Proceedings of the Standing Senate Committee on
Foreign Affairs
Issue 25, Evidence, June 4
OTTAWA, Tuesday, June 4, 2002
The Standing Senate Committee on Foreign Affairs, to which was referred Bill C-50, to amend certain Acts as a result of the accession of the People's Republic of China to the Agreement Establishing the World Trade Organization, met this day at 6:00 p.m. to give consideration to the bill.
Senator Peter A. Stollery (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, I call the meeting to order. Our witnesses this evening are Ms Andrea Lyon and Mr. John Morrison from the Department of Foreign Affairs, and Mr. Guillaume Cliche from the Department of Finance.
Senator Andreychuk: If I may interrupt, Mr. Chairman, will the minister appear before the committee this evening?
The Chairman: I apologize, Senator Andreychuk. I forgot to say that the minister cannot be here this evening to introduce the bill, but he will attend at the meeting next Tuesday.
Senator Corbin: I would like to raise a matter under a point of order. We have been sent a document entitled, ``Comments on Bill C-50'' from the Chinese government. As I understand it, Mr. Chairman, this was sent to your office from the Embassy of China. I understand that it is specifically addressed to the members of this committee and the Senate. I do not know what the usual protocol is, but it is my understanding that, if there is a divergence of opinion in the interpretation of official text, then the matter should be taken up between governments at that level and not between a government and a committee of Parliament under either House.
I do not know if the officials here present are aware of this document. Perhaps they would comment on the acceptablity of this document for this committee and tell us if it has been dealt with, in terms of protocol, at the highest levels of government.
The Chairman: Thank you, Senator Corbin, and we can certainly ask questions of the officials. Perhaps I could give you a short background on why we received this letter.
My office was contacted by someone at the Chinese Embassy and I was given to understand that someone from the Chinese Embassy wanted to appear before our committee. My view was the same as the view that you just expressed. It did not seem to me to be an appropriate way of going about something that is an agreement between Canada, other countries and China. Actually, it did not seem to be someone from the Chinese Embassy but, in fact, someone from Shanghai who was intending to come before us. I thought that seemed a little inappropriate, as you have said, in respect of an agreement between two countries.
You have that memo because my solution was to suggest to them that they send a memo to the committee and then we would take a look at it. That is where it stands for now.
Ms Lyon, perhaps you could enlighten us on this matter?
Ms Andrea Lyon, Director, Tariffs and Market Access Division, Department of Foreign Affairs and International Trade: With respect to the inquiry by the Chinese government, indeed we have been made aware of the concerns that were outlined in that particular document. We have had a meeting with officials from the Chinese Embassy to review their concerns and we have replied to the Chinese government in writing with respect to our response. I believe that a copy of that reply has been provided to the clerk of the Foreign Affairs Committee.
The Chairman: I suppose it is in the package that senators have about this matter.
Senator Andreychuk: No, it is not.
Senator Di Nino: Mr. Chairman, since we have alluded to the document, I think it would be appropriate for us to include copies of it in the minutes. As well, we should be given a copy of the response, and include that as part of the minutes of the committee, as well.
The Chairman: Certainly, that will be done.
Senator Carney: Following up on Senator Di Nino's suggestion, since we obviously will not have a chance to read the comments that I have just received or the letter that is being circulated, could we return to this issue tomorrow, after the Senate rises, rather than try to hastily deal with it today?
The Chairman: That is a good idea, Senator Carney. We have no problem with dealing with that matter tomorrow.
There is the question of the appropriateness of something that is the subject of a negotiation between two governments, and then the committee somehow becoming involved. As your chairman, I must ask if the Canadian government would go to the committee on foreign affairs of the People's Republic Congress about a concern that we have with the Chinese government? Would it work that way? I somehow get the idea that that might not work.
However, we should be open to people coming before us. In our study on Russia, we met with several prime ministers and former prime ministers, but they were not made part of the proceedings because there seems to be a theory that foreign governments cannot be made a part of our deliberations. I feel that Senator Austin may think that that is not entirely right. Is that right, Senator Austin? I do not know. I think we could have heard from some of these people. We discussed it, and that is why I raise the matter here.
Senator Austin: My view is that we should not be setting precedents either way. There will be cases where we might want to hear from a representative of a foreign government, but this is a case of interpreting the meaning of a protocol. That is business for the two governments to deal with, not this committee. On the other hand, we have a piece of legislation before us.
I just want to say for the record that there will be other circumstances where we will not be dealing with the interpretation of an agreement between Canada and another country, but dealing with a public policy issue of some kind where the representations of a foreign government might be quite interesting to us. For example, in my experience in dealing with the Colombia River treaty and protocol, the predecessor of this committee, and the House committee, heard witnesses who represented the United States government.
Senator Carney: My point in suggesting that we look at this tomorrow is simply that, since we have not read it, we do not know what it does deal with. I have not read it since, literally, I received it just minutes ago. Therefore, I have no way of judging what it contains.
The Chairman: We will deal with it tomorrow.
Senator Di Nino: Mr. Chairman, we were just given two documents. One is a response from the Department of Foreign Affairs and International Trade to the gentleman, I assume, who sent us the letter. No, that is a different person. The other looks like it is a note. I would like to ask our witnesses if they have seen a copy of the letter that was sent to us from the embassy?
Ms Lyon: Yes, we have.
Senator Di Nino: Is this what you are responding to?
The Chairman: What, Senator Di Nino?
Senator Di Nino: Your response is to that letter?
Ms Lyon: I cannot see the document.
Senator Di Nino: We were given a copy of a letter, dated April 29, that DFAIT sent to Liu Guosheng, minister- counsellor.
Ms Lyon: Yes, that would be it.
Senator Di Nino: I just want to make sure we all have a copy of this. Is this in response to the letter sent by the embassy to our clerk, Line Gravel, or is this in response to the note?
Ms Lyon: It is in response to the note. They involve the same issues.
Senator Di Nino: The letter covers both of them?
Ms Lyon: Yes.
The Chairman: May I, then, ask Andrea Lyon to make her presentation? Let me just say that if you make your presentation short it will give others an opportunity to be heard, and then we can have questions. Please continue.
Ms Lyon: On December 11, 2001, China acceded to the World Trade Organization following 15 years of negotiations. The terms of China's accession will bring broad and very positive improvements in access to the Chinese market for Canadian exporters of goods and services.
WTO accession negotiations normally do not require Canada to make any legislative changes, as it is the acceding country which undertakes the concessions and any attendant domestic changes. However, Bill C-50 will enable Canada to implement fully certain special rights that were agreed to during China's WTO accession negotiations. The new rights implemented in Bill C-50 include China-specific safeguards and the right to apply non-market-economy rules in anti-dumping investigations involving Chinese goods. These are temporary measures.
The China-specific safeguards, which will be available for 12 years following accession, include the following: A product specific safeguard and a diversionary safeguard. The anti-dumping measure will allow WTO members to apply special price comparability rules to China in anti-dumping investigations while China makes the transition to a market economy. This right would be in effect for 15 years from the date of China's accession to the WTO.
These measures would be complementary to existing provisions in Canadian law on safeguards and anti-dumping procedures. Canada's existing trade policies and legislation in these areas are guided by, and based on, the WTO agreements. Other WTO members are also taking the necessary steps to amend their domestic regulatory or legislative framework as necessary to ensure full implementation of these new rights.
The measures being implemented in Bill C-50 are based on the negotiated, agreed text in the Protocol of the Accession of China to the WTO.
Legislative changes are necessary to integrate these provisions into Canada's existing legislative framework. The laws that will be amended include: The Canadian International Trade Tribunal Act, in order to create procedures for initiating and conducting China-specific safeguard inquiries; the Customs Tariff, to allow for the imposition of surtaxes pursuant to a China-specific safeguard action; the Export and Import Permits Act, to authorize the addition of goods to the Import Control List in order to enforce a China-specific safeguard action; and, finally, the Special Import Measures Act, to allow Canada to apply special price comparability rules.
We do not foresee an increase in injurious surges of imports from China, further to its WTO accession, that would require us to use the China-specific safeguards. China already has quite open access to Canada's market, and its terms of access to the Canadian market will remain largely unchanged as a result of WTO accession.
Implementation of these measures will ensure that Canada and affected Canadian industries have at their disposal the full range of rights that were agreed to during the negotiations. Canadian industry stakeholders supported these measures since they provide additional tools to respond to potentially injurious import surges.
I have with me colleagues from the Department of Finance and also from the Department of Foreign Affairs and International Trade, and we would be pleased to respond to any questions you may have.
Senator Carney: I want to compliment whoever wrote the legislative summary of this bill; it is extremely well done. I have read that, and I have read the bill, which is quite well laid out. I have some questions about exceptions, and when you say this is a special arrangement.
The legislative summary says, and I will quote from it:
The importance of China's accession to the WTO is significant because of China's size and potential impact on world markets...
And this is the part that interests me —
...and because the conditions under which China enters will set a precedent for the other transition economies with pending WTO applications.
If this bill is a precedent with special conditions, could you elaborate on what the nature of the precedent is, and what other transition economies could be affected by this legislation?
Ms Lyon: We are currently in the throes of negotiating with Russia with respect to its accession to the World Trade Organization. You will have seen as you go through the summary of the bill that there are certain areas, for example, with respect to price comparability rules, where there is allowance made in the legislation to potentially add other countries, if we want to apply those same rules. Russia would be one example where some of the provisions in these negotiations may be applicable down the road.
That said, with respect to the special safeguard provisions, it is certainly a unique feature. It applies only to imports from China at the moment. In the context of negotiations with Russia, we do not anticipate the need for these requirements. However, these are still early days in the negotiations.
Senator Carney: What other countries are transition economies? What other WTO applicants could be part of this arrangement?
Ms Lyon: I would say Russia would be the leading candidate. There are about 30 countries with whom we are negotiating at this point. Vietnam would be the next largest in terms of economic size. Saudi Arabia is also acceding to the World Trade Organization. Beyond that, the countries are much smaller.
Senator Carney: Are they developing countries?
Ms Lyon: Yes.
Senator Carney: When you say that they are precedents, do you mean that in terms of guidance or in terms of legal precedents? I am trying to figure out whether they are applicable to some of the less developed economies.
Ms Lyon: They may or may not be applicable. The other negotiations are not nearly as advanced as, say, those with Russia, with whom it is hoped the negotiations will conclude within the next several years. The other ones are at earlier stages. It is difficult for me to indicate definitively to what extent they would be applicable.
With respect to your question about a legal precedent, this does not impose any legal precedent in terms of what we must include in subsequent negotiations.
Senator Carney: That is important because sometimes this legislation does set in stone precedents on what can be offered to other countries.
Second, I understand that Hong Kong and Taiwan are already members of the WTO?
Ms Lyon: Yes.
Senator Carney: How does this legislation differ from our treatment of Hong Kong and Taiwan and these special customs territories?
Ms Lyon: The China-specific safeguards are particular to China. They only would apply to imports from China. There is no similar safeguard mechanism that would apply exclusively to another WTO member. We do have, of course, global safeguard rights that apply to the range of WTO members, but not a Taiwan-specific or Hong Kong- specific safeguard, so there is no real applicability in terms of those other WTO members.
Senator Carney: Since Hong Kong is a great re-exporter for Chinese goods, why is there not consistency between the approach to Hong Kong and the approach to China? Obviously, if you can tranship through Hong Kong, the treatment is different there than it is for, say, Shanghai. What is the rationale for that?
Ms Lyon: The measures apply to goods originating in China, as opposed to goods that may be transhipped and undergo some transformation. It has to be a good of that particular country in order to be subject to these safeguard provisions.
Senator Carney: Hong Kong is part of China, is it not?
Ms Lyon: It is a separate customs territory. For customs purposes, it would be indicated that it would be a good originating in China, as opposed to another WTO member country.
Senator Carney: This is important to me because of Shanghai's re-emergence as a commercial centre. There have been some goals to replace Hong Kong in the commercial world. I just do not see how you could apply one set of rules to one part of China and another set of rules to another part of China, and not have some impact.
What would be the impact of this policy in terms of the flow of goods between Canada and China? Would it mean that Hong Kong goods get preference in our market?
Ms Lyon: No. There is a set of conditions that would apply before Canada, or any other WTO member, would take these special safeguard actions which are outlined in the legislation. These safeguard actions are similar to the rules that apply to a normal safeguard investigation.
There would have to be a finding of injury. There would have to be a determination by the CITT and a finding by the government before any duties were imposed on Chinese goods pursuant to an administrative process.
Indeed, if it were found to be the case that these goods were injuring domestic industry, then yes, the goods from every other country would have a preferential advantage into Canada by virtue of not being subject to whatever duties result.
Senator Carney: Do you not see the opportunity for abuse here?
Ms Lyon: The CITT is an independent, quasi-judicial agency. It will carry out its activities in full compliance with our WTO obligations.
Senator Carney: Does the CITT terms of reference allow members to examine such a situation as I have described, of basically fraud or misrepresentation of origin of goods, because there is a discrimination here between Taiwan, Hong Kong, and PRCs. If you acknowledge it, then we can move forward and you can tell us what you intend to do about it.
Ms Lyon: The Canadian Customs and Revenue Agency does have responsibility for ensuring that the goods indeed are the product of China, in this particular example. They have that enforcement capability and requirement. It is their job to ensure that the rules are administered appropriately.
Senator Carney: I am sure some other members of the committee would like to follow that up. China is a big market. It is important to us. I fail to see the justification for this approach.
I understand about safeguards. I understand about surges. I understand about diversion. We are talking about diversion here, I think. We would like a better rationale of why there would be discriminatory treatment between one trading partner and another.
You may wish to reflect on that, and let us know. I have other questions, but I will wait.
The Chairman: I will ask a question before I call on Senator Di Nino.
This bill relates to access to the WTO agreement. It is not we who are negotiating; it is the WTO who are negotiating, and it is China's negotiation. Do these negotiations take place in Geneva at the WTO? We are one of several countries in the WTO that have established these common trade rules and regulations. Correct me if I am wrong, but China does not make an arrangement just with us; it is with the WTO by way of this agreement. Is that correct?
Ms Lyon: That is correct.
The Chairman: That is done after, I am sure, years of negotiations in Geneva with the WTO?
Ms Lyon: That is correct. These rules were negotiated over the course of years.
The Chairman: We are one of the hundred-odd signatories to the agreement, and they must do the same thing with all the other signatories to the agreement. Is that correct?
Ms Lyon: All other WTO members have the same rights, yes.
Senator Di Nino: Let me just clarify that last point. Will the legislation that we are being asked to pass be mirrored by all the other 129 members of the WTO? Will all the provisions that are contained in Bill C-50 be duplicated in the U.S, the EU and in the African states?
Ms Lyon: Yes. In fact, the United States has already implemented their legislation with respect to these provisions. Other countries are in the process of doing likewise, including Korea and Japan. It depends on their legislative and regulatory framework whether they will require legislative change to implement or advocate these particular provisions. Yes, the other WTO members are taking similar actions so that they can avail themselves of these safeguard rights.
Senator Di Nino: Would there be some countries that would not do that, or that have indicated they would not do that?
Ms Lyon: We have received no indication from anyone in that regard.
Senator Di Nino: You expect all 129 countries to adopt this document?
Ms Lyon: We would expect that they would all take the necessary steps, domestically, to ensure that they can avail themselves of these rights, yes.
Senator Di Nino: For my purposes, when we are talking about these issues, we should not speak of Taiwan and Hong Kong in the same terms. Taiwan is not a part of China, but Hong Kong is a part of China. Having stated that, I will just ask for further clarification on the provisions for product-specific safeguards and also the diversionary safeguards.
Is this the first time that these and other safeguards have been included in a negotiation with a country to accede to the WTO?
Ms Lyon: Yes, it is the first time a country-specific safeguard has been negotiated.
Senator Di Nino: There are no other members of the WTO that have been subject to these similar provisions?
Ms Lyon: That is correct.
Senator Di Nino: To finish off Senator Carney's question, how do we ensure that products being manufactured in some part of China are not diverted through Hong Kong to be traded with the other members of the WTO? Do we have a system in place for that?
Ms Lyon: Again, that gets to the enforcement responsibilities of the Canadian Customs and Revenue Agency, which has that responsibility.
I would like to add that, as I think I said in my opening remarks, China's access to Canada remains largely unchanged as a result of accession, so we do not anticipate that suddenly there will be a surge of imports that will require us or domestic industries to use this particular provision. However, it was negotiated, so it behooves us to implement it.
Senator Di Nino: What is the dollar figure of Canadian imports from China to Canada?
Ms Lyon: It is about $12 billion.
Senator Di Nino: This has been growing quite steadily in the last few years. It could grow to a much larger number. It would be very difficult, I would think, if it goes to $18 billion, then we find that certain products are made in other parts. If you have those provisions in there, you have them there for a reason. The frustration that I am having is how do we police this arrangement? Do we just say we will take their word for it?
Ms Lyon: I can repeat what I said previously about the existing responsibilities of the Customs and Revenue Agency. That is precisely their responsibility, to ensure that the import procedures are adhered to and are conducted in compliance with Canadian legislation and regulations.
Senator Di Nino: I find it difficult to understand how you could impose certain conditions on another department that would be nearly impossible to police. Those provisions were put in there for the first time for China, the only country, because there must be some concern that the Chinese government may, in effect, abuse the relationship granted in the WTO.
Ms Lyon: I would just like to comment on your point about abuse. The use of the safeguard mechanism does not imply that we think that China is trading unfairly. It is not like a countervail or anti-dumping action that carries with it some unfair trading practice. It is a provision that is available to WTO members if there is a sudden injurious surge of imports, not necessarily because there has been unfair trading practices. It is a transitional mechanism to allow domestic industry the time to adjust and make the necessary corrections.
In fact, both the WTO and this particular agreement provide for compensation in the event that the safeguard measure is in place after a certain period of time. Therefore, while a China-specific safeguard is unique, the concept of safeguard is not, and has been with us for some time.
Senator Di Nino: The fact remains that we have, for the first time in the 129 other negotiations we have had with different countries who are members of the WTO, seen fit to put in some safeguards that did not previously exist. There must be some concern. I cannot see how we can charge another department with ensuring that the concerns that have been raised and have resulted in these provisions in a bill are being respected. That is something I would like to give some thought to and come back to, or perhaps one of my colleagues might follow it up.
The Chairman: I would like to clarify one other point to my own satisfaction. We are amending certain acts because of China becoming a member of the WTO. As you have said, it does not change the rules much between Canada and China. We have $12 or $13 billion going out in trade, both imports and exports, but this agreement is not with us alone. We are just one 130th of this agreement. It is with 129 other people as well. We are one 130th of it.
Am I right in assuming that other countries may have difficulty with Chinese imports or whatever? Other countries such as Argentina, Brazil, South Africa or the European Union may have different problems with China than we have, but because we are one 130th of an agreement, we have all agreed to the same thing. Many of the aspects of the agreement may not have a great deal of effect on us but may be important to other countries. Is that right, or am I wrong?
Ms Lyon: As I mentioned in my opening remarks, we do not anticipate the need for these particular measures, and we may never use them, but they are there. They were negotiated, as you correctly point out, by other countries that are members of the World Trade Organization, and this is one of the results of that negotiation.
Senator Carney: The issue is not whether we are one of 130 members of the agreement. The issue is whether this legislation represents or faithfully meets the terms of this agreement. I think Ms Lyon is nodding in agreement. The issue is not one that you raised about us being one of 130 members to the agreement. The issue is whether this legislation, in fact, correctly interprets and reflects agreement, and that is an important point.
The Chairman: My question was just to clarify what Senator Di Nino's line was about the problems of imports. It may be that the problem with imports is with South Africa and other countries.
[Translation]
Senator Corbin: My question is about the exports of Canadian goods prohibited from export or under embargo. I am referring to strategic material or material which could be used for war in China or elsewhere, for example under the existing agreements between China and Iran.
Does this bill change anything to the rules governing the export to China of goods prohibited or under embargo?
[English]
Ms Lyon: It does not add any new rights or obligations, or change the circumstances with respect to Canadian exports. Canadian exports to certain countries can be subject to the Export Control List, depending on the nature of the product in question and to certain markets. I do not have that particular information with me here in terms of the countries and the products, but we can certainly supply that to the committee.
Senator Corbin: Which department is responsible for the establishment and surveillance of the Export Control List, as you qualified?
Ms Lyon: It is the Department of Foreign Affairs and International Trade.
Senator Corbin: Currently, do you have a list of material as it affects China?
Ms Lyon: I cannot confirm whether or not there are products on the list.
My colleague here from the China desk would perhaps like to respond.
Mr. John Morrison, Director, China and Mongolia Division, Department of Foreign Affairs and International Trade: There is a list of products. They are not country specific but they are agreed in a group of countries that get together. I cannot remember the name of the organization.
A group of countries, mostly Western countries, have agreed on categorization of goods that can be used for war purposes only; goods that are dual use, or can be used for peaceful or for war purposes, and then others that do not concern us.
According to this categorization, for example, when a Canadian company wishes to export a good to China, it will submit an application to export to our department and we will then look at the type of good it is, the recipient in China, and then make a decision as to whether this is a permit that we will approve or not. That is for exports.
Senator Corbin: You said you could make the list available to us. Would you do so, please?
Mr. Morrison: We will get something for you.
Senator Corbin: If you have anything China-specific that would be helpful.
Mr. Morrison: I do not think there is anything China-specific. As I said, it is a list of goods that go to either war zones or countries that are not part of the NATO Alliance, for example. There is a NATO categorization of goods as well.
Senator Corbin: How can you control that? We all know that China is not the only nation involved in actions of making trouble on foreign soils, or helping other foreign national governments attain certain non-peaceful goals, and even indulging in aggressive acts. How can we be assured, in our trade with China, that, in the field of communications, for example, the end use is, in all respects, acceptable to Canadians in terms of fomenting peace on the face of the Earth, because China has been, and may still be, I suspect, active on some of those fronts? How can we be assured that our exports are used in peaceful applications only?
Mr. Morrison: We can never be 100 per cent sure.
Senator Corbin: Is it not our business to be sure?
Mr. Morrison: As I said, we cannot be 100 per cent sure. On certain goods I would say there is some risk, but it is a calculated risk. In most cases, we will look at the type of good it is. For example, if it is a missile guidance system, I can assure you we would not export it to China.
Senator Corbin: That is an extreme example.
Mr. Morrison: There are examples such as that, and we come across them. If it is a dual use technology, we will make an assessment of what is the risk that this technology could be used for non-peaceful purposes, or whether it would be strategically harmful to Canadian interests.
There are other issues as well, such as intellectual property rights. We warn companies of the dangers of copyright law not being completely respected in certain countries. China would be one of them. Whether to take the risk is a commercial decision that a company will take. Some companies believe it is worth taking the risk because, by the time they have copied the technology, the technology itself has moved on and they are so far ahead that it does not matter, and in the meantime they establish a brand for themselves.
We are talking here about exports from Canada to China, whereas this bill is concerned with imports from China to Canada. It is a slightly different issue, I believe.
Senator Corbin: It is, but there are connections.
Senator Andreychuk: The countries that came originally into the WTO are not bound by this kind of agreement because, as you say, this is the first one. How many other countries have come into the WTO system by a special negotiation, as China has? I know of one or two but I am not sure how many there have been.
Ms Lyon: I will need to get back to you in terms of the specific numbers. When the GATT, the predecessor to the WTO, took effect in the late 1940s, I believe there were 40 or 50 countries that were original members, and then subsequently there have been various members who have acceded. I believe the current membership is up around 142, 143 members, roughly.
Senator Andreychuk: You say there are no particular problems with the imports coming into Canada from China, although there is quite a trade imbalance now, and that other members raised the issue. Can you tell us who those other members were, and what their particular concerns were that would lead them to believe they needed safeguards? Why are we so different from those other countries?
Ms Lyon: The provisions were negotiated, I would say, out of an abundance of caution, recognizing the size and strength of the Chinese economy. As I mentioned in a previous response, China was one of the largest economies outside of the WTO. It was not on the same scale as many of the other countries that are now in the queue to join the WTO.
China is now, for example, the fourth largest exporter of goods and services in the world. It has an extremely impressive GDP growth rate. It has an enormous economy. It has a large and growing middle class, so that it is an economic powerhouse such as we have not seen in previous negotiations. Consequently, with that export strength and the fact that the Chinese have not fully made the transition to a market economy, it was felt by the WTO members, and China agreed, that these sorts of safeguard measures would be advisable in the circumstances. Certainly, the United States was one of the leading proponents of this measure.
Senator Andreychuk: If the United States is worried about it, as are others, because of the size and the relative importance of China, why was this concern not shared by Canada, if I understood your last answer?
Ms Lyon: I would not necessarily say that it was not shared by Canada. It was not seen as an issue that was at the top of our negotiating agenda. However, the WTO accession negotiations and the resulting document is a consensus one, one that everyone agrees to. We certainly did not object to it, but we would not have been one of the leading players advocating for these particular rights.
Senator Andreychuk: I want to go back to Senator Carney's point on Hong Kong and the rest of China. We have all lived through the country-of-origin problems in trying to trace where goods are actually made and manufactured, and who put what part in them. In light of the studies we have done in this committee and elsewhere, the structures and the attitudes are different in China. The rule of law has a different meaning. They are coming towards commercial law. They are as creative entrepreneurs now in many ways as other countries. It seems to me we have a difficulty here because we will not be able to control or understand where the goods are made and perhaps will not be prohibiting new and innovative interpretations that China may put on this safeguard.
I suspect the differences between Hong Kong and China will diminish in time. Consequently, we have set up two regimes, and I do not think we have effectively put in place the kind of safeguard that we think we have.
Ms Lyon: The CCRA's responsibilities for enforcement in terms of border measures are just as they were prior to China's accession. China will not necessarily increase its exports pursuant to the WTO. They may increase their exports for a variety of other reasons, but it is part and parcel of CCRA's existing responsibilities, previously and into the future.
Senator Andreychuk: You leave me with that dilemma. The safeguards are presumably for the goods in China, but Hong Kong and the rest of us are bound by the rules of the WTO. What safeguards do we have against sudden injurious surges in imported goods from Hong Kong?
Ms Lyon: There is a global safeguard provision contained in the WTO. It was in the original GATT that was negotiated back in 1947, and it provides very similar measures, enabling the WTO member to impose temporary quotas, surtaxes, charges, in the event of a sudden injurious surge of imports, and pursuant to the same sort of procedures, that is, an investigation by the Canadian International Trade Tribunal, findings by the tribunal and ultimately a decision by the government.
There are indeed global safeguard rights available to Canada for imports from all other countries.
Senator Andreychuk: How are they different from the global ones in this act? Are they the same, and if not, where are they different?
Ms Lyon: The differences are, first, that this is China-specific. This one applies only to China.
Senator Andreychuk: I mean the mechanisms and the process.
Ms Lyon: It is also different in that the injury requirements are different than for, say, a global safeguard action. They are more relaxed with respect to China than they would be in a global safeguard circumstance. There is also the duration. These safeguards do expire after a certain period of time. In 2013, for example, these China-specific safeguards will cease. Those, in a very broad brush, are some of the important differences.
Senator Andreychuk: You say they are more relaxed in Bill C-50 than they are in the global safeguard?
Ms Lyon: Yes.
Senator Andreychuk: Am I to understand that there is less of a standard and less of a safeguard than the global one? If that is the case, would Canada have the option to look to the global one as well for safeguards, or are we now, if we pass this bill, precluded from using the global safeguards?
Ms Lyon: Against China?
Senator Andreychuk: Yes.
Ms Lyon: You can still use the global safeguard.
Senator Andreychuk: We still have an option to use the global safeguards against China or the mechanism here?
Ms Lyon: That is right. It is actually domestic industry that would initiate the process. They would have the right to use either, but given that the injury requirements are different in the China-specific than in the global, I would hazard a guess that they would want to use the China-specific safeguard mechanisms.
In terms of those injury requirements, in Bill C-50, the requirement is for there to be market disruption — that is the trigger — whereas in global safeguards it is serious injury, which is a slightly higher standard.
Senator Carney: My first point is for the record, and it follows Senator DiNino's question about the difference between Hong Kong and Taiwan. I thought the record should show that we are dealing with three entities here: one is the People's Republic of China; the second is the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu; the third one is Hong Kong as a Separate Customs Territory to China. That is how they are described. For clarification, I wanted to have that on the record.
The Chairman: Are we not talking about the PRC?
Senator Carney: We are talking about Taiwan and Hong Kong.
The Chairman: They are separate and different.
Senator Carney: I wanted to read into the record what their technical names are, because Senator DiNino pointed out that there was a separate status for them. I am sure our researcher will ensure that we have the right names. It is called the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, and the Separate Customs Territory of China, which is Hong Kong, and the PRC. We know what we are talking about, but I want to make sure the terminology is consistent.
Could you provide the committee with a specific statement, Ms Lyons, because this is a precedent-setting, country- specific piece of legislation, of what elements of this bill are special to this bill compared to our normal arrangements with countries? I would like an itemized list of the special, country-specific elements in this bill so we can have it for reference.
Since this is the first time that we have done this, who is the referee in terms of a dispute? If you have a new agreement and it is the first time we have ever used this discriminatory approach and it has separate elements, if there is a dispute possibly raised by the letter from the Chinese consul, each country can turn to, not the CITT, but which country —
The Chairman: It is the WTO dispute settlement mechanism, is it not?
Ms Lyon: It would be.
Senator Carney: In terms of a disagreement about the application of this particular legislation, both parties have recourse to the WTO dispute settlement mechanism?
Ms Lyon: That is correct.
The Chairman: Honourable senators, it is seven o'clock. I shall adjourn the meeting for ten minutes so that we might clear the room and proceed in camera.
I wish to thank our witnesses. We will continue this discussion tomorrow. I hope to proceed to a clause-by-clause consideration of Bill C-50 at that time.
The committee continued in camera.