Proceedings of the Standing Senate Committee on
Foreign Affairs
Issue 17 - Evidence
OTTAWA, Tuesday, November 20, 2001
The Standing Senate Committee on Foreign Affairs met this day at 6:15 p.m. to examine Bill C-32, to implement the Free Trade Agreement between the Government of Canada and the Government of the Republic of Costa Rica.
Senator Peter A. Stollery (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, I call the meeting to order. We have appearing before us Mr. Patrick O'Brien, Member of Parliament and Parliamentary Secretary to the Minister of International Trade. From the Department of Foreign Affairs and International Trade, we have Ms Heather Grant.
Please proceed.
Mr. Patrick O'Brien, Member of Parliament, Parliamentary Secretary to the Minister of International Trade: Honourable senators, I am pleased to be here on behalf of the Minister of International Trade, the Honourable Pierre Pettigrew, to talk to your committee about the Canada-Costa Rica FTA implementation bill.
At the outset, it is appropriate that I make an apology on behalf of the department. I have now distributed the remarks of Senator Austin. Somehow, when the binders were distributed, those remarks were not included but should have been. We acknowledge that and we have corrected that error.
Honourable senators, I would like to speak about the benefits of trade to our country. It is obviously no secret that Canada, of all nations, is a trading nation. We depend on trade to a great extent and have benefited from it. Some 43 per cent of our GDP is directly attributable to the export of goods and services. One in every three jobs in Canada is now directly linked to our growing success in international trade.
The realization that our prosperity is intimately linked with international trade has led us to seek a more open, international trading system based on clear rules. With your indulgence, Mr. Chairman, I wish to repeat the congratulations that I and many members of the House of Commons on both sides offered to the Minister of International Trade and the Minister of Agriculture for their good work in Doha last week, for the important part they played in the success of a new launch.
The Minister of International Trade was one of six facilitators who helped cobble that agreement together. Anyone who takes a good look at the facts will understand that this will benefit Canada. It must also benefit the developing nations of the world. I think the support of Canadians for free trade, which is overwhelming, is largely contingent on that. The fact that they call it the "Doha Development Agenda" is a good signal of the direction in which we hope to move. I appreciate you allowing me that appropriate commendation to two ministers and their staff who worked very hard.
Honourable senators, we all know that our nation's economic prosperity is largely dependent on trade. As a government, we are moving forward on three tracks simultaneously. Multilaterally, we are pleased with the success in Doha with the new launch of the WTO round and we intend to play an important role in that over the next months and years.
Canada believes that a new round offers the best hope to expand and strengthen the rules-based system, which has worked so well for our country. I have spoken to critics of the WTO, and I did that in my home city of London, Ontario, when the house was off last week, specifically a group of Council of Canadian people, who did not see any value at all. The point I tried to make to them is that if there is any country that needs a rules-based trading system it is Canada. Given that our best trading partner and closest friend is 10 times our size, we need a rules-based trading system. As Kofi Annan made clear in his remarks, a liberalized, globalized trading system, rules-based, is probably the best thing we can do to help the developing nations of the world, the less developed, the poorer nations of the world. I have yet to have any of the critics successfully take on that gentleman's comment. I am still waiting and I will keep issuing the challenge when appropriate.
We are moving aggressively on the multilateral front. As I said, through the minister's leadership, we are playing a very constructive role multilaterally at the WTO. The second track of course is the regional track.
As all of you know, we have begun putting together, as a hemisphere, the Free Trade Area of the Americas. It is in its infancy. I attended a meeting, as did some of you, about a year ago here in Ottawa with parliamentarians from most of the nations of the Americas, to launch that mission.
This FTAA represents an historic opportunity to unite the countries of this hemisphere in a comprehensive free trade area that will contribute to jobs and growth in Canada and throughout the region. One of the most supportive countries is Mexico. I recall for you the remarks of President Fox to the critics of international trade: "Let us decide for ourselves." The man is democratically elected. He says: "Let us decide for ourselves as a developing nation what will benefit our people." That is another comment that we issued to the critics of free trade and to which we have not really had a good response.
We are enthusiastic supporters of the FTAA negotiations that are now underway. We continue to play an active role. My colleague, Bill Graham, Member of Parliament, is playing a key role in that organization. He will contribute significantly.
The third track on which the government is moving forward simultaneously is the track of seizing bilateral opportunities, such as the Canada-Costa Rica Free Trade Agreement that we are here to discuss tonight. We feel we need to move on all three fronts. I want to make the point - it is not in my notes but I have heard the Minister of International Trade make it so often - that it is very clear that our priority is a multilateral direction. All efforts are pointing toward, if you will, a successful WTO.
If Canada could only have one priority, that would be it, clearly. However, we do not intend to stand still on the regional and bilateral opportunities that exist as well.
Our relationship with Costa Rica is one of longstanding cooperation and mutual benefit. This free trade agreement will only make that relationship stronger.
As a country of some 3.9 million inhabitants with no military and longstanding democratic institutions, Costa Rica has been a small but important beacon of stability in Central America.
There is an interesting ratio relationship. The U.S. is 10 times our size in terms of population, and we are roughly 10 times the size of Costa Rica. Canada and Costa Rica share similar political cultures, placing primacy on respect for the rule of law, democracy, respect for human rights and the environment. Those are our top priorities.
We feel that this agreement serves both countries. Canada has a well-deserved reputation as a champion of smaller economies, and the Canada-Costa Rica Free Trade Agreement will serve to reinforce that. The Canada-Costa Rica deal is a clear signal that it is possible for smaller and larger economies to negotiate these types of agreements and for both to come away as winners. We continue to reinforce that view with our major trading partner as well. We have some issues with them, as you know.
There are other benefits, of course. This agreement also includes precedent-setting challenge chapters on trade facilitation and competition policy. Cooperation agreements on the environment and labour that complement the FTA were also negotiated in parallel.
Some think that every trade deal should be scrapped unless it has labour standards and environmental standards within the text. Those who call for that are in a very small minority.
I put that direct question to the president of the ILO when he was here. He was very complimentary to Canada for being creative in moving on side deals.
In the House of Commons, at least, there are very few who think that we must put standards into these trade deals. Most people feel that is not the best way to go forward. Here, in that spirit, we have negotiated parallel agreements.
Canada and Costa Rica believe that a commitment to environmental and labour cooperation, along with the effective enforcement of domestic laws, should go hand in hand with trade liberalization. These parallel agreements are designed to promote values shared by both countries, such as the rule of law and sustainable development.
Honourable senators, this is a dynamic bilateral relationship that I am attempting to describe for you. It is small; that is true. Our trading relationship is worth approximately $270 million but that number has been increasing. We expect that if this deal is made law, and we hope that happens soon, it will only strengthen that trend.
Canadians are increasingly quick to seize an opportunity. That explains the enthusiastic response to the extensive consultations conducted on this initiative. The response from Canadians was strong and clear and it indicated overwhelming support for pursuing an FTA with Costa Rica. It should also be noted that a relatively significant number of small and medium-sized enterprises expressed an interest in such an agreement. For them, numbers like $270 million are very large indeed. Their support is not surprising considering that there are considerable opportunities in the Costa Rican market for many Canadian goods.
We are confident that both of our countries' citizens will be able to share in the prosperity that freer trade creates by having greater access to each other's markets.
In the end, our efforts to liberalize trade on the multilateral, regional and, as in the case of Costa Rica, on the bilateral level, all lead to the same goal - a more open, rules-based trading system.
As I said earlier, the key priority, as the minister has enunciated many times, is that everything works toward Canada's number one priority in international trade, which is the strongest, most effective and fairest system of rules-based trade under the WTO auspices that we can achieve.
I sit on the House of Commons Foreign Affairs and International Trade Committee. There is also a special subcommittee on trade, chaired by Mac Harb, and I sit on that as well. That committee held hearings on this bill. The only concern came down to a perception of a threat to the Canadian sugar industry.
There is a sugar caucus in the House of Commons, chaired very ably by my colleague Ms Jean Augustine. That committee has representation from all parties who have heard those concerns. In reporting back to the standing committee, we said that, in any future bilateral negotiations, we want to bring to the government's attention that these concerns exist.
The reality is that this is a very straightforward bill. It is very positive for both countries. We hope that honourable senators will help to move this forward into law. Thank you for the opportunity to speak on behalf of Minister Pettigrew. I am happy to take any questions you have.
The Chairman: Senator Austin was the sponsor of the bill, and he would like to say a few words.
Senator Austin: I find the bill very much to my liking. I have already expressed my views in the Senate on second reading debate. I will not pursue the details of the bill. However, Mr. O'Brien, you mentioned the Doha meetings and the role of Minister Pettigrew. I wanted to ask you whether the Canadian position at Doha was achieved in the sense that you see a larger movement toward the reduction of tariffs and subsidies in the agricultural sector generally. Do you believe that they have founded, over the objections of the French and the Indians, for example, a movement toward reduced tariffs in the agricultural sector?
Mr. O'Brien: Thank you, senator. The minister and I certainly do think that. There was some pessimism in the first few days, but then there was some good movement. Next to the successful launch, the first priority for the government was the movement on agriculture because of the unfair situation that our farmers face across this country.
In speaking with the minister on that issue, it became a situation where the sole major objector to this - and they found themselves quite isolated, obviously - was the EU. They have their common agricultural policy. I have raised this a number of times with parliamentarians from the EU.
In getting agreement to seriously look at reducing and eventually eliminating these subsidies, our foot is in the door. I do not think the minister would pretend it will be easy or happen tomorrow, but it is viewed as a significant step forward by our government. We must seize it and keep the momentum going.
Senator Austin: Are we putting our managed trade arrangements in agriculture, dairy, poultry and elsewhere on the line?
Mr. O'Brien: Absolutely not. The minister was asked that question yesterday in the House. He gave the definitive answer that from the Canadian government's point of view the supply management system is not on the table. There are others with enormous subsidies before we would ever have to consider looking in the mirror on that.
We feel we have a unique situation that is carefully crafted and that serves our domestic and export markets. The minister was categorical on that point yesterday in the House. The answer is no.
The Chairman: For your own information, Mr. O'Brien, this committee has done two extensive studies on the European Union, and the agricultural policy is well known to members of this committee.
Senator Bolduc: This agreement is in line with the usual free trade agreements that we have with Chile and Israel, generally speaking; is that correct?
Mr. O'Brien: That is correct, senator.
Senator Bolduc: As a free trader, I do not object to much of the bill, even though I am in the opposition. I have only one small point of interrogation. It regards clause 18, where you say that the Governor in Council may modify or suspend the application of any federal law.
That bothers me significantly when you can, by regulation, modify legislation. I know that we will give you that power, but amongst those of us here, what do you think of it? That is found in clause 18(b). In other words, you ask Parliament to give the government, through the Governor in Council, the possibility of amending legislation. That is not what I learned at law school with Professor Pigeon, the late Supreme Court justice.
Ms Heather Grant, Deputy Chief Negotiator, Canada-Costa Rica Free Trade Agreement Negotiations: Honourable senators, if I may, I will say at the outset that this is a standard provision.
Senator Bolduc: There must be some good reason.
Ms Grant: I am unable to respond directly at this point. I will refer to some of my notes to see if I can provide honourable senators with an example of where this might have been used.
Senator Bolduc: There must be a technical reason for it. In terms of the principle of law, I think Senator Grafstein will agree with me that it is embarrassing for legislators to say we will accept that.
Mr. O'Brien: Senator, we will undertake to give you a written answer as soon as possible on that point.
The Chairman: This clause is written in accordance with Article XIII.18 of the agreement. There may be a qualifier there, Senator Bolduc.
Senator Bolduc: I know that you know your lessons well. I heard your speech in the House and it was quite convincing. Still, I have a problem. Coming from the province of Quebec, I know that Lantic Sugar has an operation in Montreal. They are not very happy with the accord. They have presented a document to the Subcommittee on International Trade, Trade Disputes and Investment.
The government knew that in advance and they decided to proceed. In terms of Costa Rica, it is not major, because we export to them something less than $100 million and we import from them about $400 million or something like that. It is not major. I see that Guatemala is coming on and are probably next in line. That might hurt the business we are talking about significantly.
This agreement is a precedent if we proceed to negotiations with Guatemala, and that might hurt. Perhaps you will tell me that the government will negotiate otherwise, I am not sure. The bed is already there.
What do you think of that situation? I know that you are not from New Brunswick or Quebec, but I know you can probably respond.
Mr. O'Brien: As a Montreal Canadiens fan, much of my heart is in Quebec.
Mr. Chairman, the senator has touched on exactly the concern of a number of colleagues of mine in the House of Commons on both sides. The first time this matter was brought to my attention was by government members.
Senator Bolduc: You will notice that, unlike the opposition on the other side, I am not discussing the environment or social matters. For me, that is another problem. We are talking about trade.
Mr. O'Brien: I understand your concern. That is why we held the hearings at the subcommittee. We heard considerable testimony on that issue. The reality, as you alluded to, senator, is that there is no refinery in Costa Rica. There is really no export capacity. The fear is about where this could lead, you are quite correct in that. That is why, in the subcommittee report to the standing committee, we included an asterisk saying that if there is a concern about a precedent we would like this concern noted. That item was unanimously passed by the subcommittee to highlight that matter for the standing committee.
The reality is that each of these bilateral agreements stands on its own. While there are many elements that are similar, it is not just a cookie-cutter template that would mean that any future agreement would be entered into on that basis. We certainly understand the concern and it is shared on both sides of the House.
Senator, you said you are in favour of free trade, as is the government. If we believe in free trade, we must accept the challenges that come along with that.
We have seen some problems with some of our trading partners who are free traders when it suits them and are not when it does not suit them. We are aware of the concern and we have highlighted it as well.
Senator Bolduc: To raise the discussion up a level, there is no formal process of consultation with the provinces before getting into trade. I know you do some consultation, because you must talk with business people who are involved. I understand that. On a more general basis, I understand that in England, now, there is a more open system, where Parliament is not involved in the negotiations. It is an executive job that must be done by the government.
At the beginning of the 21st century, do you not think it is somewhat outdated to see all those treaties as an executive prerogative and after that you say yes or no and that is it?
In Canada, in our system, we are always in what in the United States they call a fast-track authority. It is a permanent fast-track authority for the government. It is not the time to discuss that here, but I just put the question. Do you not think that somehow, one day, we will have to revise the Crown prerogatives somewhat in terms of those international treaties?
Mr. O'Brien: I would agree that the widest possible consultation that the government can undertake should be undertaken. That includes members of the Senate and the House as well, who are seeking to be more involved. I mentioned that when I alluded to the FTAA. However, I think this bears scrutiny. There were some 800 letters sent out by the Minister of International Trade and Industry Canada to companies, small business associations, labour organizations, citizen-based agreements and the provinces and territories to seek their views. There was quite wide consultation. It must be a federal responsibility, with ever-increasing consultation, to strike trade deals.
We could have a very interesting debate on the future of our federation, but I think we are probably one of the most decentralized federations in the world as it stands. I agree with you on the need to consult widely. I know that there was a very wide consultation.
Senator Bolduc: There were 168 Canadian representatives in Qatar and not one senator. I would have thought that Senator Austin would have been there, or Senator Grafstein.
Mr. O'Brien: There are a number of eminent senators on both sides who could have contributed. Every time I have ever travelled internationally as part of the Canadian delegation, there have been senators. In fact, six senators were directly approached and there was every expectation that there would be at least two senators as part of the delegation.
Unfortunately, a variety of factors prevented that from happening. The minister has informed me, however, that all future requests will be made through the Senate whips so that we do not find ourselves in a situation where there is no Senate representation. I agree with you that that would have strengthened the delegation.
The Chairman: We were somewhat taken aback. This committee did the original free trade agreement with the United States in 1988, and has done all of the trade agreements for years. I certainly was not approached. I did not want to go, but one of our colleagues could have been nominated to accompany the delegation, and I must say I am quite sorry that did not happen.
Senator Graham: I am happy to welcome Mr. O'Brien and to note what he has said with respect to future international representation and his assurance that the Senate will be well represented.
Senator Bolduc has raised the question about sugar. Was that the only sensitive issue that was raised before the subcommittee in the other place?
Mr. O'Brien: No, but it was the principal one. I believe there was only one party concerned about investment, but I never really understood their concern. We have a FIPA, foreign investment protection agreement, currently with Costa Rica, and we feel that that serves investment well. They were looking for a chapter on investment that the government felt was not needed given this FIPA. That was the second issue. It was of much lesser significance because I think only one party had any concern.
Senator Graham: We are told this agreement was modelled on the agreement with Chile; is that correct?
Mr. O'Brien: It is not a direct copy, but it is certainly modelled on it in the sense that we draw on every agreement possible when we strike a new one.
Senator Graham: How is the agreement with Chile working?
Mr. O'Brien: I will turn to Ms Grant to respond to that. We have what I think is a successful agreement.
Ms Grant: We have a successful agreement with Chile. I do not have the figures with me, but our trade with Chile has increased exponentially following the implementation of our free trade agreement with them. In fact, I can say that during the Asian flu, for example, trade between other countries and Chile seemed to fall whereas with Canada it seemed to be relatively stable. We credit much of that to the existence of the free trade agreement. It has certainly provided focus on the part of our business people on that market.
I would also add that the United States and Chile are currently in negotiations with Ambassador Zoellick, the United States trade representative. It has been clear that one of the reasons they are in negotiations with Chile is that they have been losing market share to the Canadians. We are quite pleased by that. I have some figures that I can share with you. The figures show that Canadian exports to Chile have risen 27 per cent in the year 2000 and are at a new high of $696 million.
The Chairman: How does that compare to figures before the agreement? The only comparison that counts is the one from the year before we had the agreement.
Ms Grant: I do not have the figures with me. I did not come prepared with the Chile figures, but I would be more than happy to provide them to you if that would help.
Senator Graham: Presumably, we are aware that these agreements sometimes form the basis for the ongoing negotiations for other free trade agreements. Senator Bolduc mentioned Guatemala, and presumably we are in negotiations with other Central American countries like Nicaragua, Honduras and El Salvador. Perhaps you could enlighten us as to how those negotiations are progressing?
Mr. O'Brien: There certainly is an anticipation of negotiations with the other countries of Central America. At this time, there are not any underway. I think they are imminent and that you will hear an announcement shortly on that. As Senator Bolduc mentioned earlier, that was the concern about the issue on the sugar refinery and so on.
The shorter answer is there are not any now, but we expect that very soon there will be a new set of talks.
Senator Setlakwe: I am concerned about the real results from Doha. I would like your views on this issue. We have been talking a lot about trade between Canada and the Latin American countries. Our exports at the moment to those countries amount to about 2 per cent of our total exports. We hope to increase that to 5 per cent in 2005. At the moment, with Europe, our total exports amount to 5.1 per cent. We have, with the European Community, a $10 billion deficit out of a total of $18 billion in trade.
I understand that the acceptance by the French, in particular, of certain modifications to their subsidy arrangements might be of some benefit, but I am interested in finding out from you to what extent you think this will rapidly or soon enhance our trade possibilities with countries that are traditionally friendly and historically very close to Canada.
Mr. O'Brien: First, if I might, as the chairman noted, there is tremendous expertise at this committee on free trade. I can probably learn from being here tonight. Honourable senators are well aware of our relationships, as you have just indicated.
First, Canada-Costa Rica and our trade with Latin American nations, while a very small percentage, it is symbolically important. It shows a commitment to our hemisphere that is very important to us. It is our own backyard, if you will. It is part of the momentum, as you noted, toward an FTAA, which is part of the momentum in our view toward the WTO. They are all very complementary. They have significance beyond just the sheer numbers, if I might say that.
I was not in Doha. I was standing in in the House for the minister who was in Doha. He is very positive, as is the Minister of Agriculture, about this breakthrough, and it is a significant breakthrough. Europe, and France within Europe, found itself isolated in wanting to stop the clock, if you will. Japan, one of the key nations in this regard, helped to break this logjam. I do not think we will see an end to this problem tomorrow, but Canadian farmers now have a great reason for hope, as do all Canadians, that our farmers will be able to compete on a much more level playing field vis-à-vis the EU and the Americans.
I would just recall for you that the House standing committee did a major study on our trade relationship with Europe, and it is putting together a business case for an EFTA, a free trade agreement with Europe. There is a good case that can be made. When I have been a party to discussions, formally or informally, most European elected people and officials are open to it, but they want to see the case made. We think there is a case to be made, and we intend to make it. The breakthrough at Doha will be very helpful in that.
Senator Setlakwe: What concerns me is that, at the moment, the European Community does have a free trade agreement with Mexico. They are talking to the Americans. They are talking to MERCOSUR. They are not talking to us, or are they? To what extent is Canada being considered an important factor in trade? In my view, the possibility of huge exports for Canada in Europe, if we have a free trade agreement with them eventually, is tremendous. I am concerned about being attacked from the Mexican or American side and not being considered at all by the European Community. It is a major concern.
Ms Grant: I wanted to follow up on Mr. O'Brien's comments. We are taking the standing committee report very seriously, and we are making efforts to consult broadly with our business people. This is all in the process right now to determine the benefits of pursuing a free trade negotiation with the European Union. We will be consulting broadly with the provinces as well in the next few months.
A tariff elimination study was conducted already by Canada, and it was shared with the Commissioner of the EU by Minister Pettigrew a number of months back. This is a first step in the direction of looking at the possible benefits to both sides of a free trade negotiation. I understand that the EU is also in the process of doing some studies on its own.
In the next number of months, we will be working very closely in terms of trying to see what the business case is for this. It is not being put aside, just to reassure you on that point.
Mr. O'Brien: Mr. Chairman, I would just add three brief points. I know, as many of you do, that the minister is raising this at every opportunity. I assure you of that.
I have personally been involved in two trade missions to parts of Europe. One was a year ago September with Minister Pettigrew to the nations of central Europe just after I was first appointed. There is a significant opportunity there that we are not seizing as Canadians yet. That was in 2000.
In 1999, I was part of the Prime Minister's trip to Northern Ireland and to the Republic of Ireland. Again, there are many opportunities there that we could seize. Those are just two personal experiences I would share with you.
I recall the initiative of a man many of you knew better than I, former Prime Minister Trudeau's endeavours in trade. I do not think we will easily shift an enormous amount of that trade away from the U.S. As a nation, we must pursue every opportunity to increase trade with other countries, as was his goal. I just tried to give you a few examples where I was personally involved in efforts to do that. Thank you for the question.
The Chairman: I might draw to all honourable senators' attention that the time is passing. It is nearly 7 o'clock. It would be nice if we could deal with the bill. It is not controversial, and there is no reason to prolong this. I do not mean to cut you off. I did not realize so many people would be asking questions, to tell you the truth.
Senator Grafstein: Mr. Chairman, it is your inspirational role and the creative role of the witnesses that compel us to ask at least several questions. Otherwise, we would have been mute.
First, I wish to commend the ministry and Mr. O'Brien on behalf of the ministry for this approach to free trade. We all believe that we have a central problem. The central problem is not really in Central America; the central problem lies beyond, to MERCOSUR, and the major barrier to free trade in the world is the EU.
Everyone thinks it is some place else, but it is not. The faster we get on with Central America, moving to South America, to offset this protectionist policy of the EU, the better. I commend the government for this.
Having said that, this is a template for free trade. Senator Austin, the sponsor of the bill, and I agree that we must vote it either up or down. Therefore, these are important questions for me.
When I look at the remedies provisions, I see that there is no provision for private companies to sue the government. Essentially, this is country to country as opposed to the private remedies that are available under Chapter 11 of NAFTA.
If this is a template, and having in mind our current problems with the United States on softwood lumber, whereby the private sector may have to sue agencies and others in the United States for what I consider to be ultra vires conduct, why have we chosen to curtail the right of private companies to sue in this agreement, as we do under NAFTA, without government and ministerial support? Is this not the wrong template to put forward if we want to move on to Guatemala, Nicaragua, Honduras and El Salvador?
Mr. O'Brien: This is an important question. As I indicated earlier, we currently have a FIPA with Costa Rica that the government believes provides the opportunities to which Senator Grafstein has spoken. I will ask Ms Grant to elaborate on the technical aspects.
Ms Grant: As Mr. O'Brien has said, the FIPA deals with the investment relationship between Canada and Costa Rica. It is similar to the NAFTA Chapter 11, in that it does include an investor state dispute settlement mechanism. Since we already had a FIPA in existence, it was decided that we did not need to have an actual investment chapter in the agreement.
Senator Grafstein: This will be very important for the private sector. Is it fair to say that the private sector, notwithstanding that it is not explicitly set out in this implementation agreement, can take advantage of a private suit under the FIPA of 1998?
Ms Grant: Yes, that is correct.
Senator Grafstein: Is it correct that this will not be a prophylactic to prevent private-sector claims for breaches of this agreement?
Ms Grant: That is correct, specific to the actual FIPA.
Senator Grafstein: Is there a limitation?
Ms Grant: I have not done a comparison between the two chapters, but it is very similar.
Senator Grafstein: Could you speak to us briefly about that? Bearing in mind what has happened with softwood lumber, it is very important not to curtail the private sector in moving on its own when governments act appropriately.
We are all concerned with the protectionist attitude of the MERCOSUR. We have tried, as you know, to negotiate access to that marketplace. We are having difficulty doing that for somewhat the same reasons that we have in Europe. This, to my mind, is a very good incremental strategy to give us leverage to pry open the protectionist policies of the MERCOSUR.
Briefly, what is the status of our negotiations with respect to Guatemala, Nicaragua, Honduras and El Salvador? In my opinion, the faster we move on the free trade front there, the stronger will be our weapon to pry open the MERCOSUR.
Ms Grant: Mr. Chairman, as Mr. O'Brien said earlier, we are expecting an imminent launch of negotiations with the four other Central American countries. I imagine that we will move forward as quickly as possible with that negotiation.
With regard to some of your previous comments in terms of investment, while we do have a foreign investment protection agreement with Costa Rica, we do not have foreign investment protection agreements with a number of the other Central American countries. You can be assured that these would be considerations in any type of negotiation with them as well.
Senator Grafstein: In summary, is it a priority with the department and the minister to move forward on those negotiations as quickly as possible?
Ms Grant: Yes, it is.
Mr. O'Brien: With regard to Chapter 11, while I agree with Senator Grafstein's points, I have fielded enough questions in the House that I should say that even with Chapter 11 the government is pretty clear in its view that it could stand some amelioration as well. The government is, in fact, seeking to achieve that. The minister has been quite aggressive in that regard.
Senator Grafstein: I agree that the remedy is not perfect and we must work to improve and expand it. However, it is there.
Senator Corbin: What are the cost implications in terms of the administrative dispositions under the bill? You are setting up a commission, committees, subcommittees and so on. Canada must pay a share. Have you costed that out, or will that be absorbed in the general administrative costs of the Government of Canada?
Ms Grant: A number of the committees that could be established are ad hoc in terms of when they will meet. Very often we tend to meet on the margin of other meetings when we believe it is necessary to do so. For example, sometimes meetings under other agreements take place on the margins of our FTAA negotiations. Very often the same negotiators that are involved with the Costa Rica subject matter are involved in the FTAA negotiations. Care is certainly taken in trying to minimize the costs of the institutional arrangements.
In fact, in the environment and labour side agreements, there was a concerted effort to minimize the institutional aspects of what was previously in the Chile agreement simply because it was a very major institutional framework and also quite costly to maintain. When we negotiate these agreements, we try to take into consideration the size of the relationship in order to minimize cost implications.
Senator Corbin: My second question concerns water, which comes under "General" on page 5. Clause 7 reads:
For greater certainty, nothing in this Act or the Agreement applies to natural surface or ground water in liquid, gaseous or solid state.
Is this in conformity with water dispositions in other agreements, specifically as it would apply for the boundary waters between Canada and the United States?
Ms Grant: I believe so.
Senator Corbin: In other words, why is water mentioned here specifically?
Ms Grant: I believe that is to make it explicit that it is not covered in any way by this agreement. Our government does have full sovereignty over the management of water in its natural state and in exercising that sovereignty is not constrained by our trade agreements.
Senator Corbin: Could this disposition affect bottled water in its natural state?
Ms Grant: This disposition covers natural, surface and groundwater. In terms of bottled water, senator, I would rather not go on the record with that.
Senator Corbin: Bottled water is a good, is it not? If it is bottled, it is tradable?
The Chairman: It is surface water in a bottle.
Mr. O'Brien: I was part of the hearings on this. The senator has touched on an important point. I do not think water in its natural state is bottled anywhere. As soon as you bottle it, it is not in its natural state. It is still water. This is subject to some debate.
Senator Corbin: If I saw a disposition of this nature in a trade agreement between Canada and the United States, I would not raise an eyebrow, but Costa Rica is so far away. Is it necessary at all to include this sort of article in the law in the first place? Why is it there? That is what I do not understand.
Mr. O'Brien: Senator, as we all know, the entire issue of water and the potential exportation of water is a contentious and highly debatable issue in Canada. The feeling is that a statement like this reinforces the position of the Government of Canada.
Senator Corbin: It is not a prohibition on the export of water. What does it say? It says nothing.
Ms Grant: The focus is on "natural."
Senator Corbin: It is a motherhood statement that leads nowhere, comes from nowhere. It is the sort of thing you say for greater certainty, but it does nothing.
Is there anything in this legislation that erodes the power of the Canadian government to legislate within its field of competence?
Mr. O'Brien: Not to my knowledge.
Ms Grant: No.
Senator Corbin: Under WTO rules - and I suppose that you are trying to match this type of agreement with the more global WTO rules - national legislative initiatives will be significantly eroded as a result of worldwide deals being struck. Can you assure me that, in this instance, we will continue to do our thing in Canada irrespective of anything in this agreement?
Mr. O'Brien: Senator, I am not a lawyer, let alone a trade lawyer.
Senator Corbin: I am not a lawyer. I must ask very simple questions.
Mr. O'Brien: I understand that this does not limit our sovereignty in any way. However, if I might allude to your comments, senator, we do not see this as something we are trying to copy at WTO. This is one of our three tracks. This is a bilateral agreement, one part of our three-track approach of bilateral, regional and multilateral, which is the priority.
If there is any lessening of sovereignty by any of the nations in WTO or any multilateral agreement that they willingly sign, then we have many precedents for that in the world of economics, defence and others. It is obviously judged by those individual countries that, for the collective good, they are prepared to sacrifice some sovereignty. There are many examples of where Canada and other nations have done that. I was at a meeting earlier today where we were speaking about NORAD. That is an example from the military/defence side.
The Chairman: Honourable senators, shall we proceed to clause-by-clause consideration of Bill C-32?
Hon. Senators: Agreed.
The Chairman: Shall the title stand postponed?
Hon. Senators: Agreed.
The Chairman: Shall the preamble stand postponed?
Hon. Senators: Agreed.
The Chairman: Shall clause 1 stand postponed?
Hon. Senators: Agreed.
The Chairman: Shall clause 2 carry?
Hon. Senators: Agreed.
The Chairman: Shall clauses 3 through 15 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 16 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 17 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 18 carry?
Hon. Senators: Agreed.
The Chairman: Shall clauses 19 to 25 carry?
Hon. Senators: Agreed.
The Chairman: Shall clauses 26 to 30 carry?
Hon. Senators: Agreed.
The Chairman: Shall clauses 31 to 46 carry?
Hon. Senators: Agreed.
The Chairman: Shall clauses 47 to 50 carry?
Hon. Senators: Agreed.
The Chairman: Shall clauses 52 and 53 and clause 51, which is by itself, carry?
Hon. Senators: Agreed.
The Chairman: Shall clauses 54 to 59 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 60 carry?
Hon. Senators: Agreed.
The Chairman: Shall Schedule I carry?
Hon. Senators: Agreed.
The Chairman: Shall Schedule II carry?
Hon. Senators: Agreed.
The Chairman: Shall Schedule III carry?
Hon. Senators: Agreed.
The Chairman: Shall the title carry?
Hon. Senators: Agreed.
The Chairman: Shall the preamble carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 1 carry?
Hon. Senators: Agreed.
The Chairman: Is it agreed that this bill be adopted?
Hon. Senators: Agreed.
The Chairman: Is it agreed that I report this bill without amendment at the next sitting of the Senate?
Hon. Senators: Agreed.
The Chairman: Honourable senators, thank you. Thank you to our witnesses.
I have one brief observation for the record. Senator Bolduc is replacing Senator Andreychuk temporarily on the steering committee.
The committee adjourned.