CIIT Committee Report

The Bloc Québécois disagrees with the Trade Committee’s current report. This report, based on an ideology that was popular in the 1980s and 1990s and according to which market openness has no harmful secondary effects and no need for safeguards, is now completely outmoded and unsuited to Quebec’s economic reality.

Paying no heed to the pressures and problems our manufacturing sector is experiencing due to the rising dollar and the fierce competition from emerging economies, the Committee is:

• calling for further trade liberalisation with no safeguards,
• advocating that we downplay the emphasis we have always put on the multilateral system by increasing the number of bilateral agreements,
• giving these bilateral agreements unconditional support, even though no study to assess their impact has been carried out,
• calling for an increase in investment protection agreements modeled on Chapter 11 of NAFTA, even though this chapter has been universally criticized,
• asking for the removal of all obstacles to trade liberalization with China, even though Quebec imports 10 times more from that country than it exports to it,
• opening the door to the elimination of supply management in agriculture, even though this system, with no subsidy and no cost to the consumer, guarantees farmers a decent living,
• asking for more flexible trade legislation to make life easier for importers, despite the fact that it is producers who are currently suffering from fierce, and often unfair, competition.

In short, the Trade Committee chose to adopt a doctrinaire position ill suited to today’s trade reality and particularly adverse to Quebec’s interests. The Bloc Québécois cannot support it and, as long as we have a minority government, will use its balance of power to prevent its implementation and the destruction of Quebec’s economy.

Between 2003 and 2006, Quebec went from a trade surplus of $7 billion to a trade deficit of almost $10 billion. In 2006, each Quebecer thus consumed $1300 more than he or she produced. And that is only the international trade deficit, to which must be added a further $5-billion interprovincial trade deficit. We grew considerably poorer last year.

In Alberta, the manufacturing sector represents only 6.7% of jobs, but Quebec is not Alberta. Our wealth does not bubble up from the ground. Manufacturing shipments represent 60% of Quebec’s GDP and more than 85% of its exports.

Our manufacturing sector is dangerously weakened. Between 2003 and 2006, it lost 100,000 jobs, the majority of the jobs lost in Canada, including 35,000 during 2006 alone. And 2007 is shaping up to be worse still, with 29,000 jobs, 96% of the Canadian total, lost in the first two months of the year.

The Committee report recommends weakening trade legislation to make life easier for importers. This legislation is designed to protect our producers against unfair competitive practices. When a foreign competitor causes serious harm to our producers by practicing dumping (selling a product below its normal price) or by receiving export subsidies, the government is obliged to impose antidumping or countervailing duties.

Trade legislation has already been weakened. Unlike the European Union and United States, Canada decided in 2003 that China had a market economy, making it very difficult to impose countervailing duties. Result: between 2003 and 2006, the number of products to which countervailing duties apply dropped by half. From 2001 to 2006, Chinese imports to Canada almost tripled, increasing from $12 to $32 billion, with the resultant damage to our industry. The Bloc has tabled a bill to resolve this problem.

In a complete denial of reality, the Committee is proposing to weaken trade legislation even further by making it more difficult to impose provisional duties. Note that the Standing Committee on Industry, in its unanimous report on the manufacturing sector, takes exactly the opposite tack. We find it difficult to understand how the Liberal and Conservative MPs can be asking for stronger trade legislation in the Industry Committee and weaker legislation in the Trade Committee.

Quebec is a trading nation. Our companies, particularly our cutting-edge companies, could not survive on the domestic market. International exports represent a third of Quebec’s GDP. If interprovincial trade is added, Quebec’s exports represented 52% of its GDP in 2005. A protectionist stance would be contrary to our interests and that is why Quebec, and Quebec sovereigntists in particular, were overwhelmingly in favour of the Free Trade Agreement with the United States and then NAFTA.

On the other hand, it would be naive and wrong to claim that everything is for the best in this best of all possible worlds. While trade liberalization has, overall, led to greater wealth, it has also produced its share of losers. The total lack of social, human, cultural and environmental considerations in trade agreements is an impediment to fair globalization from which everyone benefits. It is time to re-examine the very structure of trade agreements.

Along with commercial dumping, there is social dumping. Trade in a product manufactured in contravention of the main international labour, environmental or human rights agreements is a form of unfair competition. It exerts enormous pressure on our industry, gives offenders an advantage over those countries that respect their international obligations and encourages the exploitation of foreign workers and environmental degradation. This development model is unsustainable in the long term.

In order for trade to enrich everyone, it is not enough to simply liberalize it. It must be civilized in order to re-establish healthy international competition and clean up the terms of trade. If they are to have access to foreign markets, countries should have to respect certain rules.

The Bloc Québécois feels that this undertaking must become the major trading priority for Quebec and Canada and deeply deplores the fact that the Committee on Trade is sidestepping this issue, which is likely to become one of the major international issues in the next few years.

The fact that the plan for a Free Trade Area of the Americas is on ice and the DOHA Round at the WTO is moribund does not mean that the multilateral system is ineffective. It is the basis for negotiations that needs to be fixed. Many countries seem to feel that the concessions they are asked to make are greater than any benefits they hope to derive from a potential agreement. If everyone thinks they are losing on the deal, then there is a problem.

As a whole, the multilateral system has been incredibly effective. The agreements designed to liberalize trade completely changed the face of the world. Today, the majority of products, representing over 80% of world trade, circulate freely. With 1947’s GATT and its successors, it is no longer necessary to invade a county to gain access to its resources or its market. The GATT, and then the WTO, sounded the death-knell for empires and prevented many wars. It’s an enormous gain.

Now the time has come to correct the perverse effects of trade liberalization and ensure that trade is a source of progress for all. And this magnificent undertaking can only be accomplished in a multilateral context. Only by going ahead with this realignment of our trade policy will it be possible to relaunch the discussions.

Unfortunately, instead of completely reviewing the negotiating position at the WTO, the Committee recommends circumventing the problem by embarking on wide open bilateral negotiations. The WTO’s recent analysis of Canadian trade policy rightfully notes that “Canada’s participation in preferential trade agreements and negotiations raises concerns about resources being distracted away from the multilateral trading system.”

The Committee’s position is not only of doubtful efficacy, it is also very imprudent. Canada is currently negotiating four free trade agreements. Officials in the departments of Trade and Industry have admitted that no studies were done to allow them to assess whether these agreements would be beneficial for our economy. The Committee is asking the government to conclude these agreements, whether or not they are good. That is completely irresponsible!

What is worse, the Committee recommends embarking on wide open bilateral negotiations, once again with no studies to determine whether they would be beneficial. It even envisages a free trade agreement with China. In 2005, Canada imported $32 billion in Chinese products and generated a trade deficit of $26 billion, $1000 per Canadian.

When trade with a country generates five times more imports than exports, the major priority should be to balance the terms of trade, not to liberalize further. The Bloc Québécois is astonished at the offhand way in which the Trade Committee is recommending going forward with no consideration of the consequences.

The supply management system, which regulates commerce in milk products, poultry and eggs, is the backbone of Quebec agriculture. This system is effective, requires no subsidy, ensures a decent and stable income for farmers and generates no cost to consumers.

Traditionally, the position of Canadian parliamentarians has been to insist on the importance of protecting this jewel of our agricultural economy. The Trade Committee is breaking with that tradition. In order to relaunch the WTO discussions, the Committee is recommending that Canada make painful concessions. The Bloc Québécois is very concerned and reiterates that its position remains unchanged: don’t touch supply management.

Direct foreign investments are growing exponentially. In order to create a predictable environment and ensure that foreign investors will not be dispossessed of their assets or nationalized without compensation, countries sign investment protection agreements. It is quite normal, and the Bloc is in favour of such treaties. The Canada-US Free Trade Agreement, which included a chapter on investment protection (Chapter 16), was the first agreement in the world to include a dispute settlement mechanism.

Chapter 11 of NAFTA on investments deviated from this approach. Under Chapter 11, foreign investors can apply directly to international courts, bypassing the filter of the public good that governments use. The concept of expropriation is so vast that any law that would reduce an investor’s profits could represent an expropriation and lead to a law suit. Finally, the amount of the law suit is not limited to the value of the investment but includes all potential future profits. It is completely excessive.

And yet, the Committee is recommending that the government increase the number of these agreements. The Bloc Québécois will oppose any investment agreements modeled on Chapter 11 of NAFTA. It calls for a return to the previous formula for treaties, which did not constitute a charter for multinationals at the expense of the common good.

In the past, Quebecers felt that their trade interests and those of Canada were sufficiently alike. This Committee report marks a break. If it reflects Canada’s interests and prefigures Canadian trade policy, it seems that Quebec and Canada now have diametrically opposed interests. If the government adopts the trade policy recommended by the Committee, it will lead to the deindustrialization of Quebec. Being subject to Canadian trade policy is a veritable Sword of Damocles for Quebec.

The Bloc Québécois wishes to state its opposition and express its deep concern. We feel it is imperative that Quebec be able to develop its own trade policy in accordance with its interests. To do that, it must become sovereign.