Proceedings of the Standing Senate Committee on
Foreign Affairs
Issue 3 - Evidence
OTTAWA, Tuesday, March 27, 2001
The Standing Senate Committee on Foreign Affairs met this day at 4:30 p.m. to examine the consequences for Canada of the evolving European Union and on other related political, economic and security matters.
Senator Peter A. Stollery (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, I call the meeting to order.
More people will arrive shortly, but they are currently speaking in the chamber.
I should like to thank the Honourable Donald Macdonald for coming to speak to us. I believe everyone here knows him.
The genesis of this afternoon's meeting was a letter that he wrote to The Hill Times, I believe it was before Christmas, which discussed the European Union and its bureaucracy. I know that some of us were attracted by it, because this committee has given the subject of the European Union a great deal of study and thought. His observations rang a bell with us.
Has everyone a copy of the material that we have circulated? Mr. Macdonald must depart by 6:00 p.m.
I wish to thank both parties for letting us meet while the Senate is sitting. I thank my colleague, Senator Andreychuk, for her assistance. Without any further ado, I should like to call on the Honourable Donald Macdonald to make his remarks, and then we will have questions.
The Honourable Donald Macdonald: Honourable senators, thank you very much for the opportunity to come here this afternoon. As was mentioned, in response to an inquiry, I sent an article to The Hill Times before Christmas indicating my views on Europe. I am delighted to go through those again with senators and to talk about a wider range of subjects. As I said to Senator Bolduc, I have a wide range of opinions and about 13 per cent of them are correct. I would be delighted to expand from there.
I circulated the notes in advance. I should like to reflect my views on the record, if I could, by referring to those.
The remarks are divided into two sections -- our defence arrangements with Europe, and the emerging, always-changing European Union and Canada's relations with it.
In personal terms, I have dealt with this subject since the mid-1950s when I was a student in Europe. As a non-ministerial member of Parliament, I was involved in parliamentary exchanges. As a minister in three portfolios -- defence, energy, and finance -- I was involved in ministerial meetings that dealt with both defence and economic questions in Europe. As high commissioner, I needed to deal with that specific place in Europe which is so influential, the United Kingdom. I continue to follow developments there accordingly.
As you know, Canada was deeply involved in Europe in the 20th century. We spent 10 years in "hot war" there in World War I and World War II, and 40 years in the Cold War under NATO. In that sense, this country essentially had a great commitment to the tribal wars of the Europeans. However, the Canadians went there voluntarily and stayed there for a long time. That is a contribution which, from time to time, is not recognized by the current generation of Europeans.
Most recently, of course, under UN and NATO auspices, and with one following the other, Canadian Forces have been involved in trying to keep apart the regional antagonists in the former Yugoslavia.
My first theme is that I think it is time that the Europeans took a pre-eminent role in managing security matters on their own continent. Canadians have been there at some cost. I think that in a certain sense, this situation requires "tough love," both from us and from the Americans.
If we stay there and are prepared to supply a Canadian general to separate the Irish, or if the Americans are prepared to do the same thing, Europeans will not look after their own affairs. I think Europe is now mature enough to look after their own affairs and we should not have to go over there to do that.
To say that is not to abandon NATO entirely. NATO was, of course, created under very different circumstances. I was a university student in those dark days of 1948 and 1949, after the coup in Czechoslovakia, when the western powers were getting together to decide what to do. Not only were economic privations extensive in Europe at that time, but there was also a challenge to hope in a certain sense. It was thought that with the peace in 1945, they could now look to a bright future, but they were challenged by the threat from the Soviet Union. It was therefore appropriate to put together a concert of North Atlantic nations which 40 years later had the satisfaction of overcoming the Soviet Union.
It is important to recognize that NATO was created for a specific purpose and that it met its goal in the late 20th century. Having achieved its raison d'être, it has been looking around for a substitute goal ever since.
One of the ironies of life is that one of the more severe challenges that NATO faced came not from the Soviet Union, but 10 years later, after the end of the Cold War, and during the military operations in Kosovo.
I have included a quotation that I think makes the point rather aptly about the European contribution to their defence. I quote:
The Kosovo air campaign demonstrated just how dependent the European allies had become on US military capabilities. From precision-guided weapons and all-weather aircraft to ground troops that can get to the crises quickly and then stay there with adequate logistical support, the European allies did not have enough of the right stuff. On paper, Europe has 2 million men and women under arms -- more than the United States. But despite those 2 million soldiers, it was a struggle to come up with 40,000 troops to deploy as peacekeepers in the Balkans. Something is wrong, and Europe knows it.
That is not just an armchair critic on this side of the Atlantic speaking, it is George Robertson, the Secretary-General of NATO, himself a former British defence minister.
We have been involved in earnest efforts over the past decade to make NATO more relevant. What Lord Robertson is referring to is not just a breakdown of NATO at an operational level, but a breakdown in leadership and will in the governments concerned.
Whatever may happen with regard to the future of NATO, what is important to Canada and the Canadian Armed Forces is the habit of cooperation that has been created by NATO among its participant nations. It is an invaluable asset that was difficult to create and ought not to be discarded lightly.
On this question, I refer the committee to a paper I have cited by James P. Thomas, entitled "The Military Challenges of Transatlantic Coalitions," which analyses the Gulf War, Bosnia, and Kosovo. I have excerpted some of the comments from the article. He refers to the benefit, in carrying out the Gulf War, for example, that the forces, including Canadians, derived from a shared doctrine arising from the NATO experience. He states:
...the doctrinal cohesion of Alliance members -- with the notable exception of France -- was high.
On the subject of personal relationships, he said:
They had become familiar with national idiosyncrasies and operational styles.
He is again referring to the participating nations.
He further said:
Beyond common doctrine, NATO's combat and logistics exercises were ideal preparation for the large-scale deployment of forces to the Gulf.
Conversely, in relation to Bosnia, Thomas underlines the difficulties:
...IFOR suffered from the absence of an agreed multinational doctrine for peace-support operations.
The NATO forces understood well, and could carry out, what the roles would have been in a Cold War situation. Ten years later, they had no doctrine worked out for peace support of the kind of operations they were being asked to become involved in, and which undoubtedly they may be called upon to do again. Mr. Thomas referred to this as:
...the difficulties caused by inadequate prior agreement on common systems, interfaces and procedures.
The great value of NATO to the western allies is that it has provided the advantage of agreeing in advance on how a disparate group of military formations from various nations would operate together. That has been one of its great successes.
A renewed effort in such multinational military co-operation is called for, and Canada should continue to be involved in that because we have been one of the principal beneficiaries of that kind of enterprise.
While I insist on greater European leadership on their continent, I suggest a continuing role for Canada in helping to prepare for the challenges that face the alliance. Whatever Article 5 may say, I do not regard Canada as having a continuing obligation to go over there and settle the problems as they may arise in Europe from month to month and year to year.
With all the criticisms that have been offered of European military preparedness, it is fair to comment that the member states of the union have been working hard themselves to put in place a new European security and defence policy. Here I refer to the structures of that 50,000- to 60,000-soldier force, which would be equivalent to an army corps, that they would be able to put in the field.
The Europeans have taken some political decisions leading in that direction. Within the NATO context, they face an ongoing, 30-year-old debate as to whether a distinct European force within the alliance is a desirable thing. It was a cynical wisecrack, but maybe more than that, that the second goal of American policy was that a distinct European force should come into being, while the first goal of American policy was that a distinct European force should not come into being. Europeans would say that the thing that would alarm Americans the most would be if Europeans ever agreed on what Europeans were going to do. Whatever the Americans decide, Canadians should agree that, by all means, Europe should be able to field that kind of a force. We would support that in NATO and look forward to co-operating with it.
The Canadian Armed Forces have had to face a series of difficulties in the last several years. The challenge has always been that we have had to go overseas to do our duty. The structure of the force going to Europe has been an important discussion and that is a question that we should be debating again. There is a stunning piece of analysis in "Defence in the Seventies" published by an enlightened minister of defence at the time. You will be interested to see how little defence issues have changed in the past 30 years.
I would like to take the opportunity of this appearance to emphasize one personal priority on defence policy, and that is with regard to the Canadian reserve forces. In my prepared remarks, I cite the historic fact that in December 1939, the first Canadian division landed at Greenock, Scotland, three months after Canada had declared war. This would not have been possible without the existence and abilities of the Canadian militia.
If you look at the order of battle, of the five Canadian divisions in North-Western Europe, the Canadian militia was the main strength of that very significant military effort.
For over a century, this voluntary reserve service in communities across Canada has been an important back-up, not only for the regular forces, but also for the civil authorities in cases of emergency. I am sure that honourable senators would recognize that the Canadian militia is an important symbol of the unity of Canadians everywhere.
Therefore, it was a surprise to me, when I became the minister of defence at the beginning of the 1970s, to find that there was tension between the regular force and the reserve force. There was competition for money and resources, and because they were on the job all the time, inevitably the regular force won out. The resources available to the reserve had deteriorated over time.
The reserve has gone through yet another of a set of inquiries in the last several years, this one chaired ably by my former colleague and friend in the House of Commons, the Honourable John Fraser, who before that had been a regular force officer, and prior to that an officer in the Seaforth Highlanders in Vancouver. A structure has now been found which, I gather, is acceptable to both the regular and the reserve forces. It is important for us as Canadians with civil responsibilities, for members of the government, for the Minister of National Defence, and for yourselves as Parliamentarians to ensure that the department allocates its resources such that the reserve can continue to play an important role in the Canadian community. Unless there is strong political pressure for this role to be maintained, inevitably the assets will be drained away into the regular force.
On non-military relations with Europe, the most important reality now, of course, is the institution of the European Union, which you studied so effectively, I thought, in your reports.
When I was a student in Europe in 1957, there was widespread scepticism as to whether the Europeans would come together on any kind of agreement. In fact, in December of that year, the European Common Market was established. Of course, it has been a fact since that time, and it has been a tough haul for them. However, they deserve respect for bringing together a disparate group of national ambitions in a single institution and union over that period of time.
My observation is that the European communities have been more successful in achieving their own internal integration than in building positive relationships with the rest of the world.
During my time as high commissioner, a number of the briefs which I carried involved further opening up the British market to Canadian exports, and of course I would go to see the British ministers. Incidentally, compared to the way we treated diplomats in Ottawa -- I am sure they are managed much better now -- the British ministers were most courteous. If you desired to meet with one, it was possible within 48 hours. The British ministers would make a point of seeing you. I would meet with them to say that we wanted to export more newsprint into the European Community, or we wanted some protection on our lumber imports that were entering Britain. They supported my efforts, agreed to my requests and said that they would be delighted if they could change the tariff or the regulations -- whatever was required to permit further Canadian exports into this market.
Then they would say, "However, the decision does not rest with us anymore. That is trade policy, and it is the responsibility of the European Union." The British said to me that they wished me the best of British luck in dealing with Brussels, but that they could not carry our brief because they had their own set of briefs when dealing with that particular group and were busy enough already.
There was support for what we wanted to do in the United Kingdom, but at the same time, it was clear that they were in a difficult political situation in dealing with the organization in Brussels.
Many Canadians are surprised at the hostility exhibited from time to time by the European Union, in contrast to either the views of individual European governments or individual Europeans, which I think are quite positive towards Canada. They may be uninformed about Canada, but they are certainly not hostile.
My conclusion has been that in dealing with the European Union, you are not dealing with Europeans as a whole, but rather with a powerful European bureaucracy with a much narrower set of agendas.
Non-Europeans who are not familiar with the details of the E.U., and who read in the media about the commission doing one thing or another to a country or person, might be inclined to think that the central apparatus in Brussels is like the central government that we have in Ottawa. A European, Professor J.H.H. Weiler of Harvard Law School, has written on this subject:
The democratic tradition in most Member States (of the European Union) is one of representative democracy. Our elected representatives legislate and govern in our name. If we are unsatisfied we can replace them at election time...
As you and I know, Mr. Chairman:
The basic condition of representative democracy is indeed that at election time, the citizens can `throw the scoundrels out'...
We both left just ahead of that indignant rush; at least I did. It is possible to replace the government.
This basic form of representative democracy does not exist in the Community and Union. The form of European governance is -- and will remain for a considerable time -- such that there is no `government' to throw out.
The elected representatives of the member states, the ministers, have an ultimate say in the major decisions of the E.U., acting through their governments. However, on a day-to-day basis, the very powerful bureaucracy in Brussels acts without reference to elected persons who can be held responsible for their actions.
Brussels bureaucrats will be sufficiently politically attuned to avoid getting into difficulty with important ministers on issues critical to those ministers, but the foreign states outside the European Union do not have any vote at all. In my opinion, that is why the E.U. feels able to act so aggressively against us in its foreign policy.
Canadians may well have the impression that Canada is singled out for negative treatment by the E.U., and indeed there have been a number of issues between them. The most publicized was the issue of Spanish fishing abuses, or perhaps the cavalier rejection by the E.U. of Canadian suggestions that, having negotiated a free trade agreement with Mexico, they should do the same with Canada.
However, the E.U.'s mistreatment of Canada is only occasional. They seem to take delight in starting a new fight with the Americans every week.
Returning to my British interlocutor when I was high commissioner, individual national ministers have no interest in using up a limited amount of political capital and time to deal with foreign issues, when they have domestic issues to settle with the Brussels bureaucracy.
How do I propose to remedy that? The problem is clear but the solution is not. The first thing to do is to make it clear to Europeans and Canadians that Europe should not continue to expect Canadian support and sympathy unless they are prepared to accord the same to Canadians. We sometimes accuse ourselves of being too polite -- we are too polite. Reversing the onus of the golden rule, we should be prepared to do unto them what they do to us, or at least to make it clear that that is the way it should be. There should be reciprocity of treatment.
In presenting a more aggressive front to the European community, to European businessmen and to their elected officials, we can expect better treatment if we make it clear that Canadians do not like this disdain with which from time to time the Brussels community treats us. If we are too polite about this, we will not be better treated.
I would be happy to respond to your questions or expand on those remarks.
The Chairman: I have several people on my list, and this presentation deals with the two subjects that we dealt with last year -- European defence and the European Union. This committee was told many times in various European capitals that Canadians are involved in European defence. Senator Grafstein has many times asked the question, "What about our economic trade?" We point out, for example, that our contribution to NATO is in fact a subsidy to the European Union, in terms of the entry of Poland, Czechoslovakia and Hungary into NATO, because they cannot deal with them yet at the European Union. At that point, we tell them that we are in NATO, and we are part of the European defence. There is a relevant article in respect of trade in the treaty.
I cannot remember the number of the article. It is not Article 5. I believe it is Article 2. In every case, they say, "We cannot talk defence and trade at the same time. We do not talk about the two of them at the same time." We have been told that 20 times. What do you think about that?
Mr. Macdonald: I feel that they must be challenged on that. We are no longer facing a single adversary, where we must submerge individual differences and keep a united front. They must live on that continent together and look after themselves. Under Article 5, if the Romanians and Hungarians get into a disagreement about their mutual populations, we should not need to get involved in that dispute. However, we are prepared to continue to co-operate with them in terms of preparedness, logistical planning, et cetera, but they should be running their own operation.
If they want us there at all, they must treat us properly. They now have a united common market and, in many senses, an economic union. We have a big market and we would like them to deal fairly with us. If they do not, they cannot expect much sympathy from Canadians if they get themselves into various kinds of difficulties from time to time.
We must be plain spoken with them. I have a strong feeling that if we are plain spoken, they will respond to that.
Senator Graham: It is good to have Mr. Macdonald back in Ottawa and in the parliamentary precincts. He has always been noted as a knowledgeable person and someone who talks straight. We certainly appreciate his comments today.
I will go back to his closing comments that we should do unto them as they do unto us, suggesting, I believe, that we should be more aggressive with the Europeans.
Would you categorize our handling of the turbot war as a good example of how we should treat the Europeans?
Mr. Macdonald: The handling of the turbot war was exactly that. It is one of the best demonstrations of the democratic divide between ordinary Europeans and the Brussels bureaucracy. At Brussels, our ambassador was being given a bad time by the commissioner in question. Meanwhile, our high commissioner, my successor in London, went to the west coast of Britain, where he was a hero, because they knew the Spaniards were cheating. They were delighted that someone finally pointed that out and told them we would not tolerate the situation.
Senator Graham: That is one of our former colleagues, Senator Frith.
Mr. Macdonald: Indeed. He honed his skills, obviously, in the other place.
Senator Graham: He honed his skills in this place.
Mr. Macdonald: Excuse me, senator, yes. You can take the boy out of the House, but you cannot take the House out of the boy.
Senator Graham: One of the problems, of course, was a lack of information on the part of the Europeans. Canada had friends in some of the associations that we were involved with in the European community to whom we were able to transmit information to give them and our high commissioners and ambassadors abroad the correct slant in that respect.
I will go to the first part of your presentation, when you were talking about Europeans taking greater control of their own military security. While you did not mention him by name, you did mention a Canadian general. I presume you are talking about General De Chastelain, who was in charge of decommissioning in Northern Ireland. I believe you were suggesting that perhaps here again, a European should be in charge of the decommissioning -- and he is only one person -- perhaps with some assistance from Canada. However, it may be, and I have found this to be true, that countries around the world sometimes look upon Canada as friendly, intelligent, forceful and moderate.
In this particular case, perhaps General De Chastelain took all of those skills to the position that perhaps they would not find with someone else. He suited the situation and maybe still does.
Mr. Macdonald: I believe he suited the situation well. However, if I were a European, I would be humiliated. The population of Europe must be close to 300 million people. Yet they could not find a negotiator and a military officer. They needed to get an American senator and a Canadian general to handle a 700-year-old problem in Europe.
As long we make it easy for them, they will be calling on us to do their jobs for them. I think it is time we started shaming them. That is why I make a point of it today. They should be able to manage their own affairs. We would not invite someone else to come and solve our affairs, and I do not know why they should not solve their own.
Senator Graham: You spoke about the European security and defence policy. You spoke about the criticisms that have been offered on European military preparedness. You note the member states of the European Union have been working hard to put in place a new security and defence policy. There has been a significant amount of discussion about having a UN rapid response team. Have you any thoughts on that? This would be a team that would deal with situations that might arise in Bosnia or East Timor or any other part of the world.
Mr. Macdonald: That has been a goal of Canadian defence and foreign policy for years. It has not made much progress in the UN, but it is important from a professional standpoint that, when you put a mixed group of nations together, the kind of liaisons that I refer to in my remarks can be carried out by them.
As a matter of fact, I have been surprised that UN operations have worked so well with such a disparate group of armed forces coming in at the same time. I believe it would be absolutely essential to have that kind of co-operation. Unfortunately, the politics of the UN have made it difficult to make much progress on that side.
Senator Grafstein: We are delighted to have Mr. Macdonald here, with his extensive and precise knowledge of our topics dealing with Europe.
I want to talk about applying linkage. Essentially, you are saying that we should adhere to Henry Kissinger's advice and become more intensively engaged with linkage as we apply it to "Fortress Europe." Let me give you some history of my concern and ask you for some specific advice.
If one traces back the barrier to Canadian trade into Europe, the largest barrier -- I call it the "iron curtain" -- is the CAP, the Common Agricultural Policy. It is not only obtrusive, it is pervasive; it is both direct and indirect. We teach our Canadian and American farmers to be competitive. They are the most competitive in the world, and they cannot, even with all that is happening there, ship their products into Europe because of the CAP, both in terms of subsidy and in terms of direct and indirect tariff walls. It is the worst of all worlds. It is the Common Agricultural Policy and it is absolutely the opposite of free trade. Free trade does not exist when it comes to agricultural products. Our North American farmers are suffering.
The chairman was kind enough to refer to our many meetings in Europe about this. In particular, the most offensive was with the foreign affairs committee in London, chaired by Bruce George.
We got into a real spat, because in effect, he said, "Send your bodies and your troops, but do not ask for anything in return. We are delighted that you will send us your troops, your youth and your blood, but do not ask for anything in return. Thank you very much." That is de-linkage at its most extreme. That was Bruce George, the chairman of the Foreign Affairs Committee of the House of Commons in England. We tried to engage in some of those questions, but we were given that heave-ho.
Before England engaged in a common agricultural policy, we had the Commonwealth preferences. Quite frankly, Canadian farm products did very well. We allowed Britain to get out of that deal because they wanted to move into the E.U. The only country in the Commonwealth, based on my reading, that did not release them fully, that was grandfathered, was New Zealand, with respect to their lamb. In effect, there was a deficit in policymaking during that time. Here we are today, and it is worse than ever before.
Could you talk to us specifically about how we link products? Let me give you some suggestions. We know it is an iron curtain. They will talk about the WTO. We want to break through and give our farmers some access to that marketplace, yet we continue to import large quantities of food stuffs from Europe such as wine, cheese, and pâté -- a raft of highly-developed, value-added products. Why should we not, to test your theory, really shake their cage a little and say, "No more wine, thank you very much. No more French wine. No more Irish whiskey. Thank you very much, no more Scotch. Thank you very much, no more pâté. Thank you very much, no more 626 cheeses going from Europe to the Kensington market."
Have you given some thought as to how we could shake their cage with specific linkage of issues? The closest I can come is food products for food products: No value-added food products if they do not take our raw materials. That is the closest I have come to an answer to your proposition.
The Chairman: Is that your question, Senator Grafstein?
Senator Grafstein: Yes.
Mr. Macdonald: I am sympathetic to that as a response. The constraint is that under the GATT, under the agreement negotiated with the European Economic Community allowing them to establish their customs union, we accepted the levels of protection that existed at that time. As you know, that has been on the table for some time, with very little progress being made.
I do not think that it is in our interests to depart from the agreements and say we have decided this afternoon that we will not take it any longer. We should be alert and prepared to take the appropriate actions through the dispute settlement procedures when we find that we are being maltreated. Then, in response to that, we should be prepared to develop a list of European products which would be subject to those kinds of sanctions. In other words, I do not think I would aggressively start out this afternoon and do it, but I think we should be alert and say, "Just a minute, we are not being treated fairly."
One of the issues when I was in Europe was that they were trying to exclude Canadian softwood lumber from that market, a very familiar problem. In this case, the European officials were saying, "There is something called the pine wood nematode which arrives with the Canadian softwood lumber and we think -- we have no evidence of this -- it might be a threat to European softwood forests." I would say to them, "Listen, Canadian forest products have been coming into the European market for two centuries, as ships' spars, masts, pit props, and as lumber, and you still have the forests." This was quite clearly a form of administrative protectionism. On the next occasion that they take further action against us, we must start a trade case, and since they do not ship much in the way of forest products to us, we move over to other things we import. Now that I've given up drink, I think we should by all means go after Scotch whiskey and French brandy and wines. I think we should be prepared to be much tougher than that.
Senator Grafstein: I am okay because my wine cellar is already intact, but I thank you for that. It is important for our committee to consider some specifics about how we provide linkage. If you have others, please let us know.
Mr. Macdonald: If we start off by saying, "We have had enough and we are just going to do this," it will not fit the WTO trade rules to which we have agreed. We should be much more alive to administrative delay, or other kind of action which is working against our products, and be prepared to go to the WTO resolution procedures and, assuming success there, then lay down a tough list of sanctions.
Senator Di Nino: I have two questions. One is on the ESDI. The initiative has been proposed for some time now, and we heard a lot about it when we were in Europe. One of the concerns that we heard from time to time, not particularly in the open, but mostly privately, was that it will be a very tough sell when you consider the players -- the Germans and the French and the English and so forth. How has that moved forward, or is it moving forward, and do you see this as something that can happen in the foreseeable future?
Mr. Macdonald: I hope so. The Helsinki agreement was in 1999, I think. Time is moving on. I am not sure what specific negotiations have gone on since then. However, I hope that there continues to be political pressure to do that. I have a feeling that tensions among the larger European powers, principally France and Germany, but also to a degree the British on the defence side, are the obstacle to that. The important thing is that we cannot do that for them.
However, let us be unequivocal as a country and as a government and say, "We think that is an excellent idea. We are prepared to co-operate with that force. You may be hearing some things about Washington, but Washington speaks for itself. We as Canadians think it is a good time to get together and have that kind of defence force and are prepared to co-operate with it in any way possible." They have to settle it themselves, but I think we must make it quite clear that we do not regard this as incompatible with co-operation between North America and Europe.
Senator Di Nino: I mentioned it because I personally think it will be much tougher to accomplish. It will probably take longer. The Europeans will probably still need the North Americans, if you wish, in conflicts that may require the intervention of armed forces. I am grappling with it because I think we are probably seeing the entrenchment of regional trade blocs with more protectionist attitudes than has been the case in the past. Unless we can play quid pro quo, where we give you something in return for something else, I do not think that the trade situation will improve in the foreseeable future, even with the WTO mechanisms for resolving the disputes. Do you have any comments on that?
Mr. Macdonald: In one of your reports, you referred to the ambassador from the European Union here in town remarking that tariffs are no longer significant -- and she is right, but the non-tariff barriers are. We must be prepared to take action against those and try to negotiate those out.
The ultimate goal would be to have an absolutely superb WTO round where everything is settled.
My view, having followed trade issues very closely, is that we will not get another major, successful WTO round in this decade. We should not be surprised at that. It was 13 years between the Kennedy Round and the Tokyo Round, and almost the same time between the Tokyo Round and the Uruguay Round. It takes a long time to get together and some pressures must be brought to bear.
In the meantime, I very much support the government's policy, as I supported the Mulroney government's policy, with regard to the United States agreement. It is very important for Canada to open the maximum number of markets for ourselves.
The Free Trade Agreement with the United States was very positive, as was Mexican accession to that agreement to form NAFTA. It created a precedent for the solution of problems. Trade lawyers look at the language. It creates a pattern of co-operation. The principal problem for at least the next four years will be the political environment in Washington. I think it will be impossible for them to get a fast-track authority. If I am proven wrong in that, it will be one of the great things in my life. However, I do not think it will happen.
Senator Grafstein: You do not think they will get fast-track?
Mr. Macdonald: No, I do not think so. I think that the U.S. is almost going back to Harding-Coolidge-Hoover America-first isolationism, and that they will be stuck in these struggles between themselves. I hope I am wrong on that.
Senator Grafstein: On that point, my experience in Canada-U.S. relations is that there is a huge division in Congress between Republican senators who are, on the whole, active and avid supporters of fast tracking, and the Democratic House of Representatives members from the Midwest, who tend to be the other way around.
Frankly, the administration is much more focused on fast tracking than the Democratic government executive was.
Mr. Macdonald: That is fair, senator. The previous administration was, of course, on the hook because they were dependent for political support on the most anti-trade faction of the American community, that being the trade union movement. All the same, looking down that list at Senator Lott, the so-called majority leader in the Senate, and others who were not open-market people, I think it will be difficult to get an agreement. If I am wrong, happy days are here again for a little while, and that is fine.
Senator Bolduc: Would you say that the best policy for Canada is not to spend too much effort on free trade for the Americas and deal with individual countries?
Mr. Macdonald: I think it will be difficult to make progress on free trade with the Americas, first, because of the Americans' inability to get fast-track and second, because of the attitudes of Brazil in particular. This is not related to corned beef and Bombardier; it is related to Brazil's perceptions as an emerging economy. They want to protect that economy, just as we wanted to protect ours a century ago when we were an emerging industrial state. I do not think that will happen quickly.
If there is a change of mood, one of the big markets for us is Europe. Do not ask me where the gains will come from, but if we can overcome some of the administrative protectionism that exists there, Canadian business will do well in the European market.
Senator Bolduc: The attitude of the bureaucracy in Brussels is a recipe for a fortress. If we can do nothing in that area other than foreign direct investment, which is what Canadian corporations have done, and if the possibility for South America is not there, we must go to China.
Mr. Macdonald: We must be prepared to play in all leagues.
Senator Bolduc: What about with individual countries such as China and India? It is already working with Japan.
Mr. Macdonald: I think that the big countries will insist on being dealt with on their own. I do not think we will settle the deal with all of APEC, but it is conceivable that we could with China, and maybe even with India, which, as you know, is inclined to be highly protectionist.
Senator Andreychuk: Your comments are prefaced on the European model as it stands now. As it expands east and south and there are more countries in the European Union, will that exacerbate the situation or will it create new dynamics that will change this fortress mentality? We often talk about this new super group of Germany, France, and others taking the lead and having more constituents and therefore more clout. Other people are arguing that as more countries join, it will be very hard for that bureaucracy to manage itself the way it has.
Mr. Macdonald: The three most likely candidates are the three that are now members of NATO with us. Let us take as an example Poland, a major agricultural producer. Being from Saskatchewan, you will know how important this is to the community. I think that there will be enormous difficulty between Poland, and perhaps Hungary, and the rest of the European community over the Common Agricultural Policy. It is conceivable that through very considerable political leadership and good planning, they will come to an agreement, but I suspect it will be one in which they finally settle issues between themselves but do nothing for the rest of us who would like to do business in that market.
The next stage is difficult because the Hungarians, both in agriculture and in manufactured products, the Czechs in manufactured products, and the Poles in agriculture, are serious competition for some countries of Northern Europe. It will be a very tough deal for them to make. When they make one, it will probably be so finely balanced that they will not be very open to the rest of us.
Senator Andreychuk: They will be preoccupied with their own issues.
I want to return to your original comment about NATO. You said several times that Europeans should manage their own affairs, which led me to believe that you subscribe to a different Article 5. A threat to one is a threat to all, and yet you see a threat to Europe under present circumstances as not being a threat to Canada. I should like you to expand on that.
If that is your conclusion, would you suggest that we had no business going into Kosovo?
Mr. Macdonald: I believe that, had the Europeans been well enough organized, they could have dealt with the emerging situation in all of Yugoslavia. We went into Bosnia under United Nations auspices in default of action by European members of the United Nations. My preference would have been that they took responsibility for that themselves. As Lord Robertson said, they had 2 million soldiers but they had trouble finding 40,000 to serve in Kosovo. There is room for improvement there.
We should be prepared to lend support to efforts of that kind. I have never had expectations, in all my years of experience, that the Europeans would assist us on this side of the Atlantic, although I do not know from what threat. We have to look at Article 5 and think back to 1949 when it was negotiated. The threat was very clear then and we all had to be together. Times have changed, and I think we want to change the nature of the relationship.
The Chairman: On that subject, we asked Solana what would happen if Mexico were attacked, or if there were some kind of war in Mexico. Would NATO involve itself in any operation in North America? We were told "no." After all, it is in the North Atlantic. We were all somewhat surprised that it was such a one-way street. We recall those conversations with the secretary-general.
Senator Andreychuk: That is where I want to go next. We were told Canada became involved, not because it was a European issue, but because it was a humanitarian issue, and that Canada could not overlook the deaths and the genocide that were allegedly happening there. That was the reason that would draw us in there. Our question concerning Mexico, Europe, and Africa was not well answered. It was answered in France in one way, in Germany in another, and by Solana in a third way.
Does humanitarian intervention weigh with you and NATO, or is that a UN issue?
Mr. Macdonald: Obviously it did weigh with us. I would add to your sentence this: Canada went in there because it was a humanitarian issue and the Europeans were incapable of dealing with it themselves. I would then go on with my argument that it is about time that they took some responsibility for that.
Let me put it the other way. At the head of the list of desirables would be to have a UN Security Council resolution which would then lead to the formation of a United Nations force that would do that.
We know that for various political reasons, the security council was not able to do that because of the potential veto from some of the great powers. Indeed, it might even have been difficult to get a UN General Assembly united-for-peace resolution, because there would be many other countries which would see an intervention of that kind as potentially threatening to themselves. Under the circumstances, perhaps NATO was the only instrument available. I would have to say that next time -- if there is a next time -- I hope that there would be that strong European force at the beginning of the fray which could, as the Helsinki agreement has said, be an effective force on the scene quickly to deal with it before the issue gets out of hand.
Senator Andreychuk: My next area of concern deals with the turbot war. You said that was a good example of the way Canada could exercise its muscle and confront the Europeans. That was certainly true. I think it was sexy to put the nets up at the United Nations and get everyone's attention. However, we are still paying for passing a law that was basically in contravention of international law. The same is true with respect to boarding Spanish trawlers. We made an issue out of fishing trawlers and international law which has reverberated over and over again in business. I wonder why you think that was so successful, when in fact I think it was counterproductive, especially since in the last 50 years, Canada has said, "Play by the rules. Play by the rules." We did not play by the rules. We have suffered the consequence over and over again.
Mr. Macdonald: We have had to do that from time to time because we were in a different position from other countries. The one I was very much concerned with was the Arctic Waters Pollution Prevention Act. All the great powers of the world, led by the United States, said, "You should not enact that." If one of their ships had got into trouble and spilled oil all over the Arctic, they would say, "That should not have happened, but at least it is a spill in accordance with what we think international law is."
In the Arctic, the international law on pollution was not settled. In the straddling stocks in the North Atlantic, the law was not settled either. However, it would be the height of folly to say, "The law is not settled so we will let those Spaniards destroy the fish stock, but at least we will be consistent with what is an uncertain body of law." I think the common sense answer is that if you know that someone is in the habit of poaching, then you arrest the poacher. If the law is deficient there, then you have to take it into your own hands. I think it was appropriate to do that. If it happened tomorrow, I would be prepared to do it again and to hell with the Spaniards.
Senator Andreychuk: The point I am making is not "to hell with the Spaniards." If Senator Stewart were here, he would remind us that we chose the fishing dispute and our position on fishing as a priority without having taken into account what it would do to many other businesses which may have been in equal jeopardy. There has been and continues to be a reverberating effect. We acted in isolation on fishing. We did not take into account what it would do to our trade in Europe.
Mr. Macdonald: I think it was the excuse used. I think the Europeans are protectionists. If we are to let the pale cast of thought overcome the native hue of resolution in international affairs, then we will not be able to defend ourselves very often.
The Chairman: On behalf of the reputation of Senator Stewart, I do recall that with great enjoyment, he passed around a paper on the turbot war. I do not want to put words into Senator Stewart's mouth, but I thought he rather liked the way it went.
Senator Andreychuk: Being the balanced man that he was, he also understood how it affected other businesses.
Senator Di Nino: There is no question, though, that at least among certain countries in the European community, there is solidarity on this issue. In the Canada-Europe meetings that we have had, both here and there, this issue comes up every time. I am not sure that it is quite as universal as Senator Andreychuk is saying, but there are many European parliamentarians who, over the past couple of years, have continuously mentioned this as an irritant which still exists.
The Chairman: I think Mr. Macdonald is right. I thought that a good deal of the European citizenry seemed to be on our side. We all know that basically, the Spanish government was taken prisoner by about four MPs from the Vigo area in Galacia. They actually grabbed the fisheries policy of the European Union. You meet them in elevators in Brussels. There is a family that is very big in the fishing industry. They are important to the Spanish government, and so one thing leads to another.
Senator Graham: The feelings of the European community might have been hurt because we won the turbot war -- the colony won the war. I do not believe that this issue resonated throughout the length and breadth of Spain. It was one particular area that was hurt.
The Chairman: In Galacia.
Senator Graham: I still support the way it was handled.
Senator Corbin: Mr. Macdonald, you touched briefly on some aspects of the European Union enlargement. I wonder if we have not missed opportunities to strike deals with some of the candidates before they got entangled with the octopus, the Europeans.
Even at this stage, we should be pushing with some of the candidates to the European Union to foster greater Canadian business trade interests.
Mr. Macdonald: I have lost track of the discussion. However, I thought it was a positive suggestion, that it would be very much worth our while, to have a discussion with the remaining EFTA members, the most considerable of which is Norway. There again, it is an incremental policy of building open market access. However, I think we should be exploring that.
When I thought of the three Eastern European countries, namely Poland, Czechoslovakia and Hungary, I never thought about Canadian advance initiatives. Perhaps we should be thinking about that.
Senator Corbin: My feeling is that we should have been more aggressive. Is there not something we can do in the back rooms of Europe to foster Canadian interests with former Soviet satellites? Eventually, I think the European octopus will grab everyone. The politics of the game and the bureaucracy will only exacerbate the disadvantage in which Canada finds itself.
I am not sure if the proposal made by Senator Grafstein on wine and cheese is the way to go. I do not think it would go down very well with Quebec, for example.
Senator Bolduc: It would if we did it together with the United States. However, if we did it alone, I am not sure.
Mr. Macdonald: There is a band of Eastern European states, some of whom were formerly constituent parts of the Soviet Union. I am here thinking of the Baltic states, of Belarus, of Ukraine, and of the Moldavian region. In some of those communities, for example, the Baltic states and Ukraine, we have enormous Canadian assets that could be made to work for us. I am not sure what the policy is in that regard.
Putting myself in the place of some of those countries aspiring to enter the European Union, I think they would be concerned about hurting their case if they made a deal with Canada. However, that does not prevent us from asking and finding out.
The Chairman: Briefly, what about the subject of defence? What about the proposition that, essentially, the alliances that formed in 1939 ended in 1990 --
Mr. Macdonald: 1949?
The Chairman: No, the alliances. The alliances that became NATO started at the beginning of World War II. France fell and Germany was the enemy in 1939, but the war started in 1939 and the alliances formed around it, and at the end of the war, the communists and the Soviets, and so on, joined. That whole period started in 1939 and ended in 1990. NATO and the Europeans and the European strategic defence initiative -- all kinds of people -- are having difficulty coming to terms with that. We talk about allies, but allies are in alliances, and presumably you have an alliance to defend yourself against something. It is not clear just what it is that they are defending themselves against. A lot of people would argue that Kosovo was an opportunity for NATO to do their famous non-article 5, whatever that is. We have had witness after witness tell us that non-article 5 basically means that it is not NATO.
You have 1939 to 1990, and then it ends. However, you have three groups. There are the NATO-ites and the problems with the Europeans who, as you say, have no satellite communications. We know all about that. Are we not possibly living in a world today, in the year 2001, where it is a case-by-case operation? There really are not any alliances, it is case-by-case, depending on the problem?
Mr. Macdonald: There will be some allies at the table. I think the British will be there in common cause with the Americans, as will the French. Thus, there are some ongoing relationships there that you can count on.
The Chairman: Their interests are differing, though.
Mr. Macdonald: Their interests are different. One of the advantages of their achieving the European defence initiative is that they will be institutionally structured to react all together. Entering into that kind of alliance carries the commitment that you will follow through on it.
Senator Bolduc: I should like to return to international trade. We have studied that at length here in the last 10 years.
I tend to agree with you that in the next 10 years, there will not be big things happening at the World Trade Organization level, except, perhaps, specific international treaties, for example, on services. From the point of view of Canada, where would you put your priorities in trying to achieve a section of the Free Trade Agreement?
Mr. Macdonald: If incrementalism in different sectors is all you can do, then it is incrementalism by country. The more that you can put the relationship into the structure of international law, the better off you are in the long run.
The trade news is generally rather gloomy these days, but there is a suggestion that they may be able to arrive at an agreement in the services field. I hope it is not made hostage to a broader agreement.
Senator Graham: Mr. Macdonald, in the first part of your presentation, we were talking about your theme of encouraging the Europeans to take the pre-eminent role in managing security matters on their continent. You followed that up by saying that NATO was created under very different circumstances, to meet a threat that no longer exists. How does that affect the military equipment that we require today to meet our responsibilities?
Mr. Macdonald: Do you mean Canada?
Senator Graham: Yes.
Mr. Macdonald: There is an entirely different issue here that I referred to inferentially, but I did not deal with it. Looking at the Canadian commitment in a fresh way, as we are this afternoon in terms of the political commitments that are made, we should be structuring our forces to do what we have to do.
It is clear that Canadians have always needed a greater carry-over capacity than anyone other than the Americans to get on the scene in the first place. I do not think we have that now. I think the demand will be, for all the skills that the army deploys, to ensure that we have the best possible equipment that we can transport to the scene quickly in order to be able to carry out those responsibilities and be fair to the men at the same time; that is, to have equipment with which they can defend themselves.
We must restructure our Armed Forces to do that. A 60,000-person force is probably not enough to meet the expectations of Canadians as to what we will do in these various challenges. We should move it back up again, so that we have the additional personnel to be able to do this.
As a result of doing that, some arms of the service will be favoured over others. This is always a problem within the service, that they always feel there should be a balance between the different arms.
Senator Graham: I do not want to get into the helicopter debate. However, if it is a question of the original helicopter, it may have been designed to meet commitments that perhaps no longer exist. Thus, the model that has been purchased or ordered is a scaled-down version of one that would be necessary under different circumstances.
Mr. Macdonald: This is the aircraft to replace the Sea King.
Senator Graham: Yes, that is correct.
Mr. Macdonald: I am far enough away from the details of military equipment that I do not know the answer to that. I do know that we will need forces on the ground and we must get them there, whether for NATO or for the UN. My feeling is that we do not have enough of them and probably do not have the right equipment to get them there as quickly as needed.
Senator Di Nino: Mr. Macdonald, the relationships that have been established between Canada and Europe, principally Western Europe, go back a long way historically under circumstances that created close ties. Canada today, 50, 60 years later, is a totally different country. There are many Canadians who do not understand those relationships and have really never been part of their background or history. Should we be exploring, or exploiting, if you wish, that issue in order to expand our horizons on trade opportunities?
Mr. Macdonald: Are you speaking from a trade standpoint?
Senator Di Nino: Yes.
Mr. Macdonald: We have an enormous advantage now through being a much more multicultural population than we were when I was a 15-year-old. I think those are circumstances of which we should be able to take advantage.
In terms of trade negotiations, in dealing with Asia, in particular, we have a substantial Asian population from various Asian countries, and we should maintain positive contacts with them similar to those we have, for example, with a number of the European nations historically.
Senator Di Nino: Are we doing that well, badly, or at all?
Mr. Macdonald: I do not know the answer to that.
Senator Losier-Cool: That was my question, Mr. Chairman. How much are we doing that? You mention that they are, if I can use your word, "uninformed" about Canada. Somewhere else you say that it is a question of population. Maybe we do not have the numbers. Yet we have a certain expertise in our services. Other than with regard to defence contributions, which they have recognized, when it comes to trade, are we rejected? Have we been too shy or humble? I do not like Senator Grafstein's solution of cutting out the pâte, because I like pâte and I like French wines, but what more could we do on the trade front? I am not speaking to military issues, but on trade.
Mr. Macdonald: We must be energetic and have our best people involved. It is a question of keeping at them all the time with an able set of Canadian representatives, so that the case is always before them. Every opportunity we see, we should be prepared to press it.
When I was involved in these matters internationally, one of the Americans who had been involved in trade negotiations said Canada is a very unfair negotiator at these GATT meetings. I asked why that was. He said, "You keep sending people like Reisman and Warren and Grey, and they all know about the previous negotiations. If we put forward an amendment, Grey can produce the American argument against that from three conferences before. It is totally unfair. You're sending good people to these negotiations."
Of course he was kidding, but that is what we did. We must have absolutely top negotiating people. The people I dealt with in my time in the public service came a little after those I just mentioned, but they too were very strong. It requires a very active policy and always being there advocating our interest.
Senator Losier-Cool: Should we consider sending a Canadian team to Brussels?
Mr. Macdonald: You could do that, but I believe it would be better to have people there all the time at a less than chief executive level who will put forward Canadian interests, tie them to the interests of the various power centres in Brussels, and indicate why they should have good relations with Canada.
The Chairman: Mr. Macdonald, I want to thank you very much on behalf of my colleagues for coming to speak to us. It has been a very interesting session.
The committee adjourned.