you think, for this problem, which is wreaking havoc on so many countries in this hemisphere, it would be advisable for Canada to approach other nations in this hemisphere, perhaps through the OAS, to develop the trans-hemispheric adoption of import-export permits for the precursor chemicals used in the manufacture of illicit drugs? Should other nations adopt RICO-like amendments, so that we can have more powers to go after organized crime? Should we put greater effort into removing trade barriers, particularly for middle to developing countries? I'd cite Colombia as an example.

Prof. Laura MacDonald: I'm not an expert on trade issues per se, but I would respond to the question about a dispute resolution mechanism by saying I'm not terribly optimistic that we're going to get a better mechanism in the North American context, just because the United States is so dominant in North America, it's the hegemon of the region, and obviously doesn't want to set up more adequate mechanisms or include issues like softwood lumber that are very politically difficult. So I would tend to think, although perhaps FOCAL wants to say something about this, it might be better to rely on WTO mechanisms, rather than expecting a better mechanism in North America. I think we have to be very much aware of that power asymmetry, as I said, within the region.

On the question of a North American commission, which I believe is something Robert Pastor, for example, who spoke before the committee, has recommended, I think it is not a bad idea to set up some kind of exploratory, non-official commission of experts and stakeholders from a broad variety of backgrounds to look at these issues, because I don't think they have been looked at seriously before. I would just urge that if Canada decides to enter into talks with our partners on this issue, we make sure the representation of such a commission is truly wide and represents all sectors of Canadian society.

The Vice-Chair (Mr. Bernard Patry): Mr. MacKay.

Mr. Donald MacKay (Executive Director, Canadian Foundation for the Americas (FOCAL)): I'd like to comment on the dispute settlement--and good morning, ladies and gentlemen.

Prior to my taking up my current role at FOCAL, I was a serving officer in the Canadian foreign service and was one of the NAFTA negotiators, in point of fact, a decade ago. With dispute settlement, Dr. Martin, there are two key elements you have to bear in mind. First, if the subtext of your question refers to softwood lumber, and I suspect this is high in everybody's mind, one needs to recall that this is an issue that, in one form or another, has bedevilled Canada-U.S. relations since the 1870s. It's a highly complex issue that affects the economic rights of large and politically powerful sectors in both countries. If you're trying to put on top of that a procedure or a mechanism, it would have to at some point take into account the fact that you're dealing with extremely powerful and sensitive political interests in the countries.

I think the NAFTA, the chapter 19 process in particular, shows that the two countries, and to extend it to Mexico, the three countries, were willing to give up a bit of sovereignty. That's the second point that needs to be borne in mind, that when discussing dispute settlement, what you're essentially saying is that governments or countries are voluntarily giving up a small portion of their sovereignty in respect of their ability to make decisions internally unilaterally. Chapter 19 multilateralized that, if you will, to the three parties with binational panels.

No such mechanism with respect to anti-dumping and countervailing duties exists in the WTO. In the Uruguay round of negotiations there was an updating of the dispute settlement mechanism within the WTO, but with the timelines, cost factors, all of those sorts of categories, if you match them out between the NAFTA mechanism and the WTO mechanism, you will find that the NAFTA mechanism is more rapid. Even though it is, to many parties, too slow, it is faster than anything that exists out there at the multilateral level. It can obviously be improved, but that requires a movement on the political side. My reading of the U.S. Congress and the United States Senate at the moment is that they are not predisposed in that particular direction. They never really have been, and I think it was a unique window of opportunity in the early 1990s, late 1980s, where political philosophies allowed something like chapter 19 to come forward.

I have one last point. You'll perhaps be aware that there have been a number of parties within the United States who have attempted to raise a challenge to the constitutionality of chapter 19 within the U.S. system. All such attempts have failed to date, but the attempt itself underscores the heightened sense of protecting sovereignty within the United States.

¿ (0935)

The Vice-Chair (Mr. Bernard Patry): Thank you.

Now to the second question regarding the drug trade.

Ms. Stacey Wilson-Forsberg: I'll start on the Mexico-United States aspect of it, then I think I'll pass it over to Mr. MacKay to speak a little about the rest of the hemisphere. FOCAL does do some work on Colombia as well.

With the consumption and demand sides of the drug problem, it may be going very slowly, but President Bush in the United States did recognize for the first time that demand is an issue. Mexico has been, at least temporarily, left out of the certification process that goes on every year by the United States.

As for the rest of the hemisphere...

Mr. Donald MacKay: The OAS has worked on this, and I had the opportunity to work within the OAS for five years. Secretary General César Gaviria is the former president of Colombia and the president who was in office at the time Pablo Escobar was taken down, as well as some of the Medellín cartels. The OAS and Secretary General Gaviria certainly understand the corrosive nature of the drug business and the effect it has on society. In Colombia alone it has almost resulted in the complete disintegration of the state and many of the mechanisms of government through assassinations, threats, harassment, that sort of stuff.

As to the long-term answer, quite honestly, I have no particular answers. The consumption side is certainly one of them. President Clinton was interested in instituting alternative opportunities for inner-city youth; midnight basketball, as it was termed, was one. There are a number of community-based, municipally based programs that I think can go a long way in this regard. But there's no doubt, where's there's demand, there will be supply. It's an extremely profitable business, I'm given to understand. The economics will continue to rule to a large extent on that front.

¿ (0940)

The Vice-Chair (Mr. Bernard Patry): Thank you.

Ms. Lalonde.

[Translation]

Ms. Francine Lalonde: Thank you. Thank you both for your presentations.

First of all, Ms. MacDonald, thank you for your recommendations. What I understand is that you favour a trilateral relationship. How do you think you will be able to better convince Canadians that this is the way to go? This study we have undertaken has led us to meet many people. We have gone to the United States and Mexico. The Mexicans are very interested in a real trilateral relationship, and therefore, closer relations with Canada as well. In Canada, however, there is a constant temptation to keep to a privileged relationship that we can continue with the United States.

What Ms. Wilson-Forsberg said was important as well. It is essential that we get to know Mexico better. Those who think that Mexico is an underdeveloped country and that its industries cannot compete with those in Canada and Quebec are truly deceiving themselves, and can suffer the consequences, as well as Quebec and Canada. How can the message be better presented that there should be a true trilateral relationship and even in certain cases a privileged relationship with Mexico, to be able perhaps to better persuade the United States on a range of issues?

One of these issues is the poverty in Mexico. The leader of the Bloc québécois, Gilles Duceppe, and I have met with representatives of all sectors of society to discuss three issues. For now, I will talk to you about the Social and Structural Fund, which President Fox presented in August 2000, and which was based on what the European Union is doing.

The European Union set this up before admitting certain countries--obviously, it was in a common market--to ensure that those countries not only have low salaries and transportation problems, but could be a true market as well. So it didn't do it just for charity.

How can we put forth this idea of a true trilateral relationship? First, do you agree with a Social and Structural Fund, and how can this be promoted?

Ms. Wilson-Forsberg, you did not speak about the role of Parliamentarians. It seems to me that in closer relationships that put pressure on societies, it is important to have closer relations between Parliamentarians. I must say that it was Mr. Berruga, the Foreign Affairs and International Trade Deputy Minister, who first suggested this when we met with him. I would like to know what you think about a Social and Structural Fund, and also how can we convince Canadians.

The Vice-Chair (Mr. Bernard Patry): Ms. MacDonald.

[English]

Prof. Laura MacDonald: Thank you very much for the excellent questions.

If I may, I would like to add to my earlier response. I think another excellent idea that's been proposed by Robert Pastor is to somehow trilateralize the meetings of the parliamentarians, the U.S.-Canada meetings and the Mexico-Canada meetings. I don't see any reason they shouldn't at least overlap. I think that would be a really beneficial approach to bringing parliamentarians together, who, indeed, could play a really important role in the broader process of convincing Canadians about the need to work with Mexico.

On that issue of how we convince Canadians we are really partners with Mexicans, this, of course, is a very difficult and long-term process. I think there's a long legacy in Canada of paternalism, or even racism, to some extent, towards Mexicans. When I start out my classes on North American politics with my students and ask them about Mexico, they think of beer and tortillas and beaches. That's it. That's the only image they have of Mexico. By the end of the class I find they are very interested in Mexico, perhaps even more interested in Mexico than in the United States. Maybe that's because of my teaching style.

Once Canadians know more about Mexicans, I think they will realize that we do have a lot of interests in common. There's incredible cultural richness, intellectual diversity, ideological diversity in Mexico. It's a fascinating place for Canadians once they have the opportunity to learn about it. Unfortunately, up till now there has been very little interchange between the two countries. If you go back to the 1980s even, there were hardly any Mexican experts in Canada, as Stacey said. Hardly anyone was interested in Mexico. We had this big mountain between us, the United States, and we couldn't peer over that big mountain to see each other. One of the most beneficial side effects of the creation of NAFTA is the bringing of us together, at least in that institution, but we have a long way to go to make that relationship truly one of equals.

So how do we do that? I think very basic, long-term mechanisms are student exchanges. In fact, there are trilateral student exchanges between universities now in the three countries. Programs like that should be expanded, and Carleton does participate in one such program. It is really good for our students to get to go to Mexico or the United States to learn more about those countries.

We should think about--I know this isn't really within your purview as Parliament--ways of reforming curricula at the high school level, so that students learn about Mexico as a partner early on in their academic careers. I think there was an unhealthy tendency within the government earlier to encourage this view of Canada as competing with Mexico. When President Fox came to power, and then George Bush was elected, there was this silly competition about who would get to be first to meet George Bush. I thought this was really counterproductive, unhelpful, silly, and undignified. We have to get beyond that stage. The government has to not feed into that tendency to view Mexico as an inferior competitor, but rather look for ways to promote the idea to Canadians that Mexico is indeed a developing country. It's moving ahead and has a lot to offer us as Canadians.

We could also think about ways we could work together on concrete foreign policy measures we both are committed to, such as regularizing of Cuba's position in the hemisphere or environmental issues, or others Canada and Mexico can work on bilaterally, things we both have an interest in, such as support of multilateral institutions, which is not exactly a strong interest in the United States. If Canada and Mexico can find ways to work together on those, we could be seen as partners publicly.

¿ (0945)

[Translation]

Ms. Francine Lalonde: And what do you think about a Social and Structural Fund?

[English]

Prof. Laura MacDonald: As to structural funds, I think this is a good idea. My only concern about the way it has been approached in Mexico is that there is a tendency to approach it as a top-down funding mechanism that's going to basically fund highways and will not necessarily go to the places where the poorest people live. I would advocate, if such a mechanism is going to be undertaken, having more of a role for, say, non-governmental organizations, more bottom-up, participatory development approaches, as indeed have been pursued within funds at border regions for environmental programs. Those have successfully included NGOs and communities and coming up with ideas for development. There is an unfortunate tendency in Mexico, because of its long history of a strong, statist, centralized, and authoritarian system, to have a top-down approach. I think we need to work with Mexicans to develop a more bottom-up, gender-equitable development system.

¿ (0950)

The Vice-Chair (Mr. Bernard Patry): Thank you.

Ms. Wilson-Forsberg.

Ms. Stacey Wilson-Forsberg: I'm also going to start with this development or social fund idea. It has a number of names now; I think the newest name is finance for development mechanism. They've got away from the term development fund. The way it was originally presented by Mexico, it was simply a fund where Canada, the United States, and Mexico would put money in, administered by either the North American Development Bank, which is just not going to happen, or the Inter-American Development Bank in Washington.

First, this is a long-term fund. We're talking 20 or 30 years down the road. As far as convincing Canada of the need to create this kind of fund is concerned, the way it's been articulated by Mexico, it hasn't been articulated. There have been no details as to how this fund would work, what it would consist of. It's been about 18 months now since we first heard about this fund, and we've heard no details at all from Mexico or from any of the other people discussing North American integration. Until these details are articulated, I don't think this development fund approach can even be discussed. It's very difficult to see Canada's interest or stake in this development fund idea. In the United States it's a little more obvious, with the migration problem.

Also, the United States has looked at an alternative to this fund, the Partnership for Prosperity, which I think Laura MacDonald referred to a bit. It deals more with private sector investment infrastructure. That idea could be expanded to include more approaches. Canada, I believe Foreign Affairs, is watching this Partnership for Prosperity fund, seeing how it works, and looking at perhaps Canada becoming involved in it in the future.

The Vice-Chair (Mr. Bernard Patry): We're going to go now to Mr. Harb.

Mr. Mac Harb (Ottawa Centre, Lib.): Thank you for your excellent presentation. I have a couple of questions, one dealing with trade. Probably Mr. MacKay could answer that one, and both Laura and Stacey could comment on it if they choose to.

It's this whole question of retaliation and the mechanism that exists for trade disputes. I'm just trying to figure a way out of this. While we allow countries to retaliate under the NAFTA provisions, the WTO provisions, or whatever other provisions, it often becomes really counterproductive. When you impose a tariff on a product that is consumer-oriented, you are hurting your own consumers. I wanted to ask you about the merit of trying to go away completely from that approach and move into something where you have ease of financial compensation or a country's ability to go in and force the other country that committed the offence, in a sense, to open other markets for that specific country and reduce tariffs. It would give you more market access, rather than allowing you to punish. I would be interested in your thoughts on that.

Maybe Laura and Stacey also could comment on the other aspect of my question. This whole common currency component has been floating around. We have seen what happened with Argentina. Is that realistic in light of all the different protectionist measures that are taking place, the different challenges and the disparity that exists between different countries?

Mr. Donald MacKay: The retaliation question is one that has bedevilled the Canadian government in particular, and not simply on a bilateral basis vis-à-vis the United States. The WTO panel, with respect to aircraft, authorized Canada to retaliate against measures taken by Brazil, for example, up to a certain level. WTO panels will always be specific that measures are to be taken up to a certain level. Within the Department of Finance or the Department of Foreign Affairs, you then sit down and go through the list of imported products. You look at citrus and say, okay, if we impose a tariff on citrus, we're going to have the wholesalers and grocery store associations mad at the government because we've simply increased their costs. So you go further down the list to sugar, and then down to textiles or what have you. The retaliation method for a country as trade-oriented as Canada, sir, inevitably winds up hurting us more than it helps us, which is one reason you seldom see this mechanism actually applied in any retaliation measures.

The other side of the equation you mentioned, increased market access as a form of compensation, is one also used in the WTO under what's known as article 28 of the original GATT agreement. The difficulty we have applying that in a free trade environment is that we've already reduced all the tariffs. No more tariffs exist between Canada and the United States; there haven't been any for the last five years. So if the U.S. did something we would be retaliating against, and rather than retaliating, we were to seek additional compensation, there's really nothing left to pay, in that sense. It does present a conundrum.

The approach I think would be most effective is that between the political leaders of the countries involved. The officials will always take care of all the technical stuff, but it's the leaders at the political level, either the cabinet or the head of government level, who can go to the other party and say, George, what your country is doing here is giving me a real problem at home. Is there something we can do? A signal from the top down by leaders at the political level to their officials is a remarkably powerful instrument. If the President and the Prime Minister say on a particular issue, we have decided that you folks in the bureaucracy need to fix this and you need to fix this by date x, that kind of message can lead to some of these things being dealt with.

¿ (0955)

The Vice-Chair (Mr. Bernard Patry): Ms. MacDonald.

Prof. Laura MacDonald: On the monetary union, I think this isn't a realistic or desirable option at this time. First, it's not a necessary option, because we have de facto dollarization of international trade. International trade within the region, and indeed elsewhere, is already carried out in U.S. dollars, so we don't need to move to a shared currency. But more importantly, I think it would involve an unacceptable diminution of Canadian sovereignty. Canada would not get any decision-making power in any kind of new currency. I think having a floating currency has served Canada relatively well up until now.

Of course, we do have the problem of the low Canadian dollar, which, hopefully, is improving, but I think that has to be addressed through taking measures that address the lower levels of Canadian productivity. I don't think we can solve the problem just by arbitrarily saying our dollar is worth more, which is what advocates of this option want to do. We have to attack the deeper underlying problems that lead to a low dollar over the long run, and that's a very difficult task.

The Vice-Chair (Mr. Bernard Patry): Ms. Wilson-Forsberg.

Ms. Stacey Wilson-Forsberg: Actually, I agree with that. Last summer I remember reading a lot of editorials and debates in Canadian newspapers on common currency between the United States and Canada. With the discussions on North American integration that have been happening throughout the last 18 months with various non-governmental actors, common currency really isn't being discussed. I think people may view it as a non-starter. It doesn't seem to be part of the integration issues people are discussing.

Also, if any thought were to be given to any kind of common currency, I think the countries in Latin America that have adopted the American dollar should be studied very closely. That's Ecuador, El Salvador, and Panama. Argentina actually didn't adopt the dollar; it pegged its currency to the dollar.

À (1000)

The Vice-Chair (Mr. Bernard Patry): Mr. MacKay.

Mr. Donald MacKay: As just one additional point, currency essentially has two functions: one is as the store of value, and the other is as a medium of exchange. In the European Union all the individual currencies worked wonderfully as both store of value and medium of exchange. The move to the common currency simply reduced transaction costs, the cost of changing French francs to German Deutschmarks, to Belgian francs, and so on. With respect to Argentina, Ecuador, and some of the other countries that have had difficulties, what you saw there was that the first condition, money as a store of value, ceased to exist. Public confidence in the currency was completely lost. That's where you run into difficulties.

I don't sense that in Canada or Mexico, in the North American geographic space, the individual currencies have given up those particular factors. As Professor MacDonald said correctly, a lot of the very large companies, even if only internally, are pricing their goods and services and their input costs in U.S. dollars, because that's the international currency. So you have effective dollarization where it's necessary. Where it's not necessary, if it isn't broken, don't attempt to fix it.

The Vice-Chair (Mr. Bernard Patry): Thank you very much.

Now we're going to five minutes of questions and answers--short questions and short answers, please.

Mr. Martin.

Mr. Keith Martin: One of our challenges is to engage U.S. policy-makers in a more effective fashion. Mr. MacKay, do you have any ideas on ways we can better engage our counterparts down in the United States? We're basically invisible down there. I'd like to hear your views on what we could develop, what mechanism you would suggest so we could better engage our counterparts down there.

Second, Professor Barry in Calgary testified that “we should realize that the more we integrate with the United States, the less visible we may become elsewhere.” So I'm wondering whether, from your perspective or Professor MacDonald's, you have identified any foreign policy, trade policy, or defence policy initiatives Canada could pursue that would advance our interests, as well as strengthen our hand in dealing with the United States bilaterally.

Mr. Donald MacKay: As to engaging the Americans, your colleague Madame Lalonde alluded to this example earlier in a question related to parliamentary exchanges and parliamentarians, elected leaders, getting to know each other better.

Mr. Keith Martin: Even at a senior bureaucratic level, very importantly.

Mr. Donald MacKay: Absolutely. I'm going to work from the top down.

Two weeks ago, for example, your colleague from the other chamber, Senator Hervieux-Payette, hosted a meeting of Canadian and Mexican senators in Mont-Tremblant--sorry, it wasn't exclusively senators, there were members of Parliament there as well. It was a wonderful exchange. They had three days of discussion. In the United States, if someone can get to Senator Max Baucus from Montana, that would solve an awful lot of our problems. Interchanges between elected officials in both of the countries would go well.

One of the things I would posit is that the Canadian embassy in Washington has always been headed by an extremely senior level official. Whether you go back to Derek Burney or Monsieur Chrétien--the less well-known Mr. Chrétien--or consider the current ambassador, Michael Kergin, these are extremely senior people, and that embassy works with a singular focus. The singular focus is that anybody of note within the U.S. government will take a phone call from that Canadian ambassador. I don't think access has been the problem, because in my experience, presidents on down, they will take phone calls from the resident Canadian ambassador. It's a question of getting over the issues, and we have to understand that sometimes the issues are simply intractable. Softwood lumber is going to be one of those long-term ones, where we chip away at some of the edges, solve some of the smaller problems, and work our way into the core of the problem, but it is always going to be an extremely large issue bilaterally between our two countries.

I would also point out, again bearing in mind the requirement for briefness, that what we have is about 4% of the trade being subject to dispute. The other 96% goes on day by day without any difficulty whatever. I don't feel it's useful to define a relationship by the disagreements. One has to have some balance on that.

À (1005)

The Vice-Chair (Mr. Bernard Patry): Ms. MacDonald.

Prof. Laura MacDonald: On the attention in Washington issue, I agree with what Mr. MacKay has said, and would add that it might help to put more money into an effective lobbying strategy. I think the Canadian Embassy is not particularly well funded in that respect. The Mexicans have been extremely effective in hiring high-priced help in Washington and getting their people out there across Congress. We could perhaps learn from that strategy.

As to foreign policy priorities, this is an extremely valuable suggestion. I think Canada has done well historically by doing that middle-power job of getting out there, identifying important issues, and getting international attention by addressing those. One issue Canada and Mexico could well work on is the issue of world debt. There was recently a high profile meeting in Monterey, a financing for development conference. Addressing the entrenched third world debt problem is an issue. A related issue, of course, is the AIDS crisis. I think Canada could play a leading role on that very important crisis, particularly in Africa. Indeed, Canada is trying to do something for Africa, and I think we could do more on that public health issue.

The Vice-Chair (Mr. Bernard Patry): Thank you.

Before we go to the next set of questions with Mr. Paquette, we're going to do committee business for two minutes.

[Translation]

In accordance with subsection 108(2) of the Regulation, we are reviewing the 12th Report of the Trade Sub-Committee, trade disputes and international investments.

[English]

I have a motion that the committee adopt the report of the Subcommittee on Trade, Trade Disputes, and Investment; that pursuant to Standing Order 109, the committee request that the government table a comprehensive response to this report; that the chair be authorized to make such typographical and editorial changes as may be necessary, without changing the substance of the report; that pursuant to Standing Order 108(1)(a), the committee authorize the printing of the brief dissenting and supplementary opinions as appendices to this report immediately after the signature of the chair; that the opinions be sent to the clerk of the committee by electronic mail in both official languages on or before noon Monday, June 10; that the chair or her designate be authorized to present the report to the House.

Mr. Paquette.

[Translation]

Mr. Pierre Paquette (Joliette, BQ): Thank you Mr. Chair, I would like you to help me. I have a lot of difficulty understanding how it is that we have a report that contradicts a motion that was presented and adopted here hardly ten days ago.

Recommendation 21 reads as follows:

That the Government of Canada negotiate a FTAA that contains investment provisions based on the foreign promotion and investment protection agreements it has with Latin American and Caribbean countries, in order to clearly demonstrate that it supports the provisions on settling disputes between investors and the State.

This is in the report that was submitted to us.

Hardly ten days ago, we adopted the following recommendation:

That the Government of Canada diligently strive to attain WTO consensus on the importance of creating a comprehensive international agreement to protect investment. Investor-state provisions should be excluded from the agreement.

I find that there is a problem with the coherence of the positions that the sub-committee is presenting to the Committee, especially since the Canadian position that is presented on the web site states:

With regard to an investor-state dispute settlement mechanism provision, which would provide for investors of countries within the free trade area the right to seek arbitration of disputes arising from alleged breaches of obligations in the chapter, Canada is not advocating the replication of the NAFTA investor-state dispute settlement mechanism in the FTAA. Nor has Canada supported the proposals made so far by other countries to include such a type of dispute settlement mechanism in the FTAA.

The Committee not only contradicts its own position, but it doesn't even go as far as the Canadian position that Mr. Pettigrew reiterated in Mexico last week. I am very uncomfortable with this recommendation.

À (1010)

The Vice-Chair (Mr. Bernard Patry): Mr. Paquette, I will ask Mr. Harb, who is the Chair of the sub-committee, to respond to your question.

Monsieur Harb.

[English]

Mr. Mac Harb: This is one recommendation I will undertake to review with the clerk to make sure it is consistent with the recommendation that came before the committee from the WTO, so we will not have two inconsistent recommendations. I will undertake, before the report is tabled, to have the two recommendations reconciled.

I understand Mr. Paquette has a supplementary report to introduce, and we undertook that any one of my colleagues on the committee, NDP as well as Alliance, would be able to do so.

[Translation]

Mr. Pierre Paquette: Obviously, my opinion would be quite different if I had the guarantee that recommendation from this report reflected our position as stated in recommendation 22 of the preceding report. I could then produce a complementary report because as for the rest, I agree, except in regard to the mechanism for consulting the provinces. My question will also deal with this topic. If, however, the Committee maintains its position on recommendation 21, I will support the position that we adopted in the report on the WTO. For these reasons, we must know how we are going to proceed.

[English]

The Vice-Chair (Mr. Bernard Patry): I'm going to give this to Mr. Harb to answer, and we'll start after that.

Mr. Harb.

Mr. Mac Harb: I will undertake, Mr. Chair, to speak with our researcher to ensure that the two are compliant. Mr. Paquette still reserves the right, obviously, to put in his report whatever recommendation he wants to put in.

[Translation]

The Vice-Chair (Mr. Bernard Patry): If I understand correctly, Mr. Harb wishes to reword the recommendation with the help of his researchers, following what Mr. Paquette mentioned, so that the recommendation conforms to what was adopted by this committee about ten days ago. Do you agree with Mr. Harb's suggestion? This doesn't stop you from producing a dissenting report afterward.

Mr. Pierre Paquette: Yes, but when we will know the results of this consultation?

Mr. Mac Harb: Mr. Chair, Mr. Paquette can nevertheless produce his report, and I can communicate with him by 16:00 this afternoon.

The Vice-Chair (Mr. Bernard Patry): Ms. Lalonde.

Ms. Francine Lalonde: Mr. Chair, I think this is a very important issue. If as a Committee, we are declaring that this resolution should be compatible with the other, we could consider this as being adopted, but it should be included in the minutes.

Mr. Mac Harb: That's exactly what I said: both should be compatible. By 4 o'clock this afternoon, I can contact Mr. Paquette to ensure that both are compatible.

The Vice-Chair (Mr. Bernard Patry): Mr. Harb, Mr. Paquette and Ms. Lalonde, I think that we should nevertheless be very careful regarding procedure, because it this does not work, I will send the report back to the sub-committee; it should be understood that procedure is very important. You can express a dissenting or complementary opinion by next Monday. I will therefore check on what you will do today. I think that we can adopt the motion as such, but conditional that the wording, which will be worked out today with the assistance of the researchers, conforms to the recommendations that we have already prepared.

Ms. Francine Lalonde: As a Committee, we are not just a rubber stamp; we have a responsibility.

Mr. Mac Harb: We all agree.

Ms. Francine Lalonde: Agreed.

[English]

The Vice-Chair (Mr. Bernard Patry): Mr. Martin.

Mr. Keith Martin: Mr. Harb, what's the deadline for supplementary or dissenting reports?

The Vice-Chair (Mr. Bernard Patry): We just set a deadline of next Monday at noon.

Mr. Keith Martin: Monday at noon, okay.

The Vice-Chair (Mr. Bernard Patry): That's in the motion I just read.

Mr. Keith Martin: Sorry, I didn't hear that.

À (1015)

The Vice-Chair (Mr. Bernard Patry): Yes.

[Translation]

Mr. Harb, in regard to procedure, I am not comfortable with the fact that the committee that I am currently chairing can take a decision with the sub-committee not being aware of the decision. The recommendation was passed in sub-committee. Of course, I would prefer that the sub-committee meet and that we come back to this resolution next Tuesday at our next meeting. I don't think that it is procedurally acceptable, because we are going beyond the recommendations that were made by the sub-committee.

Is it unanimous that the Committee will modify the sub-committee's report as it is worded? I am asking the question.

Some hon. members: Yes.

[English]

The Vice-Chair (Mr. Bernard Patry): If it's agreed, we're going to proceed that way. At this time, if it's agreed, we're not going to go back to the subcommittee, we're just going to remain in the committee. You have until 4:00 p.m. this afternoon, Mr. Harb, to go with the clerk and try to rephrase it so it will be consistent with the WTO resolution we passed in this committee. Agreed?

Mr. Mac Harb: Done.

The Vice-Chair (Mr. Bernard Patry): And at that time you, the Bloc, and the Canadian Alliance have the possibility to submit a complementary or dissident opinion for next Monday at noon.

Some hon. members: Agreed.

The Vice-Chair (Mr. Bernard Patry): Fine, it's agreed. Thank you.

We're just going to keep going.

Mr. Paquette, five minutes of question and answer.

[Translation]

Mr. Pierre Paquette: Mr. Chair, Ms. Lalonde mentioned that Mexico was not very well represented during our consultations. We are very happy to see this question being addressed today, but what is practically absent is the role of the provinces in the integration process. We know that many subjects are under discussion that impact directly or indirectly on provincial competencies, and when the provinces are not associated in one way or another in the integration process, I find that there is a democratic insufficiency that has a negative impact on the entire process.

I would like to know if in your opinion, do you have any reflections regarding the role of the provinces within the context of this North American integration.

[English]

The Vice-Chair (Mr. Bernard Patry): Ms. Wilson-Forsberg, then Ms. MacDonald.

Ms. Stacey Wilson-Forsberg: I'll just make one point on the provinces. I just returned from a study tour that was organized by the Public Policy Forum, the executive study tour they do yearly to various places. This year we went to the U.S.-Mexico border region and spent eight days there. Of the nine senior officials who were involved in this study tour most were provincial. We had two federal government representatives, and the rest were provincial representatives with a great deal of enthusiasm. They represented British Columbia, Alberta, Quebec, and New Brunswick. Last year they also organized a study tour to Washington and Mexico City, and again there was a greater provincial component than federal. So I think the interest and enthusiasm is definitely there at the provincial level.

The Vice-Chair (Mr. Bernard Patry): Ms. MacDonald.

Prof. Laura MacDonald: I would agree that the role of the provinces in the North American partnership has not been adequately addressed. Indeed, this is one of my major concerns. I referred earlier to a democratic deficit within the North American space. I was referring mostly to civil society groups there, but I would agree that it would refer equally to the role of the provinces. I think the provinces were consulted at the time of the agreements, in the SAGITs and other processes, but perhaps they weren't aware of the degree to which these agreements would infringe upon their areas of constitutional concern. So I would support the idea that there should be continued consultation with the provinces. The provinces should be thinking themselves about how these sorts of new constitutions may affect them, because in a sense, these trade agreements are a type of new constitution, as Stephen Clarkson argues, at the supranational level, and they do have implications for traditional areas of jurisdiction of the provinces.

In fact, we're going to have a conference at Carleton University next year on federalism and North America. There have been two general beliefs. One is that North American integration and globalization generally encourage decentralization of power by taking power away from central governments. I think the Province of Quebec and the Province of Alberta believed that when they supported those free trade agreements. But perhaps this is a mistaken view, or a not completely accurate view, and we have seen some centralization of power as a result of these trade agreements. It's the federal governments who get to sign them. They don't have to consult particularly adequately with the provinces, who are deeply affected by these agreements, and the result of these agreements is a kind of harmonization of policies within the federation, because all the provinces, all the parts of the country, have to conform in some way to those agreements if they're going to take effect. So I think that is a real concern and something that should be studied further.

À (1020)

The Vice-Chair (Mr. Bernard Patry): Thank you.

We're going to go now to Mr. Eyking.

Mr. Mark Eyking (Sydney—Victoria, Lib.): Thank you, Mr. Chair.

I'm trying to do a little comparison between what's happening in Europe and the Americas. I know there are different cultures, but they seem to be on the road to more integration. The European Union is taking in eastern bloc countries and moving south to Portugal and these places. Also, they have the same currency and social values. It just doesn't seem to work as easily here in the Americas. My sense is that maybe it's because the United States is such a dominant player economically, and there's a bit of arrogance there, I guess. Some people can debate whether it's a political dysfunction, with the Congress and what not. We were on a trade mission all through South America, and it just doesn't seem like this Americas thing is going to work. It seems like these countries, especially Brazil, sense that it's going to have to be more bilateral.

Are we going backwards a bit from that integration, with more bilaterals and less integration? Is it a bit of a pipe dream that we're going to have this American bloc and we're going to have the same social programs as Europe and so forth? We already talked about the currency, but overall, should we be operating on a little different wavelength?

Mr. Donald MacKay: It's an excellent question, sir. I don't think it's a pipe dream, but I think we're coming at objectives from two very different perspectives.

With respect to Europe, I think the key fact to recall is the propensity of Europeans, every 25 to 30 years, to engage in massive wars where massive percentages of the populations are slaughtered. The Second World War was universally declared to be the last time Europeans would be allowed to do that, because European disagreements had become global in nature, quite obviously. Therefore, we had the Marshall Plan, the Bretton Woods system of the World Bank, the International Monetary Fund, and what was to have been the World Trade Organization--it died in the U.S. Senate in 1948, and so we had the GATT for 48 years as a stop-gap measure. Nevertheless, all the instruments the global community built up, and I failed to mention the United Nations, a key institution, pushed Europe towards a consolidation, because the rest of the world had simply had enough. The British and the Germans and the French could no longer be allowed to be a destabilizing force globally. That was the undercurrent of European integration. We've seen it be remarkably successful since.

Within the Americas we come at this with a slightly different history, slightly different political structures, and that sort of stuff. In Latin America there has been a strong affiliation with the concept of integration, that is quite true. It has more often than not, however, fallen victim to national crises, as we see currently in Argentina, crises of governance, crises of democracy for large periods. When the 34 countries met in Miami in December of 1994 for the first Summit of the Americas, that was the first time in decades that with a single exception, at least the head of state or the head of government had been freely elected, as we say in Spanish, más o menos, more or less, in all 34 of the countries. That is a track record that has continued for the last decade. Given the history of this hemisphere, that's not a bad thing. It's not a super start, but it's not a bad thing, given where we've come from.

Will the Americas evolve into something approaching the European Union? I doubt it very much, sir. The United States represents some 75% of the economic activity of the entire hemisphere. In Europe you have a much closer balance between Germany, France, the United Kingdom, and Italy, as an example. You have four counterweights there economically. In the western hemisphere we have nothing approaching that. It is so one-sided in that sense.

À (1025)

The Vice-Chair (Mr. Bernard Patry): Thank you.

We'll now have one question from Mr. Day.

Mr. Stockwell Day (Okanagan—Coquihalla, CA): Thank you, Mr. Chairman.

Just as an observation, my colleague has asked a fair question. Is the whole situation of the Americas moving ahead? Having just returned from two days of observing and being somewhat included also by our foreign affairs minister, I am quite encouraged by what is happening in the Americas overall, and I think--I'm addressing my colleague--if we look incrementally, sometimes it looks like state to state or country to country, maybe two steps forward and one step back, but 20 years ago, or even 10 years, we were constantly reading about this dictatorship or that dictatorship and a military coup and a junta here. If you step back and look over the last 10 years, there has been a profound progression related to democratic systems in the Americas. They are very committed to it, so I was encouraged by that.

I would also say, Mr. Chairman, it is quite something to see these countries, all 34, saying, we want free and fair trade. We're willing even to take on the United States, as long as it's free and fair. They're as upset with some of the protectionist moves that have been happening as we are, but when you think of it, these are tiny economies and they're saying, we're willing to go head-to-head with anybody, but it has to be fair. The situation with Venezuela is a very good example. As you know, there was a 48-hour coup. We've had similar ones in Canada--

À (1030)

The Vice-Chair (Mr. Bernard Patry): You're out of order.

Mr. Stockwell Day: For the record, that was a joke.

It was quite interesting, Mr. Chairman. The Secretary General went into Venezuela at the height of the intensity of that, armed with the democratic charter they'd all agreed on, and that was the moral suasion he used. He basically said, you're one of the 34, you agreed to this charter, and now get your act together, and he met with some degree of success and some agreement on the part of Venezuelans. I'm encouraged from that point of view. I think we have to look at overall progress, not just the one step backward.

On that particular note, related to the presentation here, I might add on the issue of social programs in Europe that while we haven't had the debate in the House of Commons, or even in Canada, I wonder if we want all those social programs. I think there are some distinct differences we might want. I was just reading an article on the health care system in Holland, for instance, where there are one-year lineups for very basic procedures and a growing consensus that it's basically cratering there.

That's my editorial comment. Any of the members could comment on this, but I don't think there should be a concern about the notion that things are progressing bilaterally rather than from a huge multilateral consensus all at the same time in Central or South America. I don't think it's going to happen. And one of these countries made a presentation directly to Canada related to an agreement we struck with Costa Rica on a trade item that's important to Costa Rica. What I heard from them and other countries there--our minister could correct me on this, but I think he'd agree--was, that's okay, Canada, go ahead and strike an individual deal with Costa Rica. All we ask is the same opportunity and equal roles for everybody.

The Vice-Chair (Mr. Bernard Patry): Do you have a question?

Mr. Stockwell Day: Yes, somewhere there was one. I'm trying to encourage the member. I know he is concerned, but I think things are moving along.

Do any of the members see an inherent problem with the fact that this nation here and that one there--this country might be Canada, it might be another one, but we're looking at the OAS--develop their own bilateral deals, but with the overall understanding that what's available for one will also be available to the others under the rules of fair and free trade? Some are just at different stages of development. Venezuela has some issues right now that are more important than certain spices that are being grown in Nicaragua, for instance.

The Vice-Chair (Mr. Bernard Patry): Ms. MacDonald, you have 30 seconds.

Prof. Laura MacDonald: I don't particularly have a problem with that, but I think we should encourage the regional integration processes that are occurring in the region. El Salvador, for example, doesn't want Costa Rica just to go on its own to make its own deal and would like to see the Central American common market, which is weak, but is important. You can't imagine those very tiny countries being viable on their own. They need to work within that subregion to develop their regional links. I think Canada can play an important role in promoting those subregional trade agreements and broader cooperation agreements. We shouldn't get in the game of making a separate bilateral agreement with every single country. We will end up with that old hub and spoke model, for one thing, that we were trying to avoid with the NAFTA, in which the U.S. makes its separate deal with everybody and ends up being the hub.

Mr. Stockwell Day: I think you agree that we don't want to hold up the progress of one emerging economy, as long as the others are agreed that the same opportunities are there for them, that they're not going to be excluded.

The Vice-Chair (Mr. Bernard Patry): Mr. MacKay, do you have any comments to close the discussion this morning?

Mr. Donald MacKay: I agree with Mr. Day. Canada concluded an agreement with Costa Rica. They are currently negotiating with what are known as the Central America four, the remaining four republics. There is a commitment given by the Prime Minister to hold negotiations with the CARICOM countries of the Caribbean. Trade negotiations are laboratories for trade policy. In other words, you're trying out ideas. Some of the members raised questions with respect to dispute settlement mechanisms, as an example. These negotiations allow that kind of thing.

Very briefly, simply reach back to the Canada-Chile free trade agreement, which put forward some unique provisions with regard to anti-dumping and countervailing duties, the same sorts of outcomes we would be dancing in the streets if we could achieve with the United States. Essentially, Canada and Chile have exempted each other from the application of anti-dumping duties. That kind of agreement and that kind of negotiation give governments and individual negotiators an opportunity to test these policy mechanisms. The more you do these sorts of things, the more tests you can actually run on those kinds of things, the more they serve as a demonstration to other countries. Mexico, post-NAFTA, went on to negotiate a whole series of agreements throughout South America that are virtual photocopies of the NAFTA agreement. So it gives you not only a testing platform, but a demonstration platform to replicate positive policy elsewhere.

The Vice-Chair (Mr. Bernard Patry): Thank you very much.

I want to thank the witnesses from our first session this morning. It was most interesting.

We're going to stop for a short recess.

À (1034)

À (1046)

The Vice-Chair (Mr. Bernard Patry): Let's keep going now.

We have the pleasure to have as witnesses, from the Canadian Institute of International Affairs, National Capital branch, Mr. George Lindsey, the chair for the nuclear missile defence study group, Mr. Keith Greenaway, a member of that group, and Mr. Cleminson. Welcome, gentlemen, to our committee. I understand Mr. Lindsey will make the remarks.

Mr. George Lindsey (Chair, Nuclear Missile Defence Study Group, Canadian Institute of International Affairs, National Capital Branch): Thank you, Mr. Chair.

The subject we're bringing to your attention today has been discussed in the study group the Canadian Institute of International Affairs, National Capital branch, has been running for about the last year. Why did we choose national missile defence? Because it has several very important implications for Canada in different fields. Defence of North America against intercontinental attack is the main one, but not the only one. I will try to indicate in a few minutes that we also have to be worried about operations overseas, where ballistic missiles are very likely to be used, but they'll be shorter-range, theatre-range types, probably not with nuclear weapons. But Canadian troops are very likely to be involved in these operations. A third element, which is perhaps closer to the deliberations of your committee, is the relations between Canada and the United States. That isn't just over defence or security, but includes the exchange of intelligence and cooperation in pursuing high technology, and it will some day be very important, more than now even, for exploiting space. Finally, there are the effects of national missile defence on the proliferation of weapons and on arms control.

All this business about intercontinental threats to North America started after World War II was over and the Cold War brought the threat of long-range bomber aircraft with nuclear weapons. The lines of approach from the Soviet Union to the main targets in the United States go right over Canada, which we'll see later on with a map I've brought. Against this, several things were done in the 1950s and 1960s. One element was a continental air defence system involving Canada, Alaska, and the central United States. There was the distant early warning line of radars across the top of the continent, there was the mid-Canada line across the middle of Canada, and there were several layers of radar in southern Canada and around the perimeter of the continental United States. Then there were interceptor fighters that worked with the land-based radars around the middle. All this was provided and controlled by NORAD, the North American Aerospace Defense Command, manned by U.S. and Canadian servicemen. I think the main message we're trying to bring to you today is the great importance of NORAD for Canada in particular.

People who had been involved in air defence in World War II learned that the best they could do was shoot down some of the bombers in a big attack, but they would never get them all. When this new system was established in North America, we ran exercises as realistically as we could, and it was clear that we would not be able to shoot down all the bombers. Some of them would get through, and unfortunately, instead of ordinary bombs such as they had in World War II, they'd be nuclear, and the results would be awful. The only thing to do was deter the attack from ever being attempted at all. That was how we would stop World War III and the ruination of North America. The means, of course, of doing that were primarily in the United States Strategic Air Command, which had nuclear bombers that would be able to deliver this punishment, so that the enemy wouldn't come at all. But in order to get their bombers off the ground, which takes quite a few minutes at the least, they had to have early warning of the attack. With these radar lines situated as far north as was convenient to put them, they were allowed more than an hour to get off, and that was enough.

À (1050)

At that point in time one could say the most important thing NORAD had to deter war was, as it still is, its ability to provide reliable early warning of an attack, so that retaliation could be provided. The hope was that because the other side knew this, there wouldn't be an attack. There wasn't one. It worked. Then along came the intercontinental ballistic missile, which changed the situation considerably. These long-range ballistic missiles would all have nuclear warheads. They would be coming in at somewhere between 15,000 to 17,000 miles an hour, compared to the 700 miles an hour of a subsonic bomber. They would be launched by the Soviet Union, perhaps from land, but also perhaps from submarines. So this was very much more difficult to defend against.

None of the anti-aircraft weapons were of any use at all against a ballistic missile, but radar worked and could detect them. So there was an effort to put the warning system, based on radar, as far forward as we could, so that the few minutes of warning available would be enough to launch a retaliation. The United States put the ballistic missile early warning system, BMEWS, in Alaska, northern Greenland, and England. It could tell if missiles were coming from the Soviet Union towards the United States perhaps 10 to 15 minutes before they landed. That wouldn't be enough to get very many aircraft up for retaliation, but it could provide a very active service for the missiles that could be put on very rapid warning. This was what they called the hair-trigger response. They could be off and on their way even before the Soviet missiles landed.

I've mentioned radar. Fortunately, another technique was discovered at about the same time that was perhaps even more important. It was the ability to detect the heat from a big missile being launched. A terrific amount of heat comes out of the rockets. It can be picked up by the sensitive infrared detectors thousands of miles away. It was possible to put satellites up into space in geosynchronous orbits to hover over the area of interest. They could tell us immediately if a big missile was launched almost anywhere in the world. So now we had deterrence of missile attack because of warnings that could come from new equipment, and we had retaliation because of the American missiles.

I said none of the anti-aircraft weapons was any good against missiles, but the technology of missiles was coming forward at an incredible rate, and not just for offensive ones. It also included the guidance and control systems that could be used for defensive missiles and the instruments that could be used to guide them. The Americans pushed along with a system based on these new principles. The first one was called Safeguard. They were going to deploy it throughout the United States. They did put one station in North Dakota. The Russians were doing the same thing and put a similar system around Moscow, which is still there and, incidentally, uses nuclear weapons in its defensive system. But just as with air defence, both sides realized that whatever they did, they wouldn't be able to stop a really big attack. They would get some of them, but some others would get through, and both sides would be utterly ruined. It was at that point that they decided to agree to the Anti-Ballistic Missile Treaty, the ABM Treaty. It put very strict limits on how much active defence could be deployed. It was signed in 1972.

Ten years later the technicians got even better. They could make even better defensive weapons. Mr. Reagan instituted his system called Star Wars to try to protect the United States. Then the Cold War came to an end, and Star Wars was wound down.

À (1055)

Ten years later President Clinton arrived. He was the sponsor of a system called National Missile Defence, NMD. He was not attempting to protect against a heavy attack from the Soviet Union, because the U.S. couldn't do that. Instead, it was intended to protect against the possibility of a much lighter attack from North Korea, Iran, and Iraq. They gave those countries the name of rogue states, although that term has now changed to states of concern. This was a small threat, but one they could perhaps actually provide an effective, active defence against. The new elements that made this a possibility were sensors in space that could track missiles in flight and very large and wonderfully equipped interceptor rockets. They were going to base them either in Alaska or the northern United States. They would be able to intercept missiles in the mid-course of their trajectories.

This slide will show you where missiles fired at the United States from the Soviet Union would come. This rather unusual projection shows the North Pole in the middle, Canada way down at the bottom, North Korea in the upper left-hand corner, and Iran in the upper right-hand corner. The arcs show the limits of the trajectories that a missile would have to follow if it were going to land somewhere in the United States. It's quite a narrow arc. If the Americans had installed their system in Grand Forks, North Dakota, where the letters GF are on the projection, the double lines show you where they could have intercepted a missile from North Korea, at about 10 o'clock in the upper left-hand corner, or from Iran, at about one o'clock in the upper right-hand corner. They could intercept them well before they even got to Canada, let alone the United States. The two arcs are for two different speeds of interceptors. It's not clear which one they would be able to accomplish, but it does give them a chance to actually defend.

What's happened since then? Mr. Bush's administration has come in. They are very enthusiastic about this system, and they've taken it to a further extent. They're going to add other layers to this system, so that they can try to catch a missile early in its flight or late. Unfortunately, the 1972 ABM Treaty would have prevented the development of this equipment, so they have announced that they're going to withdraw from the ABM Treaty, probably this month of June. They will now extend missile defence to a system with three different layers in it.

The next slide shows what goes on with the tremendous flashing through space of these very fast systems. The lower right-hand corner is where the offensive missile starts. It arcs its way up to the top and back down on the left-hand side. The shooters decide which arcs to use. The ones I've shown here reach out to between 9,000 and 12,000 kilometres, which would cover everything in the United States. The thing is going a quarter of the way around the world. The little arcs show how it has gone after 5, 10, 15, and 20 minutes, but it takes it over half an hour to complete the journey.

What I've shown in the three little arcs at the bottom is what you could do with the most effective system, which the Americans are developing to deal with short-range theatre missiles. It's the U.S. navy that's doing this. If they put their ship up near the launch point in the right-hand corner, you can see that their weapons would be able to cut into most of the trajectories and probably intercept a missile. If the ship were in the middle of the Pacific Ocean or the Atlantic Ocean, it couldn't reach the missile, which would just fly over the top of them. It would be useless. But if they were to deploy their system back near the targets in the United States, or perhaps even Canada, they would have a second chance to catch a missile on the way down. That's what the U.S. system is trying to do today.

I'm going to say a little more about short-range missiles, because they're the ones that are easier to use and might include activities where Canadians are involved. The U.S. navy is making the one I mentioned, the U.S. army has another two systems going, and the air force is trying to get one that would work with an aircraft as the launch point. It's very likely that two of these will turn out to have a role against intercontinental missiles now.

Á (1100)

Only Russia, China, and the United States have intercontinental missiles at the moment. Theatre-range missiles are deployed all over the world. Something like 30 countries have them. Some of these countries are very unstable. They're just the sorts of places where conflicts might occur, where the missiles would be a big factor, and where Canadian troops would be involved. So what would serve our purposes much more than defence against intercontinental missiles is some sort of easily transportable system against theatre ballistic missiles that could be used in a hurry--and in a hurry is when we might need them. The other threat from the rogue states is probably ten years away, or maybe there isn't one at all. One can argue about this.

What are the Canadian concerns, then? The most important is the future of NORAD. I've tried to indicate already that NORAD is the key centre for collecting and assessing information about the movement of aircraft, cruise missiles, and ballistic missiles on all approaches to North America from states of concern and from Eurasia, although not necessarily from the south. Now we have concerns over homeland defence being expressed very loudly in the United States. We're dealing with the smuggling of immigrants, smuggling of drugs, and terrorism. There is more and more dependence on collecting information about what's approaching North America, including aircraft and ships, as well as missiles. And what's going on in uninhabited parts of North America, like northern Canada? It will be very important to be able to know what things are going on there, where there aren't people to report on them. Undoubtedly, your committee will have been talking about sovereignty. A lot of other people are too. For our sovereignty, it is essential to know what's going on at the borders of our continent, country, and territory and to be able to collect these data, spread them around, and have the intelligence tell us what to conclude.

We don't know what the United States is going to do to divide up its responsibilities for air defence, ballistic missile defence, space defence, and homeland defence, but it will probably be mainly in the hands of their northern command, space command, and strategic command. What about NORAD? This is the question that's going to be important for Canada, because it's vital for Canada to remain a partner in the command and control of the information gathering facilities that are now run by NORAD.

Of course, another question that's of interest to Canada is whether the American NMD program is going to want to deploy sensors or weapons in Canada. If such is the case, who's going to operate them? But so far, there is no indication that they will have to do that.

Where Canada could be a supporter, though, is on research and development. We can find out what can be done with the missiles with all the new technologies. But we should put our priority, and encourage the Americans to put their priority, on the gathering, rapid dissemination, and quick analysis of information on the presence or movement of objects on the ground and sea, in the air or space. Fortunately, this would fit in with the capabilities of Canadian industry. If there are fields in which we are on the world level, they're probably space and computer technology, which is exactly the appropriate technique. If we got favourable results from this sort of work, it would be invaluable in preserving Canadian sovereignty, homeland defence, verifying arms control agreements, and in overseas peace operations, as well as the original purpose of defending against ballistic missiles.

Finally, to diverge completely from ballistic missiles, I think it's important to remember that Canada should give its support to multilateral efforts going on in the world today on some of the other related threats, like false alarms, accidental launching of missiles, proliferation of weapons of mass destruction, and to continue the very good work we've done already in verifying arms control. I think all these last things I've mentioned are easier to do, quicker to accomplish, very much cheaper, and much more urgent than early deployment of national missile defence. So this is my message.

Á (1105)

The Vice-Chair (Mr. Bernard Patry): Thank you very much, Mr. Lindsey.

Now we're going to start with the questions and answers. Mr. Day.

Mr. Stockwell Day: Thank you, Mr. Chairman.

I would like some comments from Mr. Lindsey on the policy approach in the United States. Especially from Mr. Reagan onward, their approach has been to take a very strong and firm stand related to, at that time, the U.S.S.R.. Whether we're talking about President Reagan telling Gorbachev to tear down that wall or the announcement that he's going to proceed with Star Wars development, most commentators now point to that very strong stand as the beginning of the end for any hopes of revitalization of military expansion by the U.S.S.R. or the Soviet group. That resulted in their eventual collapse, because they simply could not keep up economically or technologically and they realized their efforts to do so were futile. The Cold War ended, as you said, with many commentators agreeing it was the United States making that very firm commitment, letting them know in no uncertain terms they were going ahead with missile defence, or Star Wars, if you want to call it that.

That subsided with the end of the Cold War and the collapse of the Soviet Union. The sense is that the present administration in the United States has followed a similar pattern that has resulted in what we have all said, even our own Prime Minister, is the very remarkable development of Russia now joining at least the NATO council, not as a full member of NATO, and having to abandon the hope of any proliferation of missiles. This has resulted in the most radical agreement yet to destroy the missile systems in the United States and the U.S.S.R., or begin to phase down those missile supplies.

That policy has worked. The thinking is that it will also work against other states that don't have anywhere near the economic capabilities of Russia, even of its formerly devastated economic situation. The United States making the declaration that they're going to go ahead with missile defence has brought the Russians to the table. It has resulted in one of the greatest commitments to reduce the arsenals we've ever seen. It has resulted in other states--not naming any particular axis, evil or not--realizing there's no sense, realistically, in pursuing a missile-related nuclear attack system. We do have to watch for the smaller systems now and weapons of mass destruction, but it has forced other states potentially integral to the advancement of western progress to think very small-scale. If there are to be disasters, they will be on a small scale rather than large. That's obviously the better of two evils.

Obviously, this has been a successful strategy. Would you concur with that, or are we missing some holes in the thinking here that it would be helpful for us to be aware of?

Á (1110)

The Vice-Chair (Mr. Bernard Patry): Mr. Lindsey.

Mr. George Lindsey: I agree with everything you say, Mr. Day.

Mr. Stockwell Day: Fabulous.

Mr. George Lindsey: If I'd been allowed a half-hour speech, I would have said a lot of the things you did, only not as well.

Russia and the United States have agreed that they will keep the mutual deterrents in their back pockets. They can get rid of a great many of their 6,000 or 10,000 warheads. If they only end up with 1,000, that's plenty. They've set limits of 1,700 to 2,200 at the moment. So they don't have to try to defend themselves against the other side with an active system, they're going to do it with deterrents. But everybody else in the world has so few nuclear weapons that quite likely, their anti-ICBM system would be enough to handle any that came in. The possible exception is China.

There's a hierarchy of nuclear power. The U.S. and Russia are at the top, with more than they need, enough to ruin the world, then China. Then there are the people with a few, and they would probably not particularly like the development of the defensive system, but most of them are not enemies anyway. Most important are the people with none who would like a few. That's where all these non-proliferation efforts are being expended. There may be occasional failures. The essential effort ought to be in making sure people who don't have any never get any. The people who have a few are still a danger, but perhaps not to the United States any more. That's so much the better for them. I think the situation is really quite promising, if they can only keep these people with none from getting a few.

I might say that ICBMs can also carry other weapons of mass destruction, chemical or biological, and of course, there are similar problems to be tackled on that front. But I think what you say is exactly the situation.

[Translation]

The Vice-Chair (Mr. Bernard Patry): Merci.

Ms. Lalonde, please.

Ms. Francine Lalonde: Thank you, Mr. Lindsey for this interesting course on the evolution of air defence.

In the summary that I have, it states:

Regarding the need for National Missile Defense (NMD), the validity of a near-term threat to the continental United States from “rogue states” is not self evident.

This is what you said, and that is what I noted, and you finished your presentation by stating that there are urgent things that need to be done. I would like to hear you elaborate on this.

[English]

Mr. George Lindsey: The more urgent things include all the efforts at arms control, where Canada has really had quite an important role to play. Non-proliferation is, I suppose, another way of talking about arranging things so that people who don't have any never get any and people who have a few don't get more. I think those are really vital.

Another point I think needs more attention than it has been getting in most countries is the threat of shorter-range missiles, which would be used not against North America, but in these overseas operations. That was very much the case in the Gulf War, where the Iraqis fired over 100 missiles at their enemies. They were surprisingly ineffective. It wasn't due to defence. The first systems to try to defend against them were quickly put together from an anti-aircraft system, and they didn't work. The missiles weren't very good either, but wait until next time. That could be very important. The countries who belong to NATO are dependent on getting their troops into another part of the world perhaps through one or two key seaports or airports. A short-range ballistic missile might be able to destroy the means of getting in in a hurry. So I think that's perhaps the area where there should be a higher priority in regard to actual weapons.

I think the more important ones are the political strategies to try to check proliferation and build confidence and, when there's an arms control agreement, to provide the means of verifying that all the participants are carrying out what they promised to do. That has been pretty successful so far. There have been some exceptions.

I don't know if Colonel Cleminson would like to say something about that. He has been involved in the efforts that are being made in Iraq to try to make sure they aren't rebuilding their weapons.

Á (1115)

Mr. F.R. Cleminson (Member, Nuclear Missile Defence Study Group, Canadian Institute of International Affairs, National Capital Branch): I have just arrived back from a meeting of UNMOVIC in Vienna, and these ideas of whether or not you can verify and whether or not we will get inspectors into Iraq have been coming up, of course.

Probably the major thing, when we talk about this in global terms, is the American propensity now to do unilateral things, while Canada has always been very active and effective with multilateral ones. It would seem to me that what we need at the moment is a study of proliferation in weapons of mass destruction, as Dr. Lindsey mentioned, for example. For many years we have taken a multilateral approach on both of these: the chemical weapons convention, weapons of mass destruction, the bacteriological weapons convention, also weapons of mass destruction, the Nuclear Non-Proliferation Treaty dealing on that side. When Mr. Bush came to power, he said he wasn't going to have treaties any more. In fact, he has not introduced the Comprehensive Test Ban Treaty into the U.S. Senate, because he thought it would be defeated. Of course, he did sign a treaty with President Putin, so his approach may be changing to some degree from unilateralism to multilateralism, but it's very slow. Our strength is in multilateralism, and most of the other countries in the world believe in that.

So if we're going to approach these twin problems, proliferation or non-proliferation on the one-hand, and weapons of mass destruction on the other, we need to look very closely at what we have done from a multilateral perspective already, to recognize that Canada's strength is in multilateralism, that most certainly, over the years Canadian diplomats have been applauded for their work in this area. It would seem to me that a committee such as this might have a look at that and recognize the strengths we have, rather than the weaknesses. Very often, the Department of National Defence focuses on what it doesn't have, it doesn't focus on what it does have and how those systems it does have might be modified to meet some of these problems.

So my recommendation would be that we look at non-proliferation, at weapons of mass destruction, see how this matter can be dealt with multilaterally, and hope the United States will come along on that, as their policies are clearly changing.

The Vice-Chair (Mr. Bernard Patry): Thank you, Mr. Cleminson.

[Translation]

We will have a second round.

Ms. Marleau, please.

[English]

Ms. Diane Marleau (Sudbury, Lib.): You gave us a very interesting presentation. I want to thank you for that.

The Americans, I know, have been behaving in a more unilateral fashion, and the National Missile Defence Program is really a case where it appears they are prepared to go unilaterally. But while there are some good reasons to pursue that, should the Americans really be putting all their eggs in that basket at this time, or should they be looking at some other threats that are far more likely to be occurring in the short term, such as the possibility of some of these dirty bombs, which would be far easier for someone to bring into our midst? It worries me that if we put too much effort into the National Missile Defence Program, we may not be putting enough on the ground where the threat really is, while there still are good reasons perhaps to consider pursuing the other.

Á (1120)

The Vice-Chair (Mr. Bernard Patry): Mr. Lindsey, please.

Mr. George Lindsey: I think you're absolutely right. There are all sorts of ways of delivering weapons of mass destruction, and the most difficult and expensive one is with an intercontinental ballistic missile. A little, poor state is going to be awfully hard put to it to equip itself with either an intercontinental ballistic missile or a nuclear warhead, and to have both of them at once is even more difficult. There are other methods, and probably one could list cruise missiles, which are much easier to acquire, and aircraft, which delivered a couple of atomic bombs some years ago. Then there are ships, which could come into a seaport with a nuclear weapon that could be set off by a timing device. Bombs can be brought in by trucks, and of course, we read about them coming in suitcases, although I think you'd need a pretty tough porter to lift the thing. Those are really far more urgent threats, something that could happen tomorrow instead of in 2025. I certainly think that's where the urgency and the priority should go. After a while you say, it's their money, and if they make that choice, I suppose they're allowed to do it. Perhaps we could urge them not to forget about the simpler, more urgent things.

Ms. Diane Marleau: You say it is their money, but we are their closest neighbour and their best friend. Frankly, if they move forward, we'll be very hard-pressed not to be at least a part of this, so it worries me. Also, there's the fact that the European Union and many of the other powers seem to be totally opposed to their moving forward on this issue. I know you're saying we should be continuing what we do so well, but if you were in a position of decision, what would you do?

The Vice-Chair (Mr. Bernard Patry): Mr. Lindsey.

Mr. George Lindsey: I tried to indicate what I think might be an answer to your question. I would try very hard to keep us in NORAD, and that might involve our having a bigger part to play in national missile defence than we would really like. Then, if the Americans urged us to do more, my advice would be, let us work on the short-range missiles and the overhead observation, which we can use to know what's going on in our own country and get some good out of it. Usually, to get good out of something, you have to pay something and give in a little bit, but that isn't quite the same as huffing and puffing and trying to start World War III, which we don't want to do.

The Vice-Chair (Mr. Bernard Patry): Thank you very much.

Mr. Martin.

Mr. Keith Martin: Thank you very much, Dr. Lindsey, Colonel Cleminson, and General Greenaway, for being here today. We really appreciate your taking the time.

Dr. Lindsey, in referring to nuclear missiles, you mentioned that we want to make sure people who don't have any won't get any and those who have some won't get any more. This is an essential foreign policy challenge we're facing. Following what Madam Marleau mentioned, I have great concern over the issue of dirty bombs and how we've lost control over fissionable material. In your view, how do we accomplish our objective in not expanding the number of nukes out there? This is particularly in view of the fact that some of our allies, the French and some of the northern European countries, as well as the Russians, are selling technology to Iran and other rogue states to develop these nuclear technologies. How do we get control over the situation?

My second question is on NMD. Isn't this really about China? Because of trade issues, we're not willing to really call a spade a spade and say what NMD is all about, protecting ourselves against a country that's demonstrated a very belligerent foreign policy with respect to Taiwan, the Spratly Islands, and Tibet. That's what this is all about for the future, and for that reason alone, we should actually participate and work with the Americans on this.

Third, Colonel Cleminson, you're with UNMOVIC. This is a very big issue for us right now, and we've heard some very provocative testimony on it. From your perspective, sir, do you think Canada's role in this should be to ask the Americans for proof of Iraqi acquisition of weapons of mass destruction? Also, as you mentioned, do you think Canada can take a role in engaging the Iraqis in a diplomatic effort to get UNMOVIC in there to determine what is actually taking place on the ground? We owe that to the Canadian public and particularly to our troops.

Finally, in START III do you think we should pursue the banning of MIRV ICBMs?

Thanks.

Á (1125)

Mr. George Lindsey: Can I answer questions one, two, and four, and let Colonel Cleminson do number three?

The Vice-Chair (Mr. Bernard Patry): Sure, that would be great. It's your choice.

Mr. George Lindsey: With regard to dirty bombs and other weapons of mass destruction, I think that should be very much a multilateral project for just about every country in the world with technical capabilities. Canada is at the top in nuclear technology, and it certainly can help with how you deal with a dirty bomb. I think one could lump all the other threats into a category where just about every country in the world ought to be interested, and quite a few of them can actually do something about it. It would be a pity if their efforts were completely uncoordinated. I think cooperation is needed there, and it's far more urgent than anti-ICBM.

With regard to China, I think what you suggest is very likely the case. When you look at what you could do with an anti-ICBM system that could give you very good protection against a country with 10 missiles, but couldn't do any good against a country with 1,000 missiles, if that's all there is to it, we should give three cheers and hope they can deal with the 10. But then what do you do with somebody who has 100? And China might be the one. I suspect that China will have to be recognized slowly, if you like, as one of three superpowers in the nuclear field. They can do it if they want to. They're a huge country. They're probably going to be one of the most important countries in the world in our lifetime. If they feel they want these things, it's their money, and if they do it, we can't stop them. I think it would be foolish to try to beat them with a defence that could handle 1,000 missiles, because I don't think it's possible to do. And perhaps it would lead to the same sort of thing that's happened with Russia. After a while they'll have spent all their money on it and reached a state that seems satisfactory. So why don't we be friends and not threaten each other any more?

I think the Taiwan issue is a very dangerous one. I would hope everybody has patience and says, well, Hong Kong has been recovered by China, which was its legitimate owner for centuries, and they don't seem to be any the worse for it. Macau has gone into a similar state. Taiwan will watch and see, and perhaps they'll think, well, perhaps it's not so bad. Old people who remember Chiang Kai-shek and all the things that were unpopular in Beijing will die. Let time handle it instead of weapons.

Actually, I don't think ballistic missile defence in Taiwan would make very much difference. The ballistic missiles that would be used by the Chinese against Taiwan would probably not have nuclear warheads. The defence would catch some of them, and some of them would get through, but it wouldn't be much different from a big air attack with conventional weapons. Of course, the dangerous thing would be if the United States were to step in and say they're going to fight over Taiwan. That's probably the worst thing that could happen.

On question four, I think MIRV was a very great disadvantage for stable deterrence. If two sides have a certain number of missiles and one of them puts 10 warheads in one of the missiles, immediately it means that if it's fired, it has 10 times as many possible targets and it's 10 times as hard to defend against. But what's perhaps even more dangerous is that if those 10 warheads are still sitting there in the missile, it becomes a very attractive target for a first strike. If that thing gets off, I have to cope with 10. If I hit it before it goes off, all 10 go dead. So let's start the war. And that's what you don't want, basic instability.

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I think banning MIRVs would be a very good thing. Actually, the START treaties have done that, but there's some indication that's going to be withdrawn. The Russians have a limited number of warheads, and they may prefer to use some of them in a MIRV form. Of course, the Americans have their main striking power at sea. You can only put so many missiles, about 16, on a submarine, so they would like to put 8 or 10 warheads on each one of these missiles. The offensive people have got every reason to want to keep MIRVs. The people who would like stability and a lack of an incentive to start a war would like to get rid of MIRVs. Probably, the real measure of danger is warheads, not missiles.

Mr. Keith Martin: Couldn't an NMD actually knock out a MIRV warhead?

Mr. George Lindsey: Once it's deployed, it has 10 targets. The MIRVs are probably separate enough that they would have to be dealt with as 10 separate targets. If you can catch the missile soon after it's launched, before the MIRVs have been displaced, you might get them all. That's one of the reasons for having a priority on the type of system that goes up right near the launch points, with a short-range, tactical anti-ballistic missile that can catch the thing in the first few minutes. This would be one of the answers to MIRVs.

The Vice-Chair (Mr. Bernard Patry): Mr. Cleminson.

Mr. F.R. Cleminson: By way of short introduction, I have been a member of UNSCOM from its inception in 1991. I was then asked by the Secretary-General in 1999 to take part in the assessment of UNSCOM's successes and failures. Very unexpectedly, I was then appointed to UNMOVIC. So I've now been looking at Iraq and the idea of weapons of mass destruction for 12 years. People often don't realize that the United Nations requirement is not regarding conventional weapons, but weapons of mass destruction, such as nuclear, chemical, and biological weapons, and the means of delivery, in other words, missiles with the ability to travel more than 150 kilometres.

The meeting in Vienna last week was one of the more positive ones, because there are indications that Iraq is seriously contemplating bringing in inspectors. But of course, they have a quid pro quo they're asking for. So these days are very significant in respect of Iraq. I'm sure the Iraqis will meet with the Secretary-General July 6-7 in Vienna. This will be their third meeting, following their March and May meetings. At the latter they discussed the technical intricacies of reintroducing inspectors. Our executive chairman, Dr. Hans Blix, participated in these meetings. They're hoping that at this meeting on July 6-7 there will be clarification on the Iraqi side of what's required. The UN will indicate the practical areas where they need to be assured that they will receive cooperation.

The impression I came away with from the Vienna meeting was that UNMOVIC is operationally ready to undertake inspections. I would guess that it could have inspectors in Iraq within 15 days of acceptance by Iraq. They could begin this process. The Iraqis are trying to get some sort of timeframe on this process, but it's very difficult to provide, because you need their full cooperation in order to do inspections. Of course, we have had statements by the U.S. Secretary of Defense that even if inspectors were there and even if they had full access, it still wouldn't be sufficient. I'm not sure exactly what's expected.

Again, it is the idea of multilateralism versus unilateralism. I think this is very significant for the effectiveness of the United Nations. If we really do believe in the United Nations, here is a case study where the United Nations has indeed been effective. I think the focus is on inspections. UNMOVIC's reports usually start to the effect that since it has had no inspectors in Iraq since December 1998, it doesn't know a great deal. I think this is an area where the use of overhead imagery, which is a Canadian specialty, could be employed very effectively. I have suggested several times to UNMOVIC that instead of starting a statement to the effect that it does not have any inspectors in Iraq, and therefore doesn't know what's going on, it should say, here are the changes that have taken place in Iraq in the last three months. We could do this if we used a very effective overhead system. We have the capability to do this and to set up a unit of perhaps 20 to 30 people, using interpreters or whoever.

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The United States doesn't really favour this. Of course, the United States is the father of overhead imagery. One has to wonder why. My guess is that they're worried there might be a second opinion. The U.S. is very good at providing information about weapons of mass destruction. You'll see various statements made by their senior officials that there are weapons of mass destruction being produced in Iraq. Still, when you ask them where that information is and whether they've passed that on to the United Nations, you don't even get an answer. Where some people look at the use of overhead as an attempt to replace inspectors, I always say the use of overhead would make inspectors smarter. Certainly, there's a whole panoply of 12 to 15 different systems the United Nations has and could apply, including both UNSCOM and UNMOVIC.

I look at UNSCOM and UNMOVIC as a case study on the effectiveness of the UN. The United Nations has taken this on. There have been more than 3,000 people who have rolled through UNSCOM during its time. UNMOVIC is different from UNSCOM in that instead of taking experts from nations... Canada has supplied a lot. We probably supplied 10% of the best people in Iraq. I've often been very proud, as a Canadian commissioner, to have people come up to me and say, well, the Canadians are going to put a couple of people in there, so that'll work. Since I spent some time in the armed forces and most of our people came from the armed forces, army, navy, and air force, I was always very proud of that.

I think these next three months are going to be very significant. I would hope that out of the July meeting there will be an agreement for inspectors to go in. Of course, UNMOVIC will be working with the International Atomic Energy Agency as well, and both the secretary-general of the IAEA and the executive chairman of UNMOVIC will be part of these discussions on July 6 and 7.

The Vice-Chair (Mr. Bernard Patry): Thank you, Mr. Cleminson.

Now we'll go to Ms. Carroll.

Ms. Aileen Carroll (Barrie—Simcoe—Bradford, Lib.): Thank you, Mr. Chair.

Thank you, Mr. Cleminson. This is an interesting convergence of witnesses. You may have read an interesting article in today's Citizen on the recent appearance before this committee of a Mr. Scott Ritter, who had been a member of the teams that went in and had quite a novel approach to Iraq. He was, I believe, a former marine, whose argument to the committee was that we need to take quite a different approach with regard to Iraq. He maintained that there are no weapons there and that through our embargoes, we are, in fact, hugely damaging the people of Iraq and not accomplishing what we're out to do. I just mention that as something that might interest you.

Do you think, on the matter of imagery, the technology we have--and I realize Canadian intelligence is superior in that regard--is sufficient to determine what we need to know? Could it give us the kind of intelligence raw data we need to obviate the need for inspections? That's one question.

The other question, Dr. Lindsey, concerns what's occurring now with India and Pakistan with regard to nuclear weapons, without intercontinental ballistic missiles. It's very frightening to observe. We're witnessing the potential there, and that potential is in the hands of two nations who really don't have an empirical experience base with respect to the possible results of the sabres they're rattling. I harken back to what is pretty much an outdated doctrine, the McNamara doctrine. We had the three elements of that doctrine, including flexible response and the belief that you could just ratchet up the response even within the nuclear domain.

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The Vice-Chair (Mr. Bernard Patry): Mr. Cleminson first.

Mr. F.R. Cleminson: First, the Iraqis have just announced that their standard of living now exceeds Egypt's. So while the embargo has clearly had an effect, I don't think it's had the cataclysmic effect suggested by both Dennis Halliday and Scott Ritter, although a lot of things they say I would agree with.

As to overhead, I started with it when I was 23 years of age, in the Arctic on Soviet ice stations. I've gone through a lot of courses and worked on it a lot. You wouldn't get all the information you needed, but you could probably get 60% to 70% of what you needed to make a decision on whether or not there was a invalid program operating or not. But the on-site inspector is the essential, final surgical tool. We go in and use inspectors to attempt to gather great amounts of information, but you should use all your other systems, such as overhead, in situ sensors--there's a whole package of them--and go from the top to the bottom. You should know what you're looking for. If you can't find it in any other way, that is when you say you're going to do an in-your-face, on-site inspection. So it's a tool package you have there. These things have to be integrated one with the other.

As I said, more than 3,000 people were operating as inspectors at different times with UNSCOM over eight or eight and a half years. You don't get a great experience base if you're changing people all the time. The difference between UNMOVIC and UNSCOM is that while nations provide people to UNSCOM, UNMOVIC is hiring people and the United Nations is paying for it. In fact, Iraq will ultimately pay for it out of the escrow fund.

I didn't hear Ritter, but he always goes into this thing about spying for the United States and that sort of thing. I've known him reasonably well for a number of years, and I really cannot comprehend what he or Dennis Halliday is after. The way I look at it, the United Nations and Canada should be extremely proud of what they have done in this multilateral approach to verification in Iraq. It's probably the case that Iraq does not possess these weapons. The International Atomic Energy Agency has basically made a statement saying that. I think UNSCOM could have done that in missiles and chemicals. We could not have done so in biological.

Ms. Aileen Carroll: But that was three years ago. You can't say today, with a three-year vacuum?

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Mr. F.R. Cleminson: Had we been following it with overhead, we probably could. When people talk about what you can get from overhead, I often turn to Cuba in 1962, with President Kennedy. I often ask people how many on-site inspectors they think were on the ground. None. Everything he decided--and in fact, he was almost prepared to go to nuclear war--was based on overhead imagery. So there is an awful lot you can do there. It's a tool we have not used adequately in the United Nations.

Mr. Stockwell Day: There's that terrible unilateral action thing again with what Mr. Kennedy did.

Mr. F.R. Cleminson: He did it with his allies. You remember our navy in Halifax was prepared to go to sea.

Mr. Stockwell Day: Oh yes, that was comforting.

Mr. F.R. Cleminson: But I would just say, in closing, that this whole operation in Cuba has been a success. It's been depicted often as a failure. I think the United Nations can be very proud of what they've done, and Canada can be extremely proud of the support we gave in those days. I just hope the Iraqis recognize that if they provide full cooperation, UNMOVIC will provide their report to the Security Council within a year, as they have said.

Ms. Aileen Carroll: Biological included?

Mr. F.R. Cleminson: These are things I think governments like our own should be looking into and aren't. Can you ever verify a biological treaty? This has been discussed in the conference on disarmament in Geneva for many years. Strangely enough, it is the United States that does not permit the word verification to turn up in those negotiations on verifying compliance with the BTWC.

The Vice-Chair (Mr. Bernard Patry): Thank you.

Mr. Lindsey, do you have any comments in closing?

Mr. George Lindsey: Yes.

You bring up the question of deterrence, and it has several aspects to it. As regards Russia and the United States, there you still have the old mutually assured destruction. Either one could wipe the other one out if they wanted to, but they'd probably end up wiping out themselves. I think that condition will apply for a very long time. They may do it with many fewer weapons.

When it comes to tactical nuclear weapons--and you mentioned flexible response--that was very much a matter of the Cold War, when both sides had millions of men with conventional armaments and the best tanks and the best aircraft. The fear was, if a war started, perhaps by mistake, how would we get it stopped before it went nuclear? In desperation, they had a whole series of flexible things they could do, getting nastier and nastier. At one stage you used a few demonstration nuclear weapons, but at another stage you used your tactical nuclear weapons, the short-range ones that were deployed, some of them even on hand-held weapons. That really made a pretty awful future for anyone who lived in Europe if something like that happened. I think that's gone, and I think there's been a great reduction in the number of tactical nuclear weapons, but there haven't been treaties to verify that and codify it. Perhaps that would be a good thing.

I don't think people are worried too much now about the use of short-range theatre nuclear weapons between the Russians and the Americans. It's what might happen in a nasty part of the world where somebody has a few and somebody hasn't any.

It seems to me that when it comes to flexible response, it's almost a dead thing. When it comes to reductions of nuclear weapons, you do have to separate the big, strategic ones and the smaller ones. The smaller ones are becoming far less important, but they're still there. I suppose the world would be a safer place if there weren't any there. Whether that can be brought about, I don't know.

The Vice-Chair (Mr. Bernard Patry): Thank you very much.

I want to thank all our witnesses from this morning. It was very interesting. Your experience and knowledge, I think, will be very much appreciated by our committee.

[Translation]

Thank you very much, once again.

[English]

We're going to close this meeting. The next meeting will be next Tuesday at 9 o'clock.

Thank you.