Proceedings of the Standing Senate Committee on
Foreign Affairs
Issue 31 - Evidence
OTTAWA, Tuesday, March 16, 1999
The Standing Senate Committee on Foreign Affairs, to which was referred Bill C-35, to amend the Special Import Measures Act and the Canadian International Trade Tribunal Act, met this day at 5:38 p.m. to give consideration to the bill.
Senator John B. Stewart (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, our witnesses today are from the Department of Finance, Revenue Canada, and the Canadian International Trade Tribunal.
In the time available today, I suggest we hear from the officials on the content of their bill. Subsequent to their explanation, we will see if any members of the committee wish to raise points concerning the desirability of certain clauses in the bill.
Even though some senators have other commitments, we will go ahead and put on the record the analysis of the bill to be given by our witnesses today.
Is that acceptable, Senator Andreychuk and Senator Grafstein?
Senator Andreychuk: Yes.
Senator Grafstein: Yes.
The Chairman: I know some senators will have to leave because of other commitments. Is my proposal accepted?
Senator Stollery: Yes.
The Chairman: Please proceed, gentlemen.
Mr. Terry Collins-Williams, Director, International Trade Policy Division, Department of Finance: Honourable senators, I have a short statement on behalf of my department. I am also representing Revenue Canada and the Canadian International Trade Tribunal.
It is my pleasure to speak to Bill C-35, which is before committee members today.
[Translation]
This bill proposes amendments largely of a procedural and technical nature which serve to fine-tune the operation of Canada's trade remedy system as set out under SIMA and the Canadian International Trade Tribunal Act.
The amendments contained in this bill are proposed in direct response to the recommendations of the House of Commons Foreign Affairs and International Trade and Finance Committees.
These committees established two subcommittees that jointly undertook a comprehensive review of SIMA in 1996.
[English]
If I may, I would like to touch on the three main themes of the subcommittees' report, which are reflected in this bill. They are: the rationalization of the SIMA process in order to improve efficiency; clarification of the public interest provisions of the bill; and enhancement of transparency and procedural fairness.
First, with respect to the SIMA process, based on over 12 years of experience with the law, the subcommittee has identified ways in which the investigative functions shared by Revenue Canada and the Canadian International Trade Tribunal, the two bodies which administer this law, could be rationalized. As it stands, Revenue Canada's expertise is in the issues of dumping and subsidization, while the tribunal's expertise lies with determining injury to domestic producers. However, these roles overlap at the preliminary and review stages of a case. Bill C-35 would correct this by adjusting the responsibilities of each body, so that the tribunal focuses exclusively on the injury issue at all stages of the process, while Revenue Canada concentrates on the issues of dumping and subsidizing.
While the functions of Revenue Canada and the tribunal are being rationalized to better reflect their respective areas of expertise, I should point out that no change is being made to the threshold for imposing SIMA duties, nor are there any changes to the legislated time frames in which decisions must be made. Moreover, in an effort to minimize costs and the paper burden, which is of particular concern to smaller producers in Canada who wish to have access to this legislation, Revenue Canada will continue to be the single point for the filing of complaints by domestic industry and for the initiation of cases.
The second theme is clarifying the public interest provisions. The subcommittees made recommendations on how the SIMA process addresses issues of public interest. Currently, the law contains a general provision that allows the tribunal to conduct an inquiry to determine whether duties put in place to eliminate injury to producers of a specific industry sector should be reduced or removed as a result of broader public interest concerns.
On this question, the subcommittees recommended that the government establish a non-exclusive list of factors to guide the tribunal on issues of public interest, including specific factors relating to the impact of duties on other industries and on consumers.
They also recommended that the law explicitly provide for what is called a lesser-duty option. This would allow the tribunal to recommend, as a result of a public interest inquiry, a duty that is sufficient to eliminate injury, but lower than the full margin of dumping or subsidization.
Bill C-35 responds to these recommendations in full, and the factors proposed by the subcommittees will be implemented by regulation. The government intends to consult on such regulations as soon as the bill is passed.
We are confident that these clarifications respecting the public interest strike the appropriate balance among the interests of various domestic groups. They respect the fundamental objective of SIMA to protect domestic industry from injury through dumped or subsidized goods, while at the same time providing for a separate process that allows for the full consideration of other compelling interests that may arise in particular circumstances.
[Translation]
Thirdly, enhancing transparency and procedural fairness. It is a given that a SIMA investigation must respect rules of procedural fairness.
In this regard, the subcommittees made a number of recommendations that touch on procedural elements. Their objective was to ensure that all interested parties could fully present their arguments and rebut the evidence put forward by others.
In this regard, the bill improves access to confidential information and clarifies the role of expert witnesses in tribunal proceedings.
In order to ensure that access to confidential information does not lead to wrongful disclosure, new sanctions, such as significant monetary penalties, are proposed.
[English]
In closing, Mr. Chairman, I would like to note that Bill C-35 has received broadly-based industry support, and we believe this reflects the fact that an appropriate balance among various interests has been struck.
The Chairman: I am looking at the legislative history of the bill and I notice it was read a first time in the House of Commons on March 19, 1998. It had second reading on September 25, 1998. The committee to which the bill was sent for consideration reported November 4. Third reading took place on December 7, 1998, and then the bill came to us. It had second reading in the Senate on February 17, 1999.
I assume, from this legislative record, that the bill has been in the public domain for many months. Have there been objections to any part of the bill, other than the amendment proposed in the House of Commons committee?
Mr. Collins-Williams: No, there have been no objections, certainly not in the public hearing that the House committee conducted, where quite a number of witnesses were heard. All industry and trade practitioners supported, not only the essential elements of the bill, but the text of the bill itself.
I can go even further back in the history of the bill to point out that it is based on recommendations from parliamentary committees that conducted extensive public hearings through the fall of 1996 and then wrote a report with 16 specific recommendations. Those recommendations are reflected in the legislative language you have before you. It is based entirely on a parliamentary record, public hearings, and recommendations made from those parliamentary hearings.
The Chairman: . What I am trying to ascertain is how much investigation we should do in this committee before we report the bill to the Senate. The implication of the information that I have given on the chronology on the bill, and that you have given relative to its origin, is that the bill adequately deals with the original recommendations of a House of Commons committee. In the committee itself, there were no substantive amendments.
Nobody in the public is clamouring to be heard by this committee. Is that a fair analysis of the situation?
Mr. Collins-Williams: I am confident that not only does the bill reflect the recommendations of the parliamentary committees, but also that it has broadly-based industry support. We are not aware of any Canadian industry sector opposing any part of the bill.
Senator Grafstein: Are you satisfied that the new bill conforms to the standards of the WTO?
Recommendation 15 of the committee report of the other place recommended that, in the public interest, a lesser-duty concept, as provided for in article 9.1 of the WTO anti-dumping agreement, be incorporated. I believe that was implemented; is that correct?
Mr. Collins-Williams: Yes, senator. Two of us at this table were directly involved in the negotiations of the WTO anti-dumping agreement. I am confident that this bill faithfully reflects both the obligations and the benefits that that agreement provides for Canada.
On the particular question of a lesser-duty approach in the anti-dumping agreement, that agreement allows, but does not require, such an approach to be taken to mitigate the effects of the application of the anti-dumping duties.
The parliamentary committees recommended incorporation of an anti-dumping approach with a public-interest consideration, and we have done that in the legislation. That will allow the Canadian International Trade Tribunal to recommend reduction of the duty in the public interest, based on what is called a lesser-duty approach. That means calculating a level to which the duty can be reduced so as to mitigate the injuries suffered by a domestic producer. At the same time, efforts must be made to mitigate the economic effects on other segments of the economy, including the consumer. The consumer will end up paying for higher duties if they are applied.
Senator Grafstein: Recommendation 14 of the committee of the other place stated that any decision that an anti-dumping or countervailing duty might not be in the public interest should be a formal decision, subject to review by the Federal Court. The government decided not to support that part of the recommendation because the decision could, under those circumstances, also be subject to review by a bi-national panel under chapter 19 of NAFTA. That appears on page 15 of 28 of the report, just to refresh your memory. Is that correct?
Mr. Collins-Williams: The government did not support that recommendation because, in this situation, the CITT conducts a public inquiry and considers whether or not there is a public interest that should be taken into account in the application of the duty. However, the CITT is not making a decision in these public interest inquiries; it is making a recommendation to the Minister of Finance. The Minister of Finance then acts through recommendation to the Governor in Council. That is, the Minister of Finance, and ultimately the Governor in Council, is making that decision.
While other final decisions of the CITT would be subject to appeal to the Federal Court, or, in a case involving Mexico or the United States, to a NAFTA panel -- and we think that is appropriate -- we did not think it appropriate that a decision of the Governor in Council should be subject to review by the Federal Court or a NAFTA panel.
Senator Andreychuk: How have you solved the legitimate problem that the other committee raised, where in defining public interest, it is necessary to have some scrutiny over it? You did not accept the proposed Federal Court review. Have you done anything to deal with that concern, given that one of your objectives is transparency?
Mr. Collins-Williams: The ultimate decision as to whether or not to adjust the duty is not subject to review by a court. That is a decision made on recommendation from the Minister of Finance to the Governor in Council.
However, the public interest process allows for a full public inquiry, public hearings, and any interested parties may appear before the tribunal to make their views known. Due process and administrative law govern all of those. We are confident that the process by which a recommendation on public interest is made will receive full scrutiny and will respect the issues of transparency and administrative clearance.
The Chairman: Is it fair to say then that if there were a strong feeling that the powers delegated to the ministers were not being used properly, the recourse would be not to the courts, but to Parliament? The matter could then be raised during the minister's estimates.
Mr. Collins-Williams: The minister is ultimately responsible for the exercise of his authority.
The Chairman: He is responsible to Parliament, not to the court.
Senator Grafstein: There is a somewhat parallel procedure where a minister takes a decision and the affected parties disagree. They can then cause an appeal to be made to the Governor in Council.
Would that be an appropriate way to give the public confidence that there is at least a second kick at the can? We do that have practice in other areas. I have in mind, for example, an appeal from the CRTC to the Governor in Council on a decision that it feels is appropriate. It is a narrow appeal, limited in scope, but essentially it is for the purpose of enhancing transparency and fairness.
The Chairman: I am tempted to reply, but we have witnesses.
Senator Grafstein: Are you saying it is a bad example, Mr. Chairman?
The Chairman: I was wondering if the CITT is a minister.
Mr. Collins-Williams: If I understand your point correctly, senator, in this instance, the decision is made by the Governor in Council. Whether or not to change the duties is effectively a cabinet decision, based on a recommendation by the CITT, which is an independent, quasi-judicial body.
The processes by which the CITT arrives at that recommendation are public and transparent, and could themselves be appealed. In our system, any decision to change a duty level is always made on recommendation of the Minister of Finance to the Governor in Council. That is a cabinet decision, and, of course, the political process applies to that decision.
The Chairman: And if it is incorrect decision, then parliamentary action can be taken vis-à-vis either the minister or the government as a whole.
Senator Grafstein: It is not wholly satisfactory, Mr. Chairman, because you want to keep it in the boundaries of the administrative, quasi-judicial system. You do not want to take it into the political system.
I hear you, though. I want to raise another issue that sparked my curiosity when I read this bill. The investigatory functions are shared by Revenue Canada, a department of government, and the tribunal. You have rationalized them quite effectively and I think it is an improvement. Is there not a systemic objection to a non-independent department of government being involved in the investigatory process, and making a decision on fact and law, when that decision then goes ultimately to the cabinet? In other words, is there a mixed metaphor here?
Mr. Collins-Williams: I do not think so, senator. First of all, let me point out that the public interest section of the act, and of the SIMA process, is for exceptional situations, established to deal with instances where there is some broader interest at stake than just the immediate purpose of the act, which is to provide protection to Canadian industries from injury by dumping or foreign subsidization.
If I can, for a minute, set that aside, SIMA, in general, provides the authority for Revenue Canada and the CITT to administer that law, and, through public investigation on the public record, to come to decisions on dumping or subsidy levels, and on the injury determination. If you have positive determinations in both of those cases, a dumping or countervail duty is applied, and the decision to apply that duty has nothing to do with the minister or with cabinet. Those decisions stand on their own, and they are all subject to review through our court system, through a series of appeals, or, in the case of NAFTA countries, through NAFTA panels.
Senator Grafstein: How do the Americans treat this? I have not compared their legislation to this. Twenty years ago, I was familiar with this, but I have hit a senior decade, so I cannot remember what they do on this.
Mr. Collins-Williams: The changes in this bill bring our system closer to the process that the Americans use. The Americans have the Department of Commerce, a government department, conducting dumping or subsidy investigations and making determinations on dumping or subsidy levels. They also have the U.S. International Trade Commission, which conducts injury investigations and makes injury determinations.
Senator Grafstein: Those are what, 310s or 308s? I am trying to remember the number.
Mr. Collins-Williams: It is their anti-dumping statute. Likewise, they have a system to appeal those decisions through their domestic courts, which, for Canada or Mexico, could be supplanted by NAFTA panels. This bill brings our system, in process terms, closer to that of the U.S. Under current legislation, Revenue Canada is doing both the dumping and the injury determination at the preliminary stage, and the CITT usually does not become involved until the final injury determination. Then when we move into what we call reviews of existing dumping or countervail orders, the CITT does all of the review, and Revenue Canada does not have a direct role at all. This will, if you like, bifurcate our system from the beginning through to the end, so that the two administering authorities stick to their specializations right through the process. That is the way the U.S. system currently works.
Senator Grafstein: I have no further comments, other than that I found the American system much more politicized than you suggested.
Senator Corbin: I would like to know, since efficiency involves a time element, if these measures will in any way reduce the time needed for the process to reach its logical end. Is it efficient in that sense?
Mr. Collins-Williams: No. It does not change the time frames in terms of the total time taken to arrive at determinations. It does re-orient those time frames somewhat, because we are involving the CITT earlier in the injury determination, so they have to be brought into the case at an earlier stage. However, these are very complex investigations. Most dumping cases now involve large industries with large imports, and it does take a certain amount of time to conduct a complete investigation and to allow the various parties concerned to present their points of view. Nonetheless, there are also means under the current law by which duties can be applied as early as the preliminary determination, 60 days, and in exceptional circumstances, they can be applied retroactively to the initiation of the investigation.
We do have cases where you can achieve a remedy very quickly. Then, to go through and confirm or verify all the facts and finalize the order will take another period of time, but the remedy can be put in place under the law fairly expeditiously.
Senator Corbin: Is there much of a current backlog in the cases to be heard?
Mr. Collins-Williams: There is no backlog because the deadlines are statutory and must be respected. Cases are conducted as they are initiated by industry. Once you have a properly documented complaint, Revenue Canada, and then the CITT, are literally under the clock, and they must make their decisions within statutorily defined deadlines.
Senator Corbin: That is why I put the time question to you previously.
Senator Whelan: If I understand it correctly, there is the Minister of Finance, the Minister of National Revenue, and then the Canadian International Trade Tribunal. What minister do they answer to?
Mr. Collins-Williams: The CITT reports to the Minister of Finance. They file an annual report through the Minister of Finance to Parliament.
Mr. Gerry Stobo, General Counsel, Canadian International Trade Tribunal: Perhaps another way of answering that question is to say that we are answerable to the courts and to the bi-national panels for the decisions we make.
Senator Whelan: There are approximately 60 technical amendments to the legislation listed in here, are there not?
I want to refer to a case that I remember from approximately a year ago, where a New Zealand company shipped a dairy product mixed with sugar to Mexico. It contained 51 per cent sugar and 49 per cent dairy product and they called it a sugar product so that they could export it as such. They separated it in Canada and made ice cream. That is a bit of skulduggery, but you made the decision that there was no damage. Is that correct?
Mr. Collins-Williams: That case, which we refer to as the butter oil case, is not under SIMA. It is not an anti-dumping or a countervail case. It is a tariff clarification case in which Revenue Canada made a determination.
The government, acting on industry request, referred the issue to the CITT to study and make a report to the government, and that study is under way now.
Mr. Stobo: You are talking about the second of the two references, senator. The first reference was completed in July 1998. Subsequent to that, the government referred another matter to us, asking whether or not the tariff classification of butter oil plants was appropriate, as they had determined. That matter has yet to be decided by the tribunal, although the hearing has concluded and all of the evidence is in.
Senator Whelan: Mr. Collins-Williams, you stated that there are deadlines on this. I am not aware of all the ramifications; however, that seems to be a long time to get that thing settled. How many million dollars was involved in that?
Mr. Collins-Williams: Senator, that case does not fall under this legislation, and so is not covered by its statutory requirements.
Senator Whelan: Your commentary on this bill states that Canada must provide the business community with the tools it needs to face international competition. Dumping and subsidizing measures are condemned by developed countries, even though they frequently practice them.
The tribunal is part of this panel that is before us today. You have this kind of problem, where even though they are dumping, they are using every trick in the book to export a product. You say you have no jurisdiction under this legislation over that?
Mr. Collins-Williams: That is correct. This legislation only provides authority for the imposition of anti-dumping and countervailing duties. The butter oil case is a question of determining the correct tariff classification for that product, and therefore the tariff rate to be imposed when it is imported into Canada.
Those classification decisions are made, I believe under the Customs Tariff Act, by Revenue Canada. There is an avenue of appeal of those classifications to the CITT. The case is sufficiently important that the government then asked the CITT to examine the case from another perspective under section 18 of the Canadian International Trade Tribunal Act, which provides authority for ministers to refer matters relating to international trade to the CITT to study and report back to the government.
The terms of reference of such a referral from ministers would inform the CITT as to the parameters of their study and the time lines.
The Chairman: If this bill had received Royal Assent and had been brought into effect, it would have made no difference in the case of the particular import into Canada to which Senator Whelan has been referring. Is that correct?
Mr. Collins-Williams: That is correct. This bill does not deal with the issues of tariff classification that arise in the case referenced by Senator Whelan.
Senator Whelan: Following on from what Senator Corbin said, I find the delay just too great. The whole thing has been going on for over a year, and the tribunal is represented here today.
Mr. Collins-Williams: Senator, I will undertake to report your concern about the delay in that case to the responsible authorities, but we here, dealing with this piece of legislation, are not personally responsible for that. I will report your concerns.
Senator Whelan: I will finish my statement by saying I do not have the opportunity to see these people as often as I once did. I have an idea of how cabinet ministers can make decisions, too, without going to a tribunal.
The Chairman: My question relates to the whole question of anti-dumping and reaction to foreign subsidization.
There are those who argue that among countries engaged in free trade, anti-dumping legislation is really irrelevant. Have you heard that argument, and if so, what is your reaction to that assertion?
It is one market; that is the point.
Mr. Collins-Williams: I have not only heard the argument, I have defended it in international fora.
Yes, the Canadian government has taken the position that in a free trade area, between countries with closely integrated economies such as Canada and the United States -- and that is clearly the case we are talking about -- if you have removed all the other impediments at the border, the conditions for price discrimination, which is what anti-dumping addresses, should not continue to exist. The market should be integrated and products should be flowing back and forth as though the border does not exist. The border itself cannot represent a price barrier. In those conditions, we maintain that anti-dumping regimes are not relevant.
We have not been able to convince the United States government of the correctness of that argument. They continue to maintain an anti-dumping regime that affects Canadian producers, and I believe we will continue to maintain an anti-dumping regime to deal with U.S. producers, as we are entitled to under the WTO and NAFTA, until such time as we can come to a bilateral agreement.
The Chairman: Firstly, how frequently does United States legislation affect Canadian products directly, where the Canadian export is regarded as an instance of dumping? Second, how often do we get side-swiped by anti-dumping measures intended chiefly to restrict imports into the United States from a third party?
Mr. Collins-Williams: We do have statistics on that, senator. In the 10-year period from 1987 to 1997, the United States initiated 19 anti-dumping actions against Canadian products, whereas Canada initiated 41 anti-dumping actions against the United States. In the last three years, U.S. actions against Canada have been declining. We have initiated nine anti-dumping actions against the United States, and they have initiated two against Canada.
The frequency of anti-dumping tends to follow the cycle of economic growth and the health of the economy. When the economy is strong, domestic industries are not feeling the effects of competition from foreign producers to the same extent. It should be harder to prove injury from foreign producers if you have a strong domestic economy and your production and sales are strong. Those numbers should not be surprising.
Anti-dumping does not really give rise to side-swipe situations directly because it is one of the exceptions to the GATT and WTO principles. In anti-dumping, you can take action against one or several countries that are causing the injury. It is not like a global safeguard action, where if imports are causing a problem, under normal circumstances, the WTO requires that you take action against all imports.
However, with the close integration of the Canadian and U.S. economies, in the case of major industries, if the U.S. took an anti-dumping action against, for example, major offshore exporters of steel such as Japan and Russia, there is the possibility of diversion from those countries shut out of the U.S. market by anti-dumping duties. They would be looking for other export markets, and Canada would be a likely target.
That is probably one reason why many Canadian and U.S. anti-dumping actions appear in parallel. They are currently occurring in the steel industry, where the Canadian and U.S. governments are conducting anti-dumping investigations against other steel exporters, but not against each another.
Senator Bolduc: You talked about 41 measures that we initiated. Are they mostly in agriculture, or outside that sector?
Mr. Collins-Williams: The largest number of anti-dumping cases we have taken in the past 10 years were in the steel industry. A number of other cases dealt with horticultural products, such as apples, lettuce, and onions.
Of the measures we have in place now, 28 per cent are in the metals sector, 21 per cent in the food and agriculture sector, 14 per cent in the textile and footwear sectors, and 37 per cent in other categories. It is broadly based.
The Chairman: Can you provide us with the list, assuming, of course, that the list is intelligible to someone who might have to read the record of this meeting? Perhaps we could append it to our transcript. If you say that the list is only intelligible at a useful level to people in the business, then I think we would accept your judgment.
Mr. Collins-Williams: I would be happy to table the information to which I referred. It is in the form of a public discussion paper issued in preparation for a new round of trade negotiations at the WTO on the subject of anti-dumping. It provides a context of the WTO's rules related to anti-dumping, the Canadian law, and the Canadian experience in the use of anti-dumping. It includes the statistics I provided.
The Chairman: You say that this document has already been published elsewhere. Consequently, there is no need for us to append it to our record because it is already in the public domain. However, perhaps committee members would like to see the copies.
Mr. Collins-Williams: This document is in the public domain. It is about to be placed on the Web site of Foreign Affairs and International Trade as part of their consultation process in preparing for a new round of WTO trade negotiations. I would be happy to give committee members copies of the document today.
The Chairman: I would like to follow up on the question of anti-dumping with a discussion of the problem of how we cope with foreign subsidization. How often does that problem arise? We hear, for example, that municipalities in the United States frequently subsidize new plants built with offshore money. We even hear that there is subsidization with regard to the game of hockey. How do we deal with this issue, as distinct from dumping?
Mr. Collins-Williams: The issue of subsidy discipline is a very high priority for the government, and one we have attempted to address largely through international multilateral rules -- primarily in the WTO -- because subsidization is a global problem. In the area of agricultural subsidies, if we were to negotiate a bilateral subsidy discipline with the United States, it would not solve the problem, because the Europeans could continue to subsidize their industries and drive us both out of international markets. I believe subsidy discipline is best addressed in multilateral negotiations.
In the last Uruguay Round of trade negotiations, we were able to considerably advance subsidy discipline in the WTO agreement on subsidies and countervailing measures. I do not want to bore you by going through all the details, but I happened to be involved in those negotiations also. That agreement marked a watershed in advancing the international rules.
I believe we now have effective means in place to address major subsidy problems in the WTO. The ProEx aircraft case against Brazil is one example.
The alternative is for us to use countervail law to attempt to unilaterally discipline the subsidy practices of other countries. That is a second-best solution, in my view, because subsidies, which are actions of foreign governments, will give rise to disputes among governments.
For one government to unilaterally decide how that dispute should be regulated will probably not lead to an internationally satisfactory situation.
That is the situation we face with the application of U.S. countervailing law which has been applied against major Canadian exporters like softwood lumber. We have never found that experience to be satisfactory. We have attempted to find other ways to negotiate around problems like that.
The issue of U.S. sub-federal jurisdiction subsidies to their industries is a preoccupation for us. The existing WTO agreements do provide some means to bring cases, on the basis of goods, if they affected Canadian exporters in the U.S. market.
It is important to remember that the only subsidy disciplines that exist in the WTO, and that existed under the GATT, relate to goods. There are no subsidy disciplines at the present time relating to trade and services. That is a new field that has not yet been explored. This field will probably be explored in the next round of trade negotiations and will be addressed at that time.
Senator Whelan: I should like to make another inquiry about dairy products. New Zealand and the United States are appealing against the pricing system that the Canadian Dairy Commission follows. Does that come under your jurisdiction?
Mr. Collins-Williams: No, that would be primarily the responsibility of Agriculture Canada and the conduct of the case in the WTO of foreign affairs and international trade. I am really not equipped to respond to questions on that panel case.
Senator Whelan: The chairman was talking about subsidies. I have always argued that research can be a tremendous subsidy to assist producers. Are you saying that is not counted here?
Mr. Collins-Williams: No, research which assisted in the production of goods for export is certainly covered by the WTO subsidies and countervailing agreement and has been an issue in previous cases, including in the aircraft case.
Senator Whelan: We put less money than any developed country in the world into research. Therefore, we are at a disadvantage.
Mr. Collins-Williams: There are separate rules on subsidy disciplines for agriculture. The rules for subsidy controls in agriculture are found in the WTO agriculture agreement, as opposed to the generic WTO subsidy countervailing measures agreement.
That agreement, though, does cover research and development. However, it has some green-light exemptions from the disciplines. You should have a specialist from Agriculture Canada explain the details of the agreement to you.
The Chairman: Am I correct in thinking that this bill does not affect, in any substantive way, the regime with regard to subsidies; is that correct?
Mr. Collins-Williams: The bill authorizes the process for decisions and the imposition of countervailing duties. However, this bill does not change the substantive bases on which those changes were made. There were changes made to our law after the Uruguay Round of multilateral trade negotiations which negotiated all the new features of the WTO subsidies agreement. They are incorporated into our existing law. This bill does not affect those provisions.
Senator Bolduc: Therefore, is this more of an overhauling of the administrative process?
Mr. Collins-Williams: We describe this as procedural fine-tuning. We seek to ensure that the balance that the legislation currently strikes between the interests of domestic producers injured by dumping or foreign subsidization is balanced with the interests of other Canadian producers and consumers who would be affected by the imposition of anti-dumping or countervailing duties.
Senator Corbin: I should like to refer you to clause 59 on page 39 of the bill with respect to the divulging of information to counsel or experts under counsel's control.
Clause 59 does limit the information and it addresses the discretion of the person heading the tribunal. It also proposes a new section 3.2.
Would that include whoever is defending the public interest? You have addressed the matter of greater openness in terms of the public interest. Would the defender of the public interest have access to the type of information that is now being made available to these people?
Mr. Collins-Williams: A public interest inquiry could include consumers or domestic producers who rely on imported inputs of the product that will be covered by the anti-dumping duty.
Senator Corbin: Is that covered under the original bill or under these amendments?
Mr. Collins-Williams: The access to confidential information is being amended. At the present time, in the Canadian International Trade Tribunal, those parties do have access to that material.
What we are trying to do is clarify the terms of access and ensure that the confidentiality of confidential business information is respected. If it is not respected, then we wish to ensure that some penalties are put in place.
In anti-dumping cases, a company must file very detailed information on its pricing, production, sales and customers. If companies do not have confidence that their commercial and confidential information will be respected, they will not participate in the process and the process will not work.
To ensure that that confidentiality is respected, we consulted broadly with trade practitioners that what are very significant penalties should be put in place.
Senator Bolduc: By analogy, is this something like the Patents Act?
Mr. Collins-Williams: I am not familiar enough with the Patents Act to make a comparison. However, I believe that these penalties are consistent with the penalties that would be provided for the treatment of confidential information under similar commercial laws.
Senator Grafstein: Senator Corbin raised the issue that I wished to discuss; that is, non-disclosure and the commercial right to privacy. The minister determines whether or not there should be disclosure. In other words, you have a layered approach to protection for non-disclosure for competitive issues. As I follow the legislation, you seem to follow the counsel, the public official and the agent of the counsel, and you make them all subject to, in effect, penalties. That is one principle.
The other principle is that the deputy minister decides. Clause 44(3.1) states:
The Deputy Minister may not disclose information under subsection (3) if the Deputy Minister is satisfied that the disclosure might result in material harm to the business or affairs of the person who designated the information as confidential under paragraph 85(1)(a).
Was that the best way to deal with that aspect? In other words, do you really want to leave it in the hands of the deputy minister, as opposed to perhaps a member of the tribunal? It strikes me that it puts a tremendous amount of power in the hands of the deputy minister, and there is no appeal from that, I take it.
Mr. Collins-Williams: I will ask my colleague Mr. Saroli to respond.
Mr. Pat Saroli, Senior Economist, Trade Remedies and General Economic Relations, Department of Finance: I might just clarify, to avoid confusion, because of the division of functions under the statute, there are disclosure provisions relating to the deputy minister, in the context of Revenue Canada's investigation, and then there are amendments to the CITT Act which deal with disclosure by the tribunal. You are referring to the first instance, the disclosure by the deputy minister in the context of a Revenue Canada investigation.
It was determined, in order to make the proceedings more transparent, that the general theme now is for the deputy minister to disclose. He shall disclose. That is what the clause says. One of the overriding themes which emerged from the parliamentary review was that we should have a transparent process and a fairer process so the parties know what they have to respond to. They need information to know what they have to respond to. Notwithstanding the fact that disclosure is subject to penalty provisions and to firewall protections, in that you cannot use the information outside those proceedings, it was felt that situations could arise for which you need a safety valve, because you could not conceive of every possible situation that could arise in any given case. There are so many variations and permutations that you need a safety valve of some sort, just as a matter of prudence.
The deputy minister, as part of his statutory function under the Special Import Measures Act, for conducting that aspect of the SIMA proceedings, will disclose but he was given that safety valve if he was of the opinion that this was a very specific case, an exceptional circumstance. An example would be where counsel is prepared to sign an undertaking but there is a past history where that counsel has misused information, so you need that safety value. It was felt that that was the best way to treat it.
The general theme would be transparency and disclosure, subject to undertakings and penalties and firewalls and all those hoops. That being said, if the exceptional circumstance did arise, there be would a safety valve, just as a matter of prudence, to which the deputy minister could resort and withhold disclosure in those circumstances.
Senator Grafstein: Is commercially sensitive, competitive material a matter that is protected under the Charter? I will tell you why I ask. The Commissioner of Privacy came to us several weeks ago and said something that is a little curious. We have not had a chance to really respond to it fully. He said that the right to privacy under the Constitution was not incorporated. There was a debate at the time and they decided to not to incorporate the right to privacy. As a result, the Senate takes it as its duty to ensure that statutes are consistent with the Constitution, but since right to privacy is not that, that may relieve us of a constitutional responsibility.
Having said that, though, I am not clear in my own mind as to whether or not competitive, commercial information is afforded a privacy protect by the Supreme Court of Canada. The Supreme Court of Canada said in a recent case that, on many occasions, the court has recognized the great value of privacy in society, and has expressed sympathy for the proposition of including the right of privacy. In other words, the courts have legislated -- and that is another question -- that the right to privacy should be treated almost as if it is a part of section 7 of the Charter. I am not sure I agree with the court, but that is another matter.
Assuming the court is correct, do commercial facts come under that same umbrella? Would it therefore be, by the Supreme Court of Canada notion, protected by the Charter, therefore making this provision suspect?
Mr. Saroli: With permission of the chair, I will make one comment and turn it over to Mr. Stobo from the tribunal.
First, these are both acts of Parliament, and when we are talking about disclosure, there is an issue as to how these investigations can be conducted without information. In order for a proper investigation to be done, obviously there must be information and a chance to know the case that is being made and to provide additional information and that sort of thing. It is a matter of balancing.
Senator Grafstein: Due process.
Mr. Saroli: Yes, procedural fairness and due process. These pieces of legislation must be read together in a logical way. Parliament has deemed that this function is appropriate, that the Special Import Measures Act is appropriate, and that we need to protect domestic industry from the injurious effects of dumping. In order for those investigations to be conducted, obviously, information must be made available.
Mr. Stobo: Without responding to whether or not there is a particular Charter protection for confidential information, perhaps the better way to answer the question is simply to tell you how this process unfolds before the tribunal.
Typically what would happen in the course of an investigation is that a party would be asked to produce information which was confidential, and they would ask that that information be designated as confidential. That information receives special treatment by the tribunal. It is only disclosed to those people who properly have been given access to it by signing an undertaking.
The only people who can gain access to it are counsel.
Senator Grafstein: Or experts.
Mr. Stobo: Correct. At that point, the parties or their counsel have an opportunity to review this information but the public does not have an opportunity.
The tribunal may say -- and we are saying it more often now than we did in the past -- that the amount of information that parties are declaring to be confidential is too much and it is impacting on our ability to conduct a transparent process. We are therefore pushing parties increasingly to put more information which they have previously designated as confidential onto the public record so that more people can see it.
A party who submits confidential information may say to us, "We are not prepared to have that information put on the public record and we choose not to do that." Their option then is to withdraw that information and then we are left with an absence of that information.
Let me be clear: The tribunal has had an excellent history of treating confidential information in an appropriate way, and we have gained the confidence of the people coming before us. They believe that, when information is submitted to us confidentially, it is properly protected.
Senator Grafstein: You are saying an aggrieved party that is unhappy with a decision cannot take a Charter-like attack on the decision because the aggrieved party could have withdrawn that information from the confidentiality filing to begin with.
Mr. Stobo: Correct.
Senator Grafstein: It does not really involve tested information but unilateral information provided by the aggrieved party.
Mr. Stobo: Correct.
Senator Whelan: If we take into consideration Quebec and this dairy industry, I remember when the Quebec dairy farmers, because they were treated unfairly, were down in production and the Ontario farmers were up in production. Now Quebec dairy farmers are probably up in production because in Quebec they have developed one of the best dairy industries in the world. Their industry is more modern.
Do you take into consideration, in anti-dumping, for example, that Quebec farmers cannot produce any other product if they are put out of the business of dairy production? They cannot turn to any other product if you are getting cheaper products from New Zealand or the big country to the south, for instance. California is the largest dairy state in the union. If it was a country, it would be the fourth largest agricultural producing country in the world. Next is Florida, then Wisconsin. They can out-produce us and do it more cheaply.
I fear what is happening to what we built in Canada because we are all using this anti-dumping stuff and all these tribunals. I was minister for 11 years. We had a system where I could call up the secretary no matter where he was in the United States and he would call me back in 30 minutes. The same thing with me, no matter where I was in Canada. We did not have all these appeals back then and we traded 80 per cent duty-free in agriculture products at that time. Today we can look at B.C. apples, they are at the lowest price they have been in 30 years. The economic destruction is done in Canada.
I am concerned about what is happening here. I feel we are going back 50 years with this great globalization. The aim is to gobble up our competitor with one big bite with the clustering of power by these huge food companies. I am afraid we are living in fairyland if we think we will make this a better world. We shut our eyes when we seem to be full of destruction. In our cold climate, there are certain things we cannot produce, however, should we be dependent on someone else for our products? I do not believe the European Community will be dependent on anyone else for their products. They will not bend at all in Seattle at the big meeting which is being planned for June.
I am worried that we are getting so technical on everything. Mr. Collins-Williams, I gathered from what you said that there should be more settlement of these things by mutual agreement or by discussion.
My point is that I can foresee the destruction of what we built. People think they can compete with the United States or with New Zealand. There is no way they can. If New Zealand has a drought, then what happens? Dairy production may fall and there will be no supply.
Mr. Collins-Williams: Without being able to enter into a discussion of the broader competitiveness of our agricultural industries, I can say that the Special Import Measures Act, as reinforced by this bill, does give the authority to provide remedies to Canadian producers, including agricultural producers, who are injured by dumped or subsidized goods from abroad. In the past, it has been used effectively with agricultural products. That is all I can say in relation to the bill.
Senator Whelan: I will go back to the B.C. apples. These apples come in and destroy the market. When they would normally get $100 a tonne for making apple juice, they got $15 a tonne because the apples were imported from China. You can ship an apple across the Pacific Ocean and the economy for that part of the market is destroyed. The industry does not know the apples are coming in until after they are here and after they have been processed. That is a tragic way of running our world.
The Chairman: Is that problem touched by this bill?
Mr. Collins-Williams: It certainly could be. There is presently an anti-dumping order in force on Red Delicious apples.
The Chairman: From where?
Mr. Collins-Williams: From the United States. If there are problems with supply from other countries or the types of apples, they could likewise be addressed under the legislation.
The Chairman: The question of Senator Whelan is broader than that, that is why I doubt its relevance in the wide sense.
The Chairman: Thank you, witnesses.
I propose, senators, that we should not undertake to do our clause-by-clause examination of the bill now. I sense that, if we were to do so, we might be able to report the bill. I feel it would be wise to allow our judgment to mature until at least the next public sitting of the committee. Then we would do what is referred to as the clause-by-clause consideration of the bill.
Is that acceptable?
Senator Grafstein: I have one question. I heard the witnesses confirm your proposition that there does not appear to be, from their perspective, any undue concerns about the bill as amended in the other place. Hence, our comfort in proceeding expeditiously.
The Chairman: Was it amended in the other place?
Senator Grafstein: It was substantially amended in the other place.
The Chairman: Is that correct, that the bill, as introduced by the government, was substantially amended in the other place?
What attracted my attention was a proposed amendment which was defeated.
Mr. Collins-Williams: There was one technical amendment introduced by the government to the French text of the legislation in the House. That was the only amendment and it was accepted.
Senator Grafstein: Perhaps I misread the speech or report.
Mr. Chairman, I agree, we should put this off to another sitting and that would give the committee staff an opportunity to canvass and see whether there are any other concerns in the industry. They can do their research. If our staff reports back that there is no problem, then we can proceed to clause-by-clause. However, witnesses should be brought forward if there are major concerns. I am prepared to delegate that to you and the steering committee.
The Chairman: With that having been said, the committee is adjourned.
The committee adjourned.