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 p.m.

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

Dr. Paul Romer

I think the initiative should always come from the developing economy, not from Canada or anyone like Canada or Mauritius. It has to be under conditions where this is a voluntary act by the developing economy, because again, the legitimacy is the central element in this strategy.

If in 10 or 15 years someone says this arrangement was not legitimate, that it was imposed, that it was a taking of some sort, then you could lose all of the potential benefits that are contemplated here. Instead of having the trust and respect for the law that comes from legitimacy, instead you'll get opposition and potentially even violence.

To anticipate a question that often comes up, I've been asked many times whether we create a zone like this within Haiti. My answer is that it would be very beneficial for many Haitians if they could move into a zone where conditions of trust could be ensured by something like the mechanisms that I'm describing, but right now the Haitian government is really subject to a military occupation. It's a humanitarian military occupation, but the government is totally dependent on security forces controlled by other governments.

It's hard to argue that any decision the Haitian government took right now to, say, create a special zone with special arrangement was a truly voluntary arrangement. Unfortunately, sadly, I just don't think this arrangement could be proposed in Haiti now, but it could be proposed perhaps in the future once there is a government in Haiti that has the power to do so.

5 p.m.

Conservative

John Williamson New Brunswick Southwest, NB

I'm curious to quickly get your thoughts on what the minimum requirements are. The government wouldn't even be democratic, but it would have to, for example, have a commitment to the property rights, rule of law, free trade....

What other elements do you think are vital to this growth model?

5 p.m.

Conservative

The Chair Dean Allison

If you could, just give a quick response.

5 p.m.

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

Dr. Paul Romer

Sure.

I think one of the reasons why it would be good if Canada or nations like Canada, like other nations, participate in this is that they could set some standards and expectations. One that I would argue very strongly for is the notion of inclusion in the sense of equal treatment under the law. I think we should not tolerate places where, on a permanent basis, you have second- and third-class citizens with different legal rights.

5 p.m.

Conservative

The Chair Dean Allison

Thanks.

We're going to move back over for the last question of the first round.

Ms. Murray.

May 28th, 2012 / 5 p.m.

Liberal

Joyce Murray Vancouver Quadra, BC

Thank you.

Thanks for coming to help us understand about this opportunity.

On a personal note, I want to congratulate the Stern School of Business at NYU for your commitment to the offbeat and the innovative. My son, Baba Brinkman, was commissioned to do The Rap Guide to Business by NYU, and spent some time with members of your faculty and your students.

I have two questions. One of them has to do with creating the space for opportunities and special development zones. That goes hand in hand with what Michaëlle Jean said would help in Haiti; it's really working with the government and not creating an über-government network of NGO and development money. I think this sounds like an exciting prospect, offbeat and innovative, maybe.

However, we also heard earlier from witnesses that the key is that some of the intangibles, some of the things that money can't buy.... We heard that Canada's help, if it's international development interest, should be about equitable growth and job creation, and not income-unequal job creation. It should be within a sustainable development framework, a total accounting approach.

Could you comment on how Canada can respect the sovereignty of a country like Honduras, which may not have a big commitment or capacity on those things, but still be making that a criterion of our assistance. That's one question, and I'll just put the second one out now also.

In terms of providing the seed of trust, I do have to comment that there are some things that Canada is eroding in terms of being an international beacon of trust and honesty. You may not be aware of it, but there is a big investigation by Elections Canada on potential systemic election fraud in the last federal election. There are other issues. The Auditor General publicly and the Parliamentary Budget Officer were talking about two sets of books, information not disclosed—

5:05 p.m.

Conservative

Lois Brown Newmarket—Aurora, ON

I have a point or order, Mr. Chair.

There have never been two sets of books, and the Auditor General said there are not two sets of books.

5:05 p.m.

Conservative

The Chair Dean Allison

I don't think it's a point of order anyway.

Continue, Ms. Murray.

5:05 p.m.

Liberal

Joyce Murray Vancouver Quadra, BC

This is about trust, and the Parliamentary Budget Officer did say that, so it's a concern that....

The scale at which we're seeing this in Canada, I want your comment as to whether that would affect Canada helping develop the norms for trust and honesty.

Lastly, if there's time, Haiti is developing a zone on the north coast like you're describing and potentially thousands of jobs. I'm wondering why you're saying that country might not be ready. If they are developing that, would it not be helpful to have some help with capacity-building on institutions and democracy?

Thanks.

5:05 p.m.

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

Dr. Paul Romer

Like it or not, Canada is still a beacon of good governance and trust around the world. A sign of what's so admirable is the self-criticism and the investigations. Complacency about good governance would be a very bad sign, but rigorous attention to this is what it takes to maintain it.

In Haiti, the zone that's being proposed is not large enough to develop a major urban metropolis and may suffer, therefore, from the limits in scale and the degree to which it's really more of a private effort rather than an effort with a strong government that provides services that governments should provide.

The criteria are an interesting question. I think this assistance and legitimacy and moral authority that Canada could bring to help establish some new environment, some new effort, is something that shouldn't be granted carelessly. It's appropriate for Canada to set some criteria about inclusion, for example; that I think is so important. You won't participate if there's not a commitment to some of those things. But on the other hand, one also has to allow that ultimate decisions about how it wants to move forward have to come from the developing country.

So a country like Honduras can make a proposal for how it wants to develop, and then Canada could evaluate it seriously with an open mind, but then decide that perhaps this isn't one you want to participate in. But if not that one, there will certainly be others.

5:05 p.m.

Conservative

The Chair Dean Allison

Thank you very much.

That completes our first round. We'll start into our second round, five-minute rounds of questions and answers.

We'll start with Mr. Dechert, five minutes, please.

5:05 p.m.

Conservative

Bob Dechert Mississauga—Erindale, ON

Thank you, Mr. Chair.

Thank you, Professor Romer, for your appearance here today. This information is very interesting.

I was very struck by your description of the legal system in the special zone in Honduras that's mentioned in the letter you provided to us.

We've certainly heard from a number of witnesses through this study about the problems that developing countries have with their legal systems. Corruption in the legal systems tends to hold back the development of their economies. It seems as if you found a solution here.

First, how was the Honduran government convinced to go along with this, to essentially cede sovereignty over the legal system in a specific area of the country to judges and a court of appeal from another country?

Second, with respect to Haiti, we've heard a lot that one of the most significant problems in continuing the recovery from the earthquake and developing the economy is that there is a significant problem with the land title system in Haiti. I wonder if something like this could be a solution to that problem. Could you have an outside organization take over the land title registry system in Haiti and sort it out, so that business can begin to raise money based on mortgages on those properties?

I understand that part of the problem today is that, for every piece of land in Haiti, there are two or three or five people claiming title to it, and that retards the economy because people can't use that as leverage for capital to make investments in business. Maybe you could comment on those things.

5:10 p.m.

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

Dr. Paul Romer

On the question of how, this arrangement was imagined, proposed, and put forward by Hondurans themselves. They sought me out because they could see I had been thinking about something similar, so they asked me to help them. But they saw this as a way out of the kind of trap they had been in, especially after this traumatic episode of a coup with the previous president, Zelaya. So there is a new administration that is committed to reconciliation and asking the hard questions about how to rebuild trust.

To be clear, they have in no sense ceded sovereignty of this land to any other kind of government.

5:10 p.m.

Conservative

Bob Dechert Mississauga—Erindale, ON

The judicial system...?

5:10 p.m.

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

Dr. Paul Romer

Importing government services, so to speak, is not the same as granting sovereign status of Mauritius within this zone. It's just leveraging the credibility of their courts to help them solve problems in their judicial system.

It is possible that a similar arrangement could be tried in a place like Haiti. Honduras also has this problem. Many developing countries have the problem of lack of clarity in title. If people fear that the decisions about ownership are influenced by bribes, they will be very hesitant about allowing the judicial system to come to a final decision, and they'll be very fearful about attempts to resolve these questions. Delay might be safer than a resolution.

The key in Haiti, as well as in Honduras, is for it to be a body that is trusted and clearly neutral—honest and not influenced by any of the affected parties.

The other challenge is that in Honduras people will voluntarily opt into this arrangement. In Haiti, if you impose this as the dispute resolution mechanism for all the land in an area you want to try to use for industrialization, many people might become emotionally very opposed to the process because it's imposed on them and they feel it's illegitimate.

It's a very important point that the same person who would voluntarily move to Canada, if they were free to do so, might violently resist an attempt to impose Canadian systems on his or her community. It's just the reality of the way humans work that a choice to opt in has a moral significance that completely changes things, compared to the imposition of something against one's will. My fear about Haiti is that you'd have problems with legitimacy and violent opposition if it were imposed.