Evidence of meeting #37 for Foreign Affairs and International Development in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was countries.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Fraser Reilly-King  Policy Analyst, Aid & International Co-operation, Canadian Council for International Co-operation
Toby A.A. Heaps  Chief Executive Officer and Co-Founder, Corporate Knights Inc.
Paul Romer  Professor, Stern School of Business, New York University, As an Individual

5:10 p.m.

Conservative

The Chair Conservative Dean Allison

That's all the time we have.

Madam Péclet, you have five minutes, please.

5:15 p.m.

NDP

Ève Péclet NDP La Pointe-de-l'Île, QC

Good afternoon. Thank you for your testimony.

I am mostly wondering about governance. One of the things you talked about is a judicial system, but you did not mention what happened in Madagascar, where the same kind of situation took place. So here is your chance to comment on that. You gave the example of Hong Kong. However, the same thing was attempted in Madagascar, but the population was strongly opposed to it. The president actually even had to resign.

What are you doing in terms of democracy? What democratic system, what type of governance or model will be imposed on those people? Thinking that a population will be prepared to abandon sovereignty across its land and adopt a system different from the one already in place seems rather excessive to me.

5:15 p.m.

Professor, Stern School of Business, New York University, As an Individual

Dr. Paul Romer

One of the sad things about being a poor country is that the worldwide press never bothers to get the facts right about anything that happens in a poor country.

In Madagascar, Daewoo gave a statement to the Financial Times saying they had a deal to lease large tracts of land in Madagascar at zero payment to the government in exchange for the construction of some infrastructure.

The government had never accepted that deal. The Financial Times did not even ask for comment from a government official. The Financial Times subsequently published a retraction from Daewoo saying, well, this is what we were asking for but nobody from the government ever agreed to it.

The fact that the president had given away large amounts of land to Daewoo was used as a pretext for a coup that was clearly engineered by other forces for other reasons. No one has even bothered to correct the facts about Daewoo and the land.

Now it is true that I had some conversations with President Ravalomanana prior to the coup about the idea of trying to build a city, but this would be on a very small piece of land compared to what any of these agricultural projects involve. There was never any public discussion of the charter city proposal in this coup period. I know that there are reports out there, but the facts are very different from the ones that are often cited.

5:15 p.m.

NDP

Ève Péclet NDP La Pointe-de-l'Île, QC

So you do not agree that it was an attempt to establish a special regulatory zone. Could you answer with a yes or no?

5:15 p.m.

Professor, Stern School of Business, New York University, As an Individual

Dr. Paul Romer

I had conversations with President Ravalomanana about this idea. We both agreed that it offered a promising future for Madagascar, but there was never any agreement, and this was never the source of any popular protest because it was never publicly disclosed. The popular protest you're referring to was about a report of an agricultural development deal between Madagascar and Daewoo, and as I said, it was a purported deal that was not in fact a deal.

5:15 p.m.

NDP

Ève Péclet NDP La Pointe-de-l'Île, QC

You talk about poor countries and the way that type of new zone, new regulation, will help revolutionize things and fight poverty. Are we talking about a deregulation zone? I feel it is clear that this is a free zone or the equivalent of the free zones many countries have. What would be the difference between a new zone, a new regulation, and a free zone that, in most developing countries, enables companies to exploit workers?

Free zones in Jordan were actually discussed at a meeting of the standing committee on international trade. Workers are exploited and human rights are violated on a daily basis in Jordan. So, what is the difference? Sir, I am sorry, but I would really like you to tell me what kind of a system you will use to fight corruption and tax evasion. Even Canada—which is a developed society and an example, as you say—is losing billions of dollars every year because of tax evasion. What will this new governance revolutionize? Literacy, nutrition and health have been brought up, but I don't see how this new type of governance will change things.

5:20 p.m.

Conservative

The Chair Conservative Dean Allison

That's all the time we have, but I'll let you answer the question, if you could, as quickly as you can.

5:20 p.m.

Professor, Stern School of Business, New York University, As an Individual

Dr. Paul Romer

I think the best way to capture the essence is that if one could create in Honduras the conditions that Hondurans seek out in Canada and the United States—the infrastructure, employment opportunities, educational opportunities, the physical safety for their children—it would be an extraordinarily beneficial opportunity for Hondurans. And the point is that it could also be a good investment for all of the private firms who help to create those conditions.

All it takes to unleash this is the seed of a legal system and trust that can create both the laws and the norms that we take for granted here but that Hondurans don't have access to.

5:20 p.m.

Conservative

The Chair Conservative Dean Allison

Thank you very much.

We're going to finish up with Ms. Brown for five minutes.

5:20 p.m.

Conservative

Lois Brown Conservative Newmarket—Aurora, ON

Thank you, Mr. Chair.

Thank you very much for being here. This has been most interesting

Mr. Romer, I don't know whether you are aware that Honduras is still one of Canada's countries of focus for our foreign development money. We have chosen 20, and over the next little while we will be analyzing how the countries have been able to use the money, because capacity-building is obviously one of the very important things we have to look at. I mean this in the best possible terms, but there's no sense in continuing to put money someplace where it can't be properly or effectively used, and just churning the same problems over and over. To look for those countries where we know we can do good and be effective and the money will help grow capacity is one of the important tools we need to use to analyze.

I should let you know that not only is Honduras one of our countries of focus, but there are many Canadian NGOs working in Honduras. We have language ability in many cases, which has been helpful in being able to work there. In Newmarket—Aurora, my constituency, a group of men who are retired from their own professions as engineers and architects are developing schools in Honduras. It was very exciting to bring them here to Ottawa to meet with the ambassador from Honduras and have lunch.

When we talk about capacity-building in the country, we had Hernando de Soto as an intervener to the committee, as I'm sure you're aware. I'm sure you're very familiar with his writing. He talked about the extralegal economy and how people can't access capital to grow these businesses.

You're setting up a special zone where businesses will be able to work, compete, and hopefully develop their products for export. We have a free trade agreement that we're negotiating with Honduras, so that will create jobs. But I wonder if you can speak to the key pieces of legislation that need to be developed for this zone to work. Are the judges for Mauritius helping to craft that? Is there opportunity for Canada to be involved in some of that development?

5:20 p.m.

Professor, Stern School of Business, New York University, As an Individual

Dr. Paul Romer

When you say legislation, do you mean rule-making in Honduras?

5:20 p.m.

Conservative

Lois Brown Conservative Newmarket—Aurora, ON

Absolutely.

5:25 p.m.

Professor, Stern School of Business, New York University, As an Individual

Dr. Paul Romer

This initiative is at an early stage. There is lots of opportunity for interested parties to influence the decision-making process and to influence decisions, such as, for example, what the default commercial code will be within this zone. Even if Mauritius is the court of appeal, it need not be Mauritian law they're adjudicating when they're deciding a commercial dispute.

For a commercial code, there are a variety of different codes from around the world one could select from. I think the more interesting area is regulatory law. For example, if this is a place where you're going to offer opportunities for firms to make a profit by providing water, by providing power, by operating the airport, and by operating the seaport, there needs to be a body of regulatory law. The firms coming in need to know how their activities will be regulated. Using existing systems of law and processes will provide a lot of confidence for potential investors.

That's one area.

In the area of policing, I think this is not something that should be a charitable gift. The zone government should feel free to try to propose to the Mounties or to the Ontario Provincial Police an arrangement whereby they might contract with them for some staffing or some training to set up the policing in the early stages.

There is also a kind of governing board that will oversee the development of this zone in the early stages. I think it would be very interesting if anyone within either the government or the private sector were to suggest names from Canada, or names of people Canadians respect, who might sit on this kind of governing board. It will be very important in setting the tone and the standards in the early stages.

At many different levels, I think there are ways for the government to participate. It may be worth keeping in mind the example of the Supreme Court of Mauritius, because that strikes many people as novel at first. We're used to volunteer efforts and NGO efforts. This idea of one government kind of crossing a border and participating somehow with another frightens us, because it feels like colonialism. It feels like invasion. It sounds risky. But done right, it could be enormously beneficial.

I think we should open our minds to voluntary arrangements of this kind that could be undertaken. I can assure you that any expression of interest from the Canadian government would be warmly received by the Honduran government.

5:25 p.m.

Conservative

Lois Brown Conservative Newmarket—Aurora, ON

It will be. It's a mentoring process that's being put in place as well as help with the adjudication. There's an opportunity for a mentoring process between the judicial participants.

5:25 p.m.

Professor, Stern School of Business, New York University, As an Individual

Dr. Paul Romer

You could think of it as exporting government services that might then facilitate other kinds of, you know, private sector participation by Canadian firms.

5:25 p.m.

Conservative

The Chair Conservative Dean Allison

Thank you very much.

Mr. Romer, thank you very much for being here today to discuss that.

Just before I finish the meeting, I want to mention that there are a couple of informal meetings this week. We have a parliamentary delegation from Bosnia tomorrow morning at nine o'clock. I know that the notices went out. It's in Centre Block. Then we have some parliamentarians from Indonesia who are requesting a meeting on Wednesday, before question period, from 1:00 to 1:45, right here in this room. If you can make it, that's great.

The last thing I want to mention is that as far as your Ukrainian report goes, we're going to look at trying to have it distributed on June 4. There's going to be a working copy to talk about for consideration at the meeting on June 6. We're trying to get you that information as quickly as we can so that we can work on it. We're anticipating looking at crafting the report on June 6.

Thank you very much.

With that, the meeting is adjourned.