:
Thank you very much, Mr. Chairman.
[English]
It's a great privilege to have the opportunity to exchange ideas with the elected representatives who govern me. But it's a bit of a challenge to reduce 40 years of researching and teaching on this question down to 10 minutes.
So let me make three sets of points. The first couple of points are about what has changed--I started working on the Canadian-American relationship in the late sixties--followed by a couple of really basic features of the new reality that Canada faces in North America, and then I'll end with a couple of ideas about what, perhaps, you will want to be addressing and the recommendations you'll be getting.
What's changed, particularly in the Canadian-American relationship, is how Canada has lost importance in some dimensions and gained importance in others, as far as the United States is concerned. It's lost militarily with the end of the Cold War because we're no longer on the flight path, so NORAD is no longer a critical institution. We've lost economically in the sense that Canada is a relatively much smaller country, much smaller economy, with China, India, and the other big countries growing. And we've lost politically in the sense that we don't cause trouble--and I don't mean it sarcastically--so we're not on the horizon and not on the radar in Washington.
On the other hand, Canada is more important than it was in three dimensions of security. It's obvious that with American paranoia about terrorism, Canada plays a huge role in their concerns about sealing off the country to any possible terrorists crossing the border. In terms of energy security, it's obviously also true that Canada is the biggest supplier of oil and the only real supplier of natural gas. So Canada plays a big role in American concerns about their energy security. And with the new president putting the environment on the agenda, Canada is a very important, if not entirely positive, factor in the United States' environmental security concerns, given the ambivalent role of the tar sands, whether as a source of oil or as a huge source of pollution. That's not to say that Canada has entirely lost its importance, but its importance has shifted, I think, quite significantly. That's the first big change.
The second change is the shift in the international context. In the Cold War, the Canadian involvement in the world was trans-polar, with NORAD and the threat of the Soviet Union, and it was trans-Atlantic, with the huge involvement in NATO, given the Soviet threat in Europe. Now, the major international context for Canada is continental with NAFTA and global with the World Trade Organization, which, overwhelmingly, are the most important organizations that Canada relates to in terms of dealing with the United States. So those are pretty big shifts over 30 or 40 years in Canada's importance and in the context within which it deals with the United States.
I'll talk about the present very briefly. The reality of North America, 15 years after NAFTA went into operation, is the almost surprising failure of NAFTA as a primarily economic effort to create an integrated North America. It's failed primarily because disparities have increased rather than decreased between the countries and they've increased rather than decreased within the countries.
This means that NAFTA is by no means seen as a successful achievement, certainly not in Mexico and certainly not in the United States, although it's seen much more positively in Canada. That's a huge part of the present reality. One then has to include the tremendous troubles in Mexico, with the talk from Washington of its being a failed state.
We have, in effect, in North America this disintegration, the symbol of that being the wall--in fact it's a double wall--the United States is building along the southern border. That's the first major reality that the committee will obviously have to take very seriously.
The second new reality is security, the tremendous fears in the United States about terrorists possibly crossing the border. The point I want to make there is that it puts Canada in the same boat as Mexico, like it or not. The Department of Homeland Security sees Canada as just as much, if not more, of a threat. I'm sure you all know, probably better than I--and it's not just on the right-wing talk shows--it's thought to be easier in general for people from the Middle East to get into Canada than into Mexico. Therefore, Islamic terrorists can get into Canada easier, and the threat of getting across the border is more real. The United States differentiates between Canada and Mexico, but I don't think it sees Canada in a different light in the sense that Canada, along with Mexico, is a source of threat, not through its own citizens, but from people coming into those countries, just as it is seen as a source of illegal narcotics.
Mr. Chairman, about the future, the irony of the present situation is that Canada's political and economic elite, which brought us NAFTA, is now saying we should, in effect, get out, try to disconnect from Mexico, and try to re-establish a Canadian-American relationship, which in the 1960s was thought to be special--every country thinks it has a special relationship with the United States, of course. But the current line--with former Ambassadors Dereck Burney and Allan Gotlieb and the former advisors to the government who pushed for free trade, like Michael Hart--is that we are now being contaminated by our relationship with Mexico and we should create some kind of new Canadian-American relationship that is distinct from Mexico in some way.
I'd like to address that issue because I think it's naive to try to turn the clock back, or, to use another clichéd metaphor, to unscramble the omelette. I'm sure the members here from the west will know more about the drug problems in southern B.C. than I do, but I read in The Globe and Mail--and therefore it's true--that the drug crisis in British Columbia is directly connected to the cartels in Mexico. If you read The Globe and Mail a couple of days earlier, you'd have seen another report about how the drug cartels in Mexico are directly connected to the Mafia in Sicily, which has a new business plan, namely to work with Mexico.
The point there is that it's not possible to disconnect ourselves from Mexico. It's not possible to tell Bombardier to take their aircraft plant out of Querétaro. It's not possible to tell Magna to take their 19 plants out of Mexico and go home; we're going to pretend that Mexico doesn't exist. I think the reality is that we are in the omelette.
My own view is that Mexico should be dealt with, not denied. I don't think we can deny Mexico's great problems. We can't deny either that it's a growing market for us. We can't deny that it has a population of 110 million, which is three times that of Canada, that it's going to be stronger than us in due course, and that it is already stronger than Canada is in Washington.
Before the last election, over 5,000 American citizens of Mexican origin had been elected in some capacity in state, municipal, and federal government. Some 60% of illegal immigrants in the United States are Mexican. Some 30% of legal immigrants in the United States are Mexican. In the last Congress, there was a caucus of 27 Hispanics, most of whom are Mexican.
The point is that Mexico may cause trouble within the United States, but it is taken more seriously. I think Canada needs to work with Mexico in dealing with Washington on many issues in which we have a common interest, borders being one, trade and investment rules being another.
I'll just conclude with the notion that if we had spent $20 billion not on a futile military effort in Afghanistan but on building a partnership, on helping Mexico develop its infrastructure so that it could get into a development orbit, then I think.... Anyway, that's speculation, but I think it behooves Canada to work with Mexico in dealing with Washington on many common issues.
Thanks very much.
:
Thank you very much, Mr. Chairman.
I want to thank the committee for inviting me to speak to you today. I'll try to divide my remarks into three segments, somewhat as Mr. Clarkson did.
First, I'm going to remind you why Canada entered into a free trade agreement with the United States, which was eventually extended to Mexico. Then I'm going to talk about how that agreement has evolved in relation to Canada's priorities at the time. Lastly, I'll make a few suggestions for the future, in view of the change in context and administration in Washington.
I am well aware that this committee is the foreign affairs and international development committee and that there is a separate committee for international trade, but you will agree with me that a large segment of relations with the United States is first of all trade-related.
When Mr. Mulroney wrote to President Reagan in September 1985, he stated two objectives for Canada: first, he wanted more secure access to the U.S. market and, second, better access. What did that mean? It meant that Canada was essentially seeking that free trade agreement with the United States, which was the result of 150 years of effort, first to consolidate the gains it had made in the GATT negotiations. There were seven at the time. We wanted to consolidate those gains because, at the time, we were using contingent protection measures, such as countervailing duties in the case of subsidies, and anti-dumping duties, in cases of alleged dumping. By paying a price in terms of openness of its own market, there was an erosion of gains made by Canada with the United States. Already at the time, we had the first softwood lumber case; in fact that was more than 25 years ago. It was a very clear concern of Canada's.
The second objective was to improve access. Indeed, U.S. tariffs of approximately 4% were applied to Canadian exports.
When you take an overview, you can see that we have improved our access: most tariffs have been eliminated on both sides. In Canada, we've kept quite high tariffs on certain agricultural products because of the GATT negotiations that were conducted in the 1990s and that transformed a certain number of quotas that we considered necessary at the time for the Canadian supply management system for dairy products, poultry and eggs. Those quotas were transformed into tariffs, and, despite certain cuts, those tariffs nevertheless remained quite high. We have gained better access; we can confirm that.
Safer access meant a better trade dispute settlement system. That soon became the main issue in the 1987 negotiations, in particular, such that Canada's chief negotiator, Mr. Reisman, ultimately broke off negotiations because no progress was being made on the crucial issue, for Canada, of a better trade dispute settlement system.
Negotiations eventually resumed and we got what we call Chapter 19. That chapter established a completely new dispute settlement system. For the first time, the United States agreed that the decisions of their agencies could be reviewed by non-Americans. They didn't like that from the outset, but it must be said that, in the first phase, that of the Canada-U.S. Free Trade Agreement, the system worked well as planned, that is to say that waiting times were reduced to approximately 315 days, whereas previous time frames, in the U.S. courts, were more than 1,000 days. Costs were also cut because there were no appeals; under that system, the decisions by the panels were final.
Matters seriously deteriorated when we signed NAFTA. Was it because we added a new country, Mexico, which is a developing country? I doubt it. Instead I believe that U.S. interest groups, the very powerful lobbies in Washington, managed to convince U.S. authorities to oppose Chapter 19 systematically. A range of measures were then deployed to counter the operation of Chapter 19.
I won't go into the genealogy of all that; I believe it's already been quite well documented. Whatever the case may be, as a result, today, an average of nearly 1,000 days is required to settle a dispute. Some cases, such as magnesium, have taken 2,300 days. In the last episode, numerous softwood lumber cases took approximately 1,700 days. Obviously, in these conditions, you can't say the process has successfully met Canada's second objective. It must be kept in mind that that was the principal issue for Canada. The main issue for the United States, as we learned later, was more secure access to energy resources. Professor Clarkson just alluded to that.
So, as far as we're concerned, this hasn't worked. That's due not only to protectionist pressures in the United States and to efforts by lobbies to literally destroy what was agreed upon at the time of the first negotiations, but also to our own government. The Canadian government has engaged in a more or less wilful neglect—and I think it's been more wilful rather than less in certain cases—that has undermined the system, by not appointing, for example, panel members within the prescribed deadlines, by accepting unacceptable deadlines set by the U.S. and by never challenging U.S. decisions through the extraordinary challenge mechanism, whereas the Americans have literally made it an appeal mechanism. I don't think that's a partisan criticism, in view of the fact that a number of successive governments have also experienced wrongs, which is unfortunate. That mechanism has been eroded, and I believe we can seriously wonder whether it will be really useful in future.
I don't believe either, somewhat like Mr. Clarkson, that we can unscramble the omelette. We're in it, and so we have to do the best we can. What can we do? The new U.S. administration and the arrival of Mr. Obama have obviously raised considerable hopes around the world. Mr. Obama clearly views matters in a very broad and very practical way. The crisis in which he has found himself on arriving in the White House will probably reinforce that attitude. For example, in reading his trade policy statement, which appeared on February 27, one is struck by the fact that he puts a lot of things in the same basket. I think that, if Canada wants to be heard by the new President, it will have to take that fact into account.
The shopping list, that is to say our approach of going to Washington with a list of items of interest to us, doesn't work. However, Canada has a lot of advantages. The President himself moreover emphasized one when he came here a few weeks ago, the regulation of our banking system. We have a lot of advantages to put forward, on which we can base a new approach to the new U.S. administration. I'm thinking, for example, of a less degraded environment and of energy sources—some of which are highly polluting—that are already of considerable interest to the United States.
I think that, if we want to improve our relations with the United States, while dropping this moralistic approach we often adopt, we will literally be able to put ourselves on President Obama's agenda.
Thank you.
:
Thank you, Chair. I appreciate very much the opportunity to speak with you today.
I'd like to focus on a somewhat narrower issue, although it's related to some of the things Mr. Grenier has said. It concerns how Canada and the United States settle their disputes.
Obviously, you have disputes or differences with the United States all the time. Sometimes they're resolved privately. Sometimes they're resolved with a great deal of public fanfare. And sometimes they're submitted to dispute settlement processes. The question I want to look at is whether dispute settlement processes have been useful and whether there is an opportunity to expand them, or perhaps not.
I'll start with a little bit of history. Before Canada became responsible for its own external foreign relations, the United States and Great Britain did use arbitration on a number of occasions in an attempt to settle boundary and water differences on both the east and west coasts, including the infamous Alaska boundary dispute in 1903. Maybe because of that dispute, after 1903 we stopped. We didn't, in fact, have any other dispute settlement process with the United States, really, until 1984, when we went to the International Court of Justice on the Gulf of Maine maritime boundary dispute. Of course, at that time, there was a lot of concern about whether this was a good idea. What would be the political fallout from Canada litigating an issue it had with the United States? Would the United States retaliate if it lost? In fact, I think what the Gulf of Maine case showed was that we could litigate a case with the United States and we could win, and the political relationship would not be damaged by it.
The major change in dispute settlement between Canada and the United States really occurred with the Canada-United States Free Trade Agreement, NAFTA, and the WTO. NAFTA has three different dispute settlement processes that are referred to often: chapter 20, which is disputes between Canada and the United States, state to state--it's only been used once, in fact; chapter 19, which Mr. Grenier referred to, which is intended to deal with anti-dumping and countervailing duty disputes and which has come into disrepute as a result of the softwood lumber debacle, as one might call it; and chapter 11, which allows investors to bring claims against one of the NAFTA state governments.
The World Trade Organization has just one broad dispute settlement process. Disagreements over the interpretation of WTO agreements go to a panel. It has also the useful addition of having decisions of the panel potentially reviewed by appellate bodies. The process is compulsory, it has set time limits, and it's generally regarded as successful. There have been a number of Canada-United States cases before the WTO dispute settlement process.
So in the area of trade disputes there has been considerable experience in Canada and the United States with the use of dispute settlement processes. In other areas, there has been practically no experience. I mentioned the Gulf of Maine case, but it stands out as the one example, really, of the use of a formal dispute settlement process.
What have we learned from this? I think one thing we can say we've learned is that Canada is not necessarily disadvantaged by this process. The idea that the United States will always win and that we'll always lose is simply not correct. If you look at the trade disputes, it's probably rather balanced in terms of wins and losses at the WTO and in NAFTA.
Second, the idea that the United States will not comply with any ruling I don't think is borne out by the facts, if you look at the range of cases at the WTO and in NAFTA. Softwood lumber stands out, but it really is the exception rather than the rule. I won't dwell on softwood lumber.
The third point is that not every dispute is susceptible to being sent to arbitration or to a court. Sometimes that is not the best way to deal with a dispute. I would illustrate this by reference to the Pacific salmon dispute I was involved with in the late 1990s. There, it seemed, in the mid-1990s, that Pacific salmon was completely intractable. We couldn't agree on catch allocations. Passions ran high on the west coast. There was a blockading of an Alaskan ferry in Prince Rupert. At that time, it was argued that we should submit the dispute to arbitration. The United States was not prepared to accept arbitration, and we had no way of forcing them to arbitration, as we could have under a trade agreement if it had been a trade dispute, or at least under the WTO.
Even if we had forced the United States to arbitration on that issue and had won, I'm not convinced that the United States would have complied. I'm not saying that because I think the United States does not comply with its international obligations. I think it really relates to the nature of the dispute. That was a very complex dispute involving competing interests in the domestic fishery in the United States, competing interests between Alaska and the State of Washington, and the tribal fishery. They were interests that the United States federal government simply was unable to reconcile. Therefore, it was unable to get itself into a position in which it could accommodate the potential outcome of any kind of arbitration.
So I think in many respects we can draw a parallel between Pacific salmon and the softwood lumber dispute. Both sides had quite different interpretations of any relevant rules in the area, and they represented fundamentally different perceptions about what the rules were trying to do in that area. There were also powerful domestic constituencies, I would say, on both sides of the border, which the federal governments had to deal with and which Mr. Grenier has referred to. Ultimately, as we saw, softwood lumber was resolved through an agreement. Ultimately, the Pacific salmon dispute was resolved through an agreement. I'll come back later on to a few things we might learn from that, but I think we do learn that not every dispute should be sent to a third-party process. Not all are susceptible to third-party settlement.
I think there are three conditions that we want to think about if we're thinking about procedures to settle disputes. One is that clear and agreed upon rules between the parties have to be determined, rules that can be interpreted through processes of legal interpretation and that would have some legitimacy. The result would have some legitimacy within the processes of interpretation.
Second, I think you have to be sure that the other side will have a good chance of being able to implement any decision of the court or tribunal.
And third, which I think is related, is that both sides have to be able to handle the domestic consequences of an outcome of any dispute-settlement process. In other words, to put it simply, you have to be ready to lose if you go before a court or an arbitral tribunal.
In light of this, one wonders whether dispute-settlement processes should be extended into areas beyond the trade area, and, I should say, the investment area as well. In the past there have been proposals for broader-ranging mechanisms for dispute settlement between Canada and the United States. I think there are some disputes that could be resolved that way. An obvious example is the Beaufort Sea boundary dispute between Alaska and Yukon, in which there's a clear set of maritime boundary limitation rules. Tribunals have had experience in this, and it could be done. Both Canada and the United States have experience in this as well.
But apart from those kinds of disputes, I would suggest there ought to be some caution about adopting arbitration or dispute settlement processes for other areas of Canada-U.S. relations. I think trade disputes are, to some extent, a bit unique. Trade agreements have fairly precise rules that can be interpreted. They're not always precise--that's one of the criticisms of WTO agreements--but they are capable of interpretation. I think in other areas the nature of the dispute is that you do not always have clear rules, and you often have disagreement about the relevant rules.
What can we say generally about the process? In respect of trade disputes, we really have to ask, in the context of Canada and the U.S., whether we really want to use WTO or NAFTA. I think the WTO has been the mechanism. It has a better dispute settlement mechanism. It has an appellate process. It has a system for dealing with non-compliance. The NAFTA does not have many of those things. Though chapter 20 of NAFTA is really the alternative, there are reasons the parties really haven't used that.
Outside the trade area, instead of looking for new dispute settlement mechanisms, I think we might be able to build on some of the existing mechanisms. We do have, in the International Boundary Waters Treaty Act, for the International Joint Commission a process of arbitration. But the parties have never used it. It's there. The commission could arbitrate a dispute between Canada and the United States, but neither party has been prepared to send a dispute to that process.
We have processes under the NAFTA side agreements that could be developed, whereby complaints could be brought against the NAFTA parties for failing to enforce their own environmental laws. The governments have been very reluctant to allow complaints to be brought, and have narrowed the scope of the complaints, and narrowed the scope of the conclusion of a factual record, which is the outcome of that dispute. I think that's an area that deserves strengthening.
But if we also want to strengthen dispute settlement, we have to focus on something we learned from softwood lumber, which is that the ultimate test of any process is implementation. A decision of a court or a panel or a tribunal is of little use if one party is free to ignore it. I think that has implications for how we go about implementation. It means that dispute settlement decisions have to be binding within the domestic law of the two parties.
In the European Union we talk about this as direct effect. The decisions of the European court automatically are binding. If one is moving in the direction of more dispute settlement processes, I think we have to have those processes integrated into the domestic laws of the two countries. That means closer integration between the two countries, and I know that raises a whole range of other questions and concerns about the extent to which we'd be prepared to accept that kind of integration. But if we want to have dispute settlement, I think it's the only way to go.
The reality is that most disputes between Canada and the United States are going to be negotiated. We're not going to have a Court of North America. I'd go back briefly to the Pacific salmon negotiations of the 1990s to see what we learned there. I think we learned that power imbalance does not necessarily mean you end up with a bad agreement. There are many agreements Canada has entered into with the United States that would not be regarded as lopsided bargains.
Second, it shows that negotiating with the United States is not simply state to state. Canada cannot sit across the table from the United States and assume the United States federal government is the correct interlocutor on any dispute. We saw that back in the 1970s, when we negotiated the east coast fisheries agreement with high-level officials and the support of the White House, and Congress said no to the agreement.
With the Pacific salmon dispute, we negotiated with the State of Washington. We negotiated with Alaska. We negotiated with the tribal fishers. Instead of thinking we are simply negotiating with the United States, we have to get behind the United States and deal with the domestic interests.
The reality of many disputes that Canada has with the United States is they are multiple and varied in that way. You cannot simply expect that the United States federal government is the correct interlocutor and that it will be in a position to implement what can be agreed across the table.
Thank you.
:
Thank you, Mr. Chairman.
Thank you for appearing here today. I'll be splitting my time with Ms. Brown, and if there are a few minutes left, with Mr. Lunney.
I'll make a statement here and ask a question, and maybe you can answer after we've finished our rounds here, to try to get a little more in.
You mentioned trade to the United States and perhaps lessening our involvement with Mexico. But given the recession and the security, the thickened border between Canada and the United States, and the past convenience of shipping rail straight through into Mexico, we no longer have all of that convenience. It's getting more and more difficult. When we were shipping to the Caribbean through the States and from Florida, we had it.
So wouldn't we rather be increasing our opportunities by doing more from our Atlantic and Pacific ports down the seaboard of the United States for easier access? Then we would be staged to go to the Caribbean--to Jamaica, Trinidad, Tobago, and other areas. Also, by going down to San Diego in the United States, you'd be staged to do direct shipment to Mexico. Wouldn't that be an opportunity?
If that is a multi-level approach to trade and expanding our presence with the United States and through it, is it complicated by NAFTA or any of our other agreements?
I'll pass this over to Lois.
:
Thank you very much, Kevin.
[Translation]
It is a pleasure to appear before this parliamentary committee. I feel somewhat at home here.
I believe this is the right time to review the important and broad role that Canada plays internationally.
I would like to make nine brief observations. I will also be circulating some charts, but I hope they will not be distributed to the audience in such a way as to detract from the very serious nature of my remarks. They will, however, need to be circulated.
Firstly, Canada enjoys a very solid reputation among the world’s nations. Our reputation is a national asset comparable to our wealth of resources and it can be put to use to our mutual advantage.
Secondly, in a world marked by religious and economic differences, the most valuable skills today and for the foreseeable future are the ones that make it possible to transcend these differences, to forge alliances and to find common ground, to manage diversity and to spur confidence. These are traditional qualities that Canada has displayed in a tangible way on the world stage.
Third, using that asset is in our own national interest. One of the charts that is being circulated, or will be, reports a projection by Goldman Sachs—not economic advice, but projections of the future—which projects the changes in world economic standing of various countries by the year 2050. Canada then will be a respectable economy. We'll be a little smaller than Vietnam and a little larger than the Philippines.
In those circumstances, how long could Canada keep a place at the table of a G-8 summit? Would we even make the cut of a G-20 summit? Would we, in other words, keep our seat in the inner circle of countries that define international trade and military and diplomatic policy? Not if we focus narrowly on trade and economic policy or define our international profile by military presence alone. But the odds are that we could remain an influential country were we to renew our trusted activist, diplomatic, and development credentials.
Fourth, when Canada has been most effective internationally—and I say this as someone who served as Secretary of State during a period when we simultaneously said no to President Reagan on the strategic defence initiative and persuaded the Americans to enter into a free trade agreement and an acid rain treaty—it has been because we pursued two priorities at the same time. We worked hard on our friendship with the United States and we worked hard on an independent and innovative role in the wider world. Those, sir, are not opposite positions. They are the two sides of the Canadian coin.
Our access to Washington adds real clout to the standing we earn by our actions in other countries, because we are thought to be able to influence our powerful neighbour.
In the same line of thinking, our sound reputation in developing countries and our active role in the multilateral community are not negligible assets for Canada. The United States cannot say as much.
In the past 60 years at least, Canada has established partnerships and earned the trust and respect of regions where the United States sometimes creates envy or fear. This capability of Canada's is definitely understood by President Obama's administration.
Fifth, power in the world is changing. The new world that is taking shape holds out a twofold advantage for Canada. We are an industrialized and innovative economy and society. We are an independent and respected country, often a bridge between the industrialized and developing countries.
[English]
As Fareed Zakaria is careful to note in his book The Post-American World, this shift in power is not about anybody's decline. It is rather about the rise and assertion of new forces. We have more capacity in Canada than most of the developed world to build and enlarge relations with the cultures and societies whose influence in this world is growing. So many of those cultures are dynamic parts of our own Canadian identity, and our past actions have earned the respect of the developing world.
Sixth, Canada can have relatively more influence in politics and diplomacy than we do in trade and economics. Economic power reflects size. Diplomacy depends more on imagination, agility, and reputation. Canada's political and diplomatic strengths have more currency, again, if we choose to use them. Yet we are eroding those strengths when we should be building them up.
Seventh—and again, one of the charts circulated relates to these figures—there are three departments in the Government of Canada with explicit international vocations. They are ranked here according to the government's published spending reports for the year 2008-09. They are National Defence, which accounts for 8.29% of federal program spending; CIDA, which accounts for 1.39%; and Foreign Affairs and International Trade, which currently accounts for 1.0% of federal program spending. Compared with 2007-08, the Department of National Defence budget increased by close to 8.4%. CIDA's increased by 0.68%. The Department of Foreign Affairs and International Trade dropped by 17.96%. DFAIT estimates that this decline will continue for at least the next two years and that by 2010-11, its budget will decrease by another 13.38%. In real terms, that would mean a loss of $700 million in just over three years from a budget that is now approximately $2.4 billion.
Eighth, to the Harper government's credit, Canada has now increased its defence spending to repair the damage that was done when we let other countries carry an increasing share of our defence burden. Yet our diplomatic resources and our development capacity are being run down now as steadily and as certainly as our defence resources were run down before. So why the double standard? Why are we more prepared to accept our share of the military burden than of the diplomatic and the development burden?
There are a number of issues I would like to address, but perhaps we will deal with those during the questions.
Finally, I just want to make a point about what modern foreign ministries can do, because I am more aware than others, perhaps, of the differences between the period when it was my privilege to serve as Minister of Foreign Affairs and today. The world has changed profoundly, and it has had an impact upon what countries can do. But one dramatic change in the world has been the increased role and authority of NGOs and activists, individuals and organizations who range from the International Crisis Group, which gives perhaps the best briefings one can find on international affairs, to the Gates foundation, to the environmental movement.
Very often these new actors are more nimble and less constrained than governments, or large institutions like the UN, but while they complement the work of governments and international institutions—and this is a point I want to insist on—they don't replace them. This is still an institutional world. Sovereign states still make the critical decisions to cut or to increase budgets, to respect or to break treaties, to send or to withdraw troops, to pay or withhold their membership contributions, to confront or ignore crises.
So the challenge now, and the opportunity now for a country like Canada, is to marry mandate with imagination, combine the creativity of these independent forces with the capacity of institutions to act. In Canadian experience, that is what happened in the fight against apartheid, in the signing of the land mines treaty, in the Kimberley Process to stop the trade in blood diamonds, and in a wide range of less-publicized initiatives.
We could make that a Canadian practice if we gave priority again to development and diplomacy.
Thank you, Mr. Chairman.
Let me begin by thanking the committee for the privilege of speaking with you this afternoon. I would add that to do so in the company of Mr. Clark is a privilege indeed.
[Translation]
South Carolina has long maintained significant economic and cultural ties with Canada. In 2007, we received more than 850,000 Canadian visitors. Most of them, approximately 80%, spent their vacations on our beaches. Others came on business visits.
According to Canada's embassy in Washington, trade between South Carolina and Canada supports approximately 85,000 jobs in our state. Although it is hard for us to reconcile that level of employment, I can assure you that we are grateful for it and that relations between Canada and our state are of prime importance.
[English]
I should emphasize that I represent the State of South Carolina, not a country. We're a trade and investment office, so what I can perhaps offer to benefit your deliberations is our insight into how we develop these trade relationships and economic development opportunities or investment.
We are a very small state of roughly four million people. Our land mass is slightly larger than New Brunswick. It might be equal if the tide's out in the Bay of Fundy, but other than that we're about the same size. Our economy is historically based on agriculture and textiles. For those of you who know about this, we have essentially redeveloped ourselves in the past two decades. We're now very much focused, with a very successful effort, on economic development and growing our manufacturing, logistics, distribution, and tourism sectors. But the economic downturn is certainly having a major impact on us. We are a manufacturing state, but we're also a very fiscally conservative state. For that reason we feel we'll certainly be on the early end of the turnaround.
I appreciate that time is limited, so rather than rhyming off a bunch of trade statistics I'm sure you're all aware of, let me conclude by saying that whether as a tourist destination or a business-friendly place for Canadian industry to access and grow their U.S. markets, we have a long and valued history of welcoming Canadians, and we certainly appreciate the importance of building on this very important relationship.
Thank you.
[Translation]
Once again, thank you for inviting me today.
I think a risk is that young people are not looking to governments. And I quite understand and encourage their interest in NGOs and the things they can do personally. It's much larger than it was in earlier generations. That's why I insist on the point that the decisions that are made in a world of institutions are made by governments. So we have to find some way to marry those.
One of my sad observations about Canada is that if you ever ran a referendum on foreign policy--I don't recommend referenda, but if you did--you would not get strong support for international initiatives. Our stellar record internationally has always been led by leaders. It's been multi-partisan in this country, and there is a strong grassroots interest in these matters, but it is not something that rises from the grassroots. It has to be led.
The third point I'd make is that the old models of how CIDA worked and of how External Affairs worked when I was the minister have been changed. One of the things that is necessary is to engender confidence in our public servants and others, the people who work with those departments, to look creatively at the changes.
What worries me most now, when I talk to people who serve both in our diplomatic and in our development agencies, is how down they are, how unwilling they are to speak with confidence about missions that not very long ago used to fill them with a sense of confidence. That is an institutional problem, which I believe is within the capacity of this committee to help address.
There needs to be, first of all, a recognition that there is a wide world in which individuals can make a difference. But the final differences require shoring up of our institutions. Those institutions have to take a look at themselves in modern and contemporary terms. Some of the best architects of change will be people who had been working in those institutions but who are now ground down by the sense that their contribution is not respected. They and others, I think, could make a substantial contribution to change.
The other thing is that, whether we deserve it or not, our reputation is still very high in the world. It won't stay that way forever, but it is still very high in the world, including, I believe, with the new Obama administration. There is a recognition that there are things we can do in the hemisphere and in the world that the United States can't do. I don't want to comment on recent performances. I simply want to make the case that this reputation remains strong and is an asset in Canada's hands.
Thank you very much to both of our witnesses here.
Mr. Clark, I just wanted to pick up on your remarks earlier. You remarked about our proud history of engaging and working hard on two priorities: we have worked hard on our relationship with the United States and we have worked hard on our independent foreign policy. You made a remark about how the world is changing and that our policy should be innovative and independent.
But I think you appropriately described the multicultural nature of Canada, which gives us the opportunity to be a bridge to many parts of the world, because we have many historic and cultural links.
The challenge, as you said, for a small country is to come up with some focus. A lot of our discussions in our hearings so far have been about Canada and the U.S., and we've had some discussions about Canada, the U.S., and Mexico. You might have heard some of the discussion with the previous witnesses about whether we should be concentrating on a trilateral relationship or be shifting more to a bilateral relationship.
I simply wanted to ask, first, for your take on that particular issue, whether Canada should be emphasizing more a bilateral relationship than a trilateral one.
By the way, Mr. Chair, I'll fire the questioning down to my colleague here, Mr. Young.
:
First of all, on the North American issue, I think we should emphasize a trilateral arrangement. I think the Canada-U.S. arrangement is very important and requires a lot of our attention. A lot of our challenge has to be to keep getting their attention. I don't think that would benefit from hiving off Mexico.
I wanted to avoid speaking of the past, but the first issue that came to me as foreign minister in 1984 was a request by Mexico for help in getting into the GATT. So in 1984 our NAFTA partner was not a member of the GATT. What's interesting is that they wouldn't go to the United States for help; they came to us. I think there are a multitude of reasons for us to maintain that tripartite arrangement.
I think the very tough issue for Canada and this committee is going to revolve around the issue of how we make the tough choices and where should the spending go. Within the envelope of spending on development and diplomacy, where should it go? The other side of that is, where should it not go? The questions are tightly allied. I hope you have the opportunity to take a very close look at both of those questions.
The Afghanistan question is very interesting, because, among other things, there has been a side to the military demonstrated that not many people knew about. It is a side that has real proficiency and skill in development and in other non-traditional military capacities. But that's not their first job, and they're naturally going to take an approach to that through the lens of what their first job is. I suspect that even though we have had enormously able people from Foreign Affairs and CIDA operating and working with DND in Afghanistan, our approach to the development side, the post-conflict side, if you will, of Afghanistan, would have been stronger had there been a greater sense of morale, esprit, and confidence among the Foreign Affairs and CIDA people who were part of that approach.
You know there is a very active debate in the U.S. as to whether development issues should be led by military personnel or not. We haven't had that debate, and we don't tend to have those kinds of debates here. We didn't debate whether or not there should be an increase in military spending. No vote, no debate.
To our guests, thank you.
I have to say, Mr. Chair, it is an honour. Something that Canada needs to improve a lot on is taking advantage of the fact that our former Prime Ministers have a lot to say. I'm glad we're hearing the sage advice of a former Prime Minister. Maybe a recommendation to the committee is that we do a better job of that. They certainly do a better job of that in the States than we do here.
But it's good to have you here today.
I actually had the opportunity to hear you speak recently on Canada's role, and it was vis-à-vis the United States. You made some of the same points today—I also look forward to the data you tabled for us to look at—in particular your point on budgets, because as everyone around this table knows, money is important and how money is spent is important. I've always said that the budget of any government shows to Canadians the priorities of the government. So I think that data is important for us to understand.
I want to start with you, Mr. Clark, on Canada's role with the United States as it relates to Mexico—we talked a little bit about that with the previous witnesses—and your take on how we can involve them on the environment.
It was interesting to hear Mr. Obama talk in trilateral terms when it came to climate change. When I asked a departmental official about who was taking the lead on the environment in cap and trade, it certainly wasn't Foreign Affairs. However, at times we hear the Minister of Foreign Affairs suggesting this is a major initiative. I would like your opinion, because of your experience with the acid rain treaty in particular, about how Canada should deal with the issue of particularly the cap and trade, because that seems to be where we're going—I think that's a good thing, and it certainly was something we campaigned on—and how it relates to Mexico and who should actually be the lead ministry on it.
I have just a comment.
Mr. LeBlanc, some years ago I worked for a Canadian company that did a considerable amount of business in the Carolinas. Our office was actually located in Raleigh-Durham. I spent six delightful months down there representing a company and enjoying the hospitality of the southern states. I would recommend that they do learn how to use teapots, though. It's a sad neglect, given the fact that they had the Boston tea party, that they have never really learned how to use teapots.
My question is for Mr. Clark, and thank you very much for your presentation.
I want to talk about your discussion about the increased role of NGOs and activists particularly, an area that I would like to explore more in my responsibilities. One of the things that we have seen is the ability for them to react very quickly, particularly in catastrophic situations. Think of the tsunami that we had and how those NGOs were able to get aid into countries, and there are organizations like those you mentioned, the Bill & Melinda Gates Foundation. What comes to mind for me is World Vision and the great work they do around the world, or the international Red Cross and how responsive they are able to be.
I go back then to the discussion about the budgets, where we see that CIDA has more money in its budget than DFAIT does. I am wondering, and this is purely speculation on my part, if there is a significant change in the ability of technology. My sister worked for USAID in Kenya for a number of years and she commented about how, over her years there, the differences in technology--even in the years that she was in the office--increased the ability of USAID to get goods to the ground for the people who needed them. Is that perhaps part of what we're seeing here, that the money has been shifted from DFAIT into CIDA, and rightly so, because then we can supply more health services, more food services, more education services? Is that part of this equation?
I read the Thomas Friedman book, The World Is Flat: A Brief History of the Twenty-First Century , and he talks significantly about the ability in communications and how that has changed so much of what we're doing. Is it possible that is part of what we're seeing here in this changing world?
:
I'd like to put a question to Mr. LeBlanc and then another one to Mr. Clark.
Mr. LeBlanc, you say that, in South Carolina, you rely somewhat on the consulate which is in Atlanta, Georgia. In the past, this committee conducted a study on international trade and suggested to the government that it make an enormous increase in the number of consulates in the United States. It did so in one of the recent budgets. We're often told that the person responsible for trade in one of those consulates can go to various U.S. states, but it doesn't work that way.
Do you think that, if we increase the number of consulates and the number of people working in trade in those consulates, as in South Carolina, that could really help increase trade between Canada and the United States?
[English]
Mr. Clark, I have a question for you also. Last week, Peter Harder, former deputy minister of Foreign Affairs, talked to us about the projection for 2010 and 2015. I don't know if it was a goal or a projection, but he pinpointed that Canada will be, as you mentioned, a respectable country. But in fact we're not represented in the emerging countries. My question is, how do we engage with the emerging countries? I'm talking mainly of China, India, Brazil, and some other countries, because it is now time to engage for the future and not to wait for 10 or 12 years from now.
:
If I were still a parliamentarian and engaged in partisan debate, I'd be tempted to say that I don't think they would have drawn that impression until you entered the idea into the record of Hansard.
Some hon. members: Oh, oh!
Right Hon. Joe Clark: Nonetheless, on the Americas, I think one of the really fortunate things that happened is that the current government established its Americas policy before the election of a new president, because it's not going to look like a Johnny-come-lately initiative. I think now the challenge--and it's being acted on in part by the changes in aid allocations--is to make real use of that.
I'm very impressed by the work of the new minister in this field. I've just spent a couple of days in Washington speaking with people who work in this area, and his impact is being felt and the country's capacity is well understood.
On Africa, I think we could get into a debate, which probably doesn't serve much purpose, about aid levels. I think the attention paid to Africa by Canada has declined, in particular on the governmental side. You're absolutely right, and others are absolutely right, that it has not happened with regard to NGOs and faith groups and others, who are more present and more effective than ever in Africa. And I don't think this should ever be a partisan matter.
My view of this is that Africa is an immensely resourceful and highly troubled continent, and it needs attention, and it needs friends in the developed world. Very often, we have been able to provide some of that friendship. We have great capacities to get a lot of bang out of a few bucks simply because we have that strong tradition. I would hope that it would be pursued vigorously.