moved that Bill C-57, an act to implement the agreement establishing the World Trade Organization, be read the second time and referred to a committee.
Mr. Speaker, the legislation we are considering today, Bill C-57, is an act to implement the agreement establishing the World Trade Organization. The bill will ensure the implementation of the GATT agreement which I signed on behalf of Canada in Morocco in April.
Adoption of this legislation will enable Canadians to reap the benefits of the biggest trade deal in history. By creating a more open and stable international trading environment this agreement will generate increased Canadian exports and investment. Exports, the driving force behind Canada's recent economic recovery, are crucial to the achievement of this government's job and growth agenda and to Canada's continuing prosperity.
The legislation before us today approves the agreement. It amends Canada's existing laws and tariff schedules to bring them into conformity with our obligations under the Uruguay round agreement. Finally, it provides for the appointment of representatives to the new World Trade Organization and for the payment of Canada's share of its budget.
We made clear before assuming office that a Liberal government would continue to support GATT as the cornerstone of Canada's trade policy. We undertook to focus our efforts on breaking the deadlock in the GATT Uruguay round of negotiations and on building a new World Trade Organization. This legislation before us today is the fruit of those efforts.
The Uruguay round, the largest most comprehensive trade negotiation ever undertaken, involved more governments than any of the previous rounds of the General Agreement on Tariffs and Trade. The final package contains over 30 agreements, understandings and declarations, capped by the agreement to
create the new World Trade Organization. The agreements include an enormous package of national commitments to lower tariffs and non-tariff barriers to merchandise trade, a thorough reform of trade rules and the extension of the world trading system to cover such new issues as trade in services and trade in intellectual property.
Completion of the Uruguay round will have major implications for the world and for the Canadian economy well into the next century. Conclusion of the round after seven and a half years of difficult and uncertain negotiations has already had a positive impact through improved confidence in the global economy.
The GATT Secretariat in Geneva estimates that the global income will be at least $500 billion higher in the year 2005, some 10 years hence, than it would have been without the Uruguay round. Some economists believe that even these numbers, large though they are, may underestimate the impetus to growth, innovation and investment that will result from the Uruguay round agreement. Economists without exception have underlined the substantial potential benefits for all members of the global trading system, including Canada.
Using prudent economic assumptions, we estimate quantifiable Canadian gains of at least a .4 per cent increase in real income, or $3 billion annually when the agreement is fully phased in. These are however only a fraction of the actual gains that will certainly occur.
Although this Uruguay round agreement covers a wide array of issues affecting international trade relations, three areas stand out, both as a result of the leadership role that Canada played in promoting progress and consensus and as a result of these elements representing for us the most important and beneficial achievements of the Uruguay round. I refer to the market access package, to the agreement on subsidies and countervailing duties which grew out of a Canadian draft, and to the agreement to establish a new institution, the World Trade Organization, with a greatly strengthened and integrated dispute settlement system. The creation of the World Trade Organization is largely the result of a joint initiative by Canada and the European union.
Under the Uruguay round agreement access to markets for industrial products will be substantially improved with most tariffs being cut by at least one-third. Deeper cuts including zero tariffs in some 10 sectors will also be made. Overall, Canadian exports to the European union for example will benefit from tariff reductions of almost 60 per cent. To take another example, tariffs on our exports to Japan will be reduced by about 70 per cent.
The impact of tariff escalation will also be reduced. For example the gaps between tariffs on finished products and raw materials will fall by as much as two-thirds for products of importance to Canada such as copper, lead, zinc, and other non-ferrous metals.
A major achievement of the Uruguay round is that for the first time the agricultural sector is brought under the rules based multilateral trade regime. Agricultural tariffs will be cut overall by 36 per cent with domestic support measures to be reduced by 20 per cent and export subsidies by 36 per cent in terms of budgetary expenditures over a six year period. This represents a significant gain for Canadian agricultural exporters. More generally the agricultural reforms will contribute to improving efficiency in the world economy, providing a good start for future disciplines particularly on agricultural export subsidies.
Also for the first time trade in services and trade related intellectual property are brought within the framework of the multilateral trade disciplines. The agreement on services covers trade and investment worth some $2 trillion annually and will promote continuing liberalization in these sectors. Multilateral rules on intellectual property will provide a stronger basis for the development and transfer of technology. Agreements in areas as diverse as rules of origin, import licensing and pre-shipment inspection will improve conditions for all international traders.
As I already mentioned the agreement strengthens trade remedy rules, thus realizing one of Canada's priority objectives on going into the Uruguay round some seven and a half years ago. The agreement defines the concept of subsidy for the first time in a multilateral trade agreement. Further, it sets out criteria exempting certain subsidies for regional development, research and development, and the environment from countervailing measures. In this era of fiscal constraint, Canada will benefit from the strengthening of multilateral disciplines on subsidies that can have such an adverse effect on our competitive position in both domestic and foreign markets.
Although the Uruguay round agreement does contain some improvements with respect to anti-dumping measures, we shall have to go further to ensure that such measures are not used in the future as an instrument for continuing protectionism.
The agreement effectively precludes unilateral measures in responding to trade disputes. The new integrated dispute settlement system, one with clearer rules, tighter deadlines and for the first time an appeal process with binding effect is a major improvement over the existing GATT system. In the final analysis rules after all are only as effective as the means of enforcing them. This wholesale reform of the multilateral trade dispute settlement system therefore can represent an important if unquantifiable benefit for the small and medium size trade players like Canada which are inherently vulnerable to the threat of unilateralism by the economic giants.
Without a doubt the crowning achievement however of the Uruguay round is the creation of the new World Trade Organization that will replace the General Agreement on Tariffs and Trade. Such a new organization is indispensable in overseeing the operation of the complex series of agreements and other instruments resulting from the Uruguay round. It will also provide for greater political surveillance of the system by trade ministers in coming years.
The new World Trade Organization will finally put international trade on a firm institutional footing by becoming the third pillar of the world's commercial and financial structure, along with the World Bank and the International Monetary Fund.
As a successor to the GATT, the World Trade Organization will provide the forum for future trade negotiations aimed at further trade liberalization world wide and the development of new global trade rules.
All parts of Canada, all regions, most sectors of our economy will reap substantial benefit from the Uruguay round agreements. The business and agricultural communities as well as the provinces were closely consulted throughout the course of the seven years and more of negotiation. It is in no small part due to their contributions that these agreements will provide real tangible benefits for Canadian producers and consumers in all regions.
Elimination of tariffs for example on paper and allied products and lower tariffs on lumber will substantially improve access to the European union and Japanese markets for our forest products industry, particularly in British Columbia, Ontario, Quebec and the Atlantic provinces.
The reduction in tariffs and non-tariff barriers in Europe, Japan and Korea, although more limited than we would have wished, will enhance the export competitiveness of our fish products based in Atlantic Canada and British Columbia.
The agreement will produce a more market oriented and global trading environment for our agricultural sector. The reduction in export subsidies and in the volume of subsidized exports will put our field crops, particularly grains and oilseeds from our prairie provinces, on a more equal footing with those of our principal competitors.
At the same time, supply management will be able to continue operating as an effective Canadian approach to producing and marketing dairy and poultry products. The Uruguay round agreement allows for the continuation of supply management through high import tariffs that will maintain a real security for these sectors.
New rules and disciplines on sanitary and phytosanitary measures will improve prospects for exports of many Canadian agricultural and forest products.
The reduction and harmonization at lower rates of tariffs for chemicals and chemical products will improve access to world markets especially in Asia and Latin America for our producers concentrated in Alberta, Saskatchewan, Ontario and Quebec.
Sectoral free trade for pharmaceuticals will result in lower import costs and improved market access and will enhance exports to offshore markets, particularly from Quebec and Ontario. Improved protection for intellectual property will enhance prospects for investment and for research and development.
The Canadian communications and electronic equipment industries concentrated in Quebec and Ontario will benefit from the substantial reduction of tariffs in important industrialized markets. Software and computer service exports will be facilitated by the agreements on services and trade related intellectual property.
Canada has many strengths in the services sector that will benefit from increased global market opportunities brought about by the new General Agreement on Trade and Services. Services in which Canada is competitive internationally include various professional and management consulting services, technical testing, financial, computer and environmental services, telecommunications, air transport, tourism, commercial education and training, health related services, maintenance and repair, and services incidental to agriculture, mining, forestry, energy and manufacturing.
Increased clarity and discipline in the use of multilateral trade rules, particularly countervailing duties as well as more effective dispute settlement mechanisms, will provide greater security of access for Canadian products in many markets. Canadian products that have in the past suffered harassment from countervail actions that can expect more secure access as a result of the agreement include lumber, fish, pork and magnesium.
In addition, new rules under the Uruguay round agreement on subsidies provide for the possibility of taking action against subsidized products that displace Canadian products in foreign markets, including those of the subsidizing country. These provisions alone can be a real benefit to Canadian manufacturers of civil aircraft and ground transport equipment, steel and steel products and other sectors that have often been heavily subsidized by foreign governments.
As a country that stands to benefit greatly from these agreements, Canada has insisted that our principal partners fully implement their Uruguay round obligations by legislating them
into domestic law. We paid particular attention to the United States implementing of legislation. We were in frequent touch with the American authorities at the highest level. We urged them to ensure that the United States legislation faithfully reflects the international agreements.
We are satisfied that the United States legislation now awaiting vote in Congress while not perfect, substantially implements the Uruguay round agreements. All of our principal trading partners are now in the process of moving their legislation forward. We are currently reviewing the European union and Japanese implementing bills, which have just been tabled. While none of our major partners has yet completed the legislative processes, it appears probable that they will in fact do so in time to bring the agreements into force and to establish the new World Trade Organization two months or so hence on January 1, 1995.
It is important that Canada play its part and give a clear signal to the world community that we intend to complete our domestic procedures and implement these agreements into Canadian law in time for the January 1 start-up. However, we shall keep a close eye on the course of the legislative process in Washington, Tokyo and the European union.
We do not intend to complete our legislative procedures until we see how events unfold elsewhere. Accordingly, we shall proclaim our legislation only after our principal partners have obtained their necessary legislative approval.
With the exception of Germany, Canada is more dependent on international trade for its economic well-being than any of the other G-7 countries. Canadians understand that our domestic market is too small to generate alone the level of prosperity we enjoy.
It behoves Canadians to make a contribution to the functioning of the international trading system proportionate to our interest in the system itself. That is why Canada played a key role in the seven years or more of negotiations that led to the agreement to establish the new World Trade Organization which will replace the GATT on January 1. That is why we are now playing a leadership role in the complex, detailed, preparatory work required to get the new World Trade Organization up and running.
We in Canada are committed to completing as soon as possible the unfinished work of the Uruguay round in such areas as government procurement, financial and telecommunications services. We are also committed to beginning work on that new generation of trade policy issues including such matters as the relationship of international trade to the environment, to competition policy, to investment and to labour standards. We intend to help shape the agenda and basic concepts at an early stage so that future negotiations will advance Canadian interests.
Canada's economic strength now and in the future will depend fundamentally on our willingness to stay on the leading edge of freer trade, to continue to take an active and creative role in forging new relationships and in building new structures that over time can extend the reach of a rules-based international order.
The multinational system centred on the World Trade Organization will be the foundation of that international order but it is not the only element of what is and must be a complex and constantly evolving trade order.
We must harness for positive ends the profound forces pushing us all toward deeper economic integration. Today it is more accurate to speak not of trade policy as such but of international economic policy. Jurisdictions and policy areas that have long been considered to be quintessentially domestic are now increasingly subject to international negotiations and rule making.
The old trade policy issues of tariff and non-tariff barriers remain on the table but they are being overtaken by a new agenda: concerns over investment policy, regulatory regimes, intellectual property, competition law and even international monetary policy, a trend which in turn reflects the evolution of a yet more globally integrated world economy.
If we accept that economic security inevitably lies in deepening our commitment to open rules based trade, then the issue is really no longer whether we should surrender sovereignty but how we take a leading role in building a new kind of sovereignty to reflect a new economic order.
The reality is that Canada cannot wait for the international community to provide the institutions of mechanisms that will ensure our economic security. Multilateralism while remaining our first option cannot remain our only option. For Canada, this means taking a yet more active and creative role in forging additional relationships and in building new structures that can over time extend the reach of rules based trade.
This was the original justification for the U.S.-Canada Free Trade Agreement and the subsequent North American Free Trade Agreement. It was really just that, to push forward in areas where our degree of economic integration seemed to call for a deeper, more comprehensive, more expeditious regime of rules and procedures than the GATT itself could provide.
It is Canada's goal to extend this deeper free trade relationship throughout the western hemisphere and beyond, regionally if possible, bilaterally if necessary. We are already engaged in the negotiation of bilateral investment agreements with some international partners. We shall have to consider the negotiation of bilateral trade agreements if other avenues forward should become blocked.
Although the negotiation and implementation of NAFTA has focused Canada's attention in recent years southward to the rest of our hemisphere, we must also begin to explore additional means of expanding our trade relations eastward, across the Atlantic to Europe and westward across the Pacific to Asia.
The momentum for trade liberalization both in the western hemisphere and around the world is strong. Canada seeks to maintain that momentum. Accordingly I shall convene a meeting of the trade ministers of Japan, the United States and the European union here in Canada this spring.
We shall strive to develop a consensus for new common trade initiatives that will be considered at the G-7 summit next June in Halifax.
In submitting this bill today to the House for approval, the government counts on the consensus of all parties in this House that the cornerstone of trade policy is a multilateral system of mutually agreed market access conditions and non-discriminatory trade rules applicable to all that free, fair and open trade is essential for the future of the Canadian economy and for securing the competitiveness and long-term sustainable development of Canada and that trade expansion contributes to job creation, achieves higher standards of living, offers greater choice to consumers and strengthens the Canadian economic union. Such are the objectives that the bill before us today seeks to promote.
I invite members from each side of the House to join in considering its provisions, its purposes and ensuring its timely adoption.
