House of Commons Hansard #52 of the 37th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was trade.

Topics

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1:05 p.m.

NDP

Joe Comartin Windsor—St. Clair, ON

Mr. Speaker, that is the point. It is just starting. Why is that? Why did we follow this model? Why did we not follow the European model? That is what this government needs to answer.

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Liberal

Stephen Owen Vancouver Quadra, BC

Mr. Speaker, I will be splitting my time.

I will address the issue of the value of foreign investment for Canada.

First, we know that there is almost $300 billion of foreign investment directly into Canada each year. This is immensely important.

When companies from other countries invest in our country, they bring ideas as well as support jobs. One in ten jobs in Canada is supported by that nearly $300 billion investment per year. They also bring ideas and technology to our country. Also, in an increasingly cyclical way, they support 50% of our exports by investing in this country. Investment into Canada is immensely important for jobs, the GNP and bringing in ideas and technology.

Investment outside of Canada by Canadians is even larger. It is more than $300 billion a year. This provides great opportunities for us to deal with other countries but it must be protected. Canadian companies and individuals investing abroad deserve protection. However investors in Canada also need the protection of rules.

Trade and investment inside and outside of Canada is immensely important to our country. We also have important domestic responsibilities. Those are to protect very strategic parts of our public services and our governance models. Our health care, education, social services and water absolutely need to be protected.

Canada has not put out its negotiating position yet in terms of the investment provisions in the FTAA because they are being developed. There is a great deal of consultation going on and more will continue. Those will be made public when they have been properly consulted on and prepared. The government has consistently said that it will protect and will not sign any agreement that does not protect those important strategic policy issues in Canada.

However our interests are not just domestic. Our interests and our social responsibilities are global. The democracy clause in the FTAA framework is a major first step toward this. We must ensure that other global issues of social importance, whether they be environmental, human rights, the rule of law or the promotion of democracy, are protected and linked in some effective way to our trade agreements. The advance that we have made in the FTAA discussions in Quebec City demonstrates that well.

The hon. member mentioned that he was aware of the North American agreement both on environmental co-operation and labour co-operation. He felt that they had not been perhaps as effective in allowing NGOs to challenge governments. However he did not answer the question whether those could be improved, just as chapter 11 rules, interpretation and processes need to be and will be in future agreements.

If those could be improved should NGOs be able to effectively challenge governments? I challenge hon. members to consider carefully the reality of new governance in a modern society where the market and civil society have a powerful and important role to play with governments. If NGOs should be able to challenge governments and other non-state actors, why not corporations as long as those rules are fair, transparent and they meet other social responsibilities?

I will talk about this concept of new governance a little further. NGOs will come up to the governance table as they are invited to do more and more effectively. We saw that opportunity in the FTAA lead-up consultations across the country and the people's summit and the civil society committee taking part in the negotiations of the free trade of the Americas. However, if civil society is going to step up to the governance table, it has to demonstrate its democratic nature and its representative nature, just as corporations must prove their social responsibility.

One of the most powerful forces to exact social responsibility from corporations trading abroad is the democracy of the market. If a company such as Levi thinks it is going to get 10 year old kids in India or Bangladesh to stitch its jeans, then the North American, European and increasingly other markets are simply not going to buy its product. We had a striking example of market democracy in my province of British Columbia where not only were civil society and the market involved in looking at land use planning and forestry practices on the mid coast, but they were making decisions without government.

We have powerful forces that need to be brought to bear. We not only need linkages between free and fair trade but also social responsibilities, environmental, democratic, rule of law and labour practices.

Finally, chapter 11 of NAFTA needs to be clarified. There are problems which have been properly pointed out. However that does not mean corporations should not have the opportunity, under a proper set of rules and processes, to challenge governments in courts as they do domestically.

Foreign investment helps developing countries. Globally, however, there is not sufficient public money or public interest to provide the investment necessary for countries to pull themselves out of poverty. Direct or indirect foreign investment through private companies is an effective way of supplementing the public money available for that purpose.

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1:15 p.m.

Brome—Missisquoi
Québec

Liberal

Denis Paradis Parliamentary Secretary to Minister of Foreign Affairs

Mr. Speaker, first allow me to talk a bit about NAFTA.

Whereas the success of NAFTA is usually linked to the opening up of markets to goods and services, its capacity to attract foreign investment in the regions could end up being the most powerful and durable impact of the agreement. As the Prime Minister said, NAFTA works quite well.

I will quote some figures. The total direct foreign investment in NAFTA countries was $1.97 billion in 1999, more than double the figure of 1995.

American investments in Canada has doubled since 1993 and reached $186 billion in 2000, whereas Mexican investments in Canada reached $132 billion in 2000.

Canadian investments in NAFTA countries have also been quite sizeable. In 1999, direct foreign investments of Canada in the United States and Mexico were $134.3 billion and $2.8 billion respectively.

I will now say a few words about the World Trade Organization. The WTO is not the multilateral agreement on investment, commonly called the MAI. These are two different things. The WTO has more than 130 member states, most of which are developing countries. The multilateral agreement on investment was meant for an elite group of developed countries, the OECD countries. Each member of the WTO has its own approach to investment, and, for the time being, there is no consensus to proceed with an agreement on investment.

Proposals on investment brought forward during the period leading to the ministerial meeting in Seattle were quite different from those in the MAI. Nobody has suggested we should include dispute settlement mechanisms for investor-state conflicts. We can expect that any new WTO agreement on investment will include developing countries.

During the ministerial meeting in Seattle, many countries, the United States included, wanted our international trade minister, who is doing an excellent job, to chair the implementation task force of the Seattle meeting. He has accepted, and he has shown that Canada is perceived as a country that helps build bridges between developed and developing countries.

The task force was supposed to highlight the enormous challenge of including these countries in the round and determining the means to implement the agreement. The idea of a new round at the WTO is not dead. A ministerial meeting will take place in Doha, Qatar, in November this year.

Whatever its position on investment, the government is determined to protect the rights of Canada to make regulations in strategic sectors such as health, education, culture, and the environment. That is what Canadians have always wanted, and that is what their government will stand for.

I would like to add a few words on the free trade area of the Americas and the FTAA mechanisms.

In the free trade area of the Americas, every country will have to submit a proposal to the nine negotiating groups, one of which will deal with investment.

To date, Canada has not yet submitted its proposal to the group dealing with investment. We prefer to pursue our negotiations and wait for the other countries to submit their proposals. We expect to submit our position after we have held all our consultations with the provinces and with the stakeholders.

However, the Canadian proposal will look at the rules applicable to investment in the light of its experience with trade negotiations and with the implementation of its rules concerning investment with other countries such as, obviously, NAFTA member countries, as well as Latin American and Caribbean countries. We will rely on our past experiences.

The main objective of Canada is to ensure a clear delineation of the obligations with respect to investment that will serve Canadian interests.

Countries of the Americas need and want capital as well as the opportunities associated with investment, of course. It is in their interest to guarantee that investment flows in a predictable manner in the whole area.

Mexican President Vicente Fox recently stated in Montreal that Mexico benefited from increased investment, which creates jobs, improves health care and raises standards of living. He also recognized that the middle class has made major progress since NAFTA. More than 10 million people are now said to be part of the middle class.

As for the FTAA, Canada is not advocating a reproduction of the rules applying to investors and states under NAFTA, and we did not support any proposal made up until now by other member states of the FTAA to include a dispute settlement mechanism.

In the FTAA, Canada is taking into account the work already started with its NAFTA partners on the issue of investment in this agreement, including the clarification of the provisions concerning investors and states, as the case may be.

I would now like to say a few words on the General Agreement on Trade in Services.

Coming back briefly to what I was saying on NAFTA, I would like to say that this agreement is extremely profitable for Canada.

My riding of Brome—Missisquoi, which is located along the Vermont border, is an extraordinary one in the sense that it has a large, qualified workforce. It is a riding, of course, that wants to attract American investors on our side, so that we can re-export goods to the United States and elsewhere.

In this respect, NAFTA gives us that flexibility. In Brome—Missisquoi, I am in the process of building a Team Brome—Missisquoi, so that we can export more goods to the United States and that investments can be made on both sides of the border.

I now want to come back to the General Agreement on Trade in Services. The 1994 Marrakesh agreements provided for new discussions on agriculture and services at the World Trade Organization. The agreement on services is better known as the General Agreement on Trade in Services, the GATS.

Services are not only important to the Canadian economy, they are the cornerstone of employment in many areas and regions, whether for a plant with 500 employees or a business starting up with only three employees.

We have made our position known to the WTO: Canada's objective in the GATS negotiations is to reach the best agreement possible, to improve Canadian service suppliers' access to foreign markets and to provide Canadian consumers with a larger choice of services at a lower cost.

This agreement deals mainly with the issues of market access and non discriminatory treatment of service suppliers. However, the agreement also deals with major issues concerning service suppliers' right to a commercial presence, that is, where to invest to establish a presence in other countries.

However, the GATS lets us choose. All members are free to make commitments on this commercial presence or to choose not to do so. Let us be very clear. This agreement is not an agreement on investment under chapter 11 of NAFTA.

The GATS does not include any safeguards for investors, such as the right to compensation in case of expropriation, or any provision concerning a dispute settlement between an investor and a state.

If the hon. member would withdraw her motion, I would move to replace the motion we are debating now by the following motion:

That this House calls upon the government to respect the words of the Minister for International Trade, who stated in the House on April 30, 2001 “Our view is that we want to clarify certain aspects of chapter 11 within the present mechanism of NAFTA”.

Words intended to ensure a more open and transparent dispute settlement process, and to safeguard the interests of all Canadians in this and all future trade agreements signed by Canada.

Thus, I am proposing that the previous motion be withdrawn and replaced with the one I just read.

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The Deputy Speaker

Does the hon. parliamentary secretary have unanimous consent to move his motion?

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Some hon. members

Agreed.

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Some hon. members

No.

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NDP

Yvon Godin Acadie—Bathurst, NB

Mr. Speaker, first, I was the one who yelled “no” to oppose withdrawal of the NDP motion. I was pleased to do so.

There is a simple reason for that: we cannot trust the government on free trade negotiations, especially since this government, which prides itself on being democratic, even refused to provide us with the texts. We, who have been elected by the people, cannot even have a look at the content of the agreement which will be negotiated.

I was in Quebec City during the people's summit. I attended several meetings. I met workers from several countries who told us bluntly that the free trade agreement and all the resulting changes have definitely not improved their living conditions. We were told this by people who came to give evidence, people who have to live with these changes.

Can the parliamentary secretary assert that the opposite is happening in Canada? Free trade was supposed to improve the standard of living in Mexico and other countries. The reverse is happening. Canada's standard of living is dropping.

For instance, there is a shortage of beds in hospitals. There are not enough physicians. Health care is being privatized. Experts and everyone else are saying that this is because of free trade. And then we are told that this is the best thing that ever happened.

Can the parliamentary secretary tell us about what the free trade agreement provides in terms of worker protection? In terms of unionization for their protection we need laws to protect workers in all these countries. Where is the balance between the two, apart from the fact that big corporations, which as far as I am concerned represent the liberals, will be the winners with free trade, not Canadians, not workers of the Americas?

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1:25 p.m.

Liberal

Denis Paradis Brome—Missisquoi, QC

Mr. Speaker, my colleague from Acadie—Bathurst most certainly wants to speak about job creation. So, let us talk about job creation, but in a positive way.

With the free trade area of the Americas, we have a powerful neighbour, namely the United States, with whom we are used to trade. It is the country just south of ours. Since the FTAA also includes every South American country, we would have a market of 800 million people. If we take away the 300 million people living in the U.S., we have 500 million more people with whom everyone in Canada can do business in a free trade context.

The benefits are clearly there. In Canada's justice system, common law exists alongside the civil code. Latin American countries usually have civil law. Common law applies in Canada and the U.S. We also have a culture similar to that of Latin American nations.

We should stop looking at the negative side and view in a positive light all the jobs that can be created and the improvement to the quality of life that can be made throughout the Americas. That is what the free trade area of the Americas is all about.

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1:30 p.m.

Progressive Conservative

Loyola Hearn St. John's West, NL

Mr. Speaker, the hon. member talked about civil rights. Coincidentally I was just reading a copy of a letter sent to the Prime Minister expressing concern about why the disturbances occurred.

We saw what happened in British Columbia some time ago with the pepper spray incident. We saw what happened in Quebec City. Forgetting about trade and what the police did, because they did what they needed to do, the question is: Why did it happen? Why must our leaders fence themselves away from the people? What is wrong? Where is the leadership that the Prime Minister has not shown?

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Liberal

Denis Paradis Brome—Missisquoi, QC

Mr. Speaker, first, I want to congratulate the Prime Minister for the tremendous work he has done and for a wonderful summit that brought everyone closer together.

The member mentioned the protests. Yes, there was a huge protest with 25,000 to 30,000 people walking peacefully from one end of Quebec City to the other in order to peacefully get their point across. We are open to such peaceful suggestions.

But we draw the line at violence. Everyone agrees with that. Canadians do not tolerate violence.

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1:30 p.m.

Canadian Alliance

James Moore Port Moody—Coquitlam—Port Coquitlam, BC

Mr. Speaker, we routinely hear calls from the left in Canada denouncing NAFTA's chapter 11, the World Trade Organization and free trade in general. Unfortunately their pedestrian understanding of trade matters undermines the rights of union workers whose interests they claim to represent.

Had the NDP view prevailed during the FTA debate in 1988, auto workers would have been in deep trouble when the WTO struck down the longstanding Canada-U.S. auto pact. That decision alone could have wiped out union jobs in towns like Windsor, Oakville, Oshawa and Sainte-Therese.

However the FTA agreement, an agreement the left so strongly denounces, protected those jobs and established free market rules that allowed auto exports to the U.S. to grow by 15%. That has increased the opportunities, wealth and living standards of thousands of Canadian auto workers.

If members of the radical left in Canada want to be taken seriously and not labelled hypocrites, they should adopt the same standards of openness, democracy and transparency they demand from others. If they want open door free-for-alls when Canada negotiates bilateral or multilateral trade deals they should be willing to live by the same standards.

In fact they should lead by example. They should demonstrate to Canadians how their nirvana of openness would work in practice. They should open up all future union-management contract negotiations to public scrutiny. They should answer questions from citizens who are concerned about the impact of proposed labour deals on the environment, culture, the economy and society at large. They should discuss the impact of such deals on the cost of labour, on post-secondary education and on the way we all feel about one another. The media would of course be invited to these free-for-alls.

Fortunately no serious economist, social scientist, commentator or politician believes such a system could work. More important, no serious unionists or business leaders would impose such a regime of unreasonable checks on their own behaviour. They understand that there is a place for consultation and closed door negotiations and then a place for the rank and file to vote on a final agreement. That is the approach that the Canadian Alliance and I support, and that is exactly what needs to happen.

When I hear that the fourth party is opposed to the investor state provisions in NAFTA's chapter 11, I cannot help but wonder what they stand for and, more important, where they have been for the past few years. Consider the following paragraph:

The investor affected shall have a right, under the law of the Contracting Party making the expropriation, to prompt review, by a judicial or other independent authority of that Party, of its case and of the valuation of its investment or returns in accordance with the principles set out in this Article.

The text I just read is not from NAFTA's chapter 11. It is article 8, paragraph 2 of the Canada-Egypt foreign investment protection agreement. It is also article 8, paragraph 2 of the Canada-Philippines foreign investment protection agreement and article 8, paragraph 2 of the Canada-Venezuela foreign investment protection Agreement.

It could also have been taken from similar foreign investment protection agreements, or FIPAs, that Canada is negotiating with a growing list of countries from Armenia to Uruguay. It could just as easily have been taken from article 8, paragraph 2 of the Canada-Croatia foreign investment protection agreement. That agreement went into effect on January 30 of this year and the NDP does not even appear to have noticed. It is still fighting battles from 1988.

The NDP seems unconcerned that all these agreements have clauses allowing investors to submit disputes with signatory states to arbitration by the International Centre for the Settlement of Investment Disputes, an international ad hoc arbitration tribunal established under the United Nations Commission on International Trade Law.

Let me say that again. A foreign investment protection agreement with Croatia, which features investor state provisions virtually identical to NAFTA's chapter 11, went into effect on January 30 of this year and the far left has said nothing. It seems the radical left follows trade issues about as carefully as New Zealanders follow hockey.

I used to play hockey. If I am in a bar and people with a New Zealand accent tell me it is great that the Canadian team scored three touchdowns against Italy at the world hockey championships, I will thank them for their support but will likely not take their advice on next year's hockey pool. So it is with the fourth party in the House when it comes to trade policy. Its members seem to know as much about world trade as I do about yodelling.

The NDP's principal argument against chapter 11 is that it limits the government's ability to protect our environment and sovereignty in the same way that the charter of rights initially compelled Canadian police forces to adapt to the country's newly enshrined citizens rights.

Canada's international trade agreements will require governments to think smarter and more consistently in making public policy decisions. Chapter 11 of NAFTA is based on five basic principles. The first is transparency. Investors have a right to know what the law is and governments cannot capriciously change rules midstream.

The second is national treatment. We must treat investors from other countries the same way we treat Canadian investors, provided they do the same for us. In other words, we cannot stop Wal-Mart from building a big box store unless we are prepared to apply the same rules to Zellers, Canadian Tire or Rona.

The third is protection of investors. We cannot take property without offering compensation, and a property owner has the right to ask an independent body to determine if the compensation is fair.

The fourth is quick and fair settlement of disputes. Parties should get a quick and impartial decision.

The fifth is reciprocity. Canadian companies doing business abroad should be treated the same way we treat foreign companies here.

People may why ask they did not hear about investor state rights until recently. It is likely because the five principles I just listed are so basic to Canada and to our major trading partners that there was never any need to write them down.

It should come as no surprise that we are not negotiating foreign investment protection agreements with the United Kingdom, Switzerland, Taiwan or Australia. Those countries have long respected the five principles and thus there is no need for a formal agreement.

Every case in which we have included NAFTA chapter 11 type language has extended Canada's notion of an independent judiciary to less progressive states in regions like eastern Europe and Latin America.

Most lawyers will say that for foreign companies doing business in Canada NAFTA chapter 11 changes almost nothing. The left jumps up and down hysterically about the Ethyl Corporation case yet fails to point out that Canada's supreme court would probably have reached the same decision regardless of chapter 11.

Let us consider point 13 from the Ethyl Corporation's statement of claim. The MMT act does not prohibit the manufacture or use of MMT in Canada. It merely requires that all MMT sold in Canadian unleaded gasoline is 100% Canadian. A domestic manufacturer of MMT can manufacture and distribute MMT for use in unleaded gasoline entirely within a province and not violate the MMT act.

If the Ethyl Corporation wanted to maintain its presence in the Canadian octane enhancement market it would be required to build an MMT manufacturing, blending and storage facility in each province.

The left would have us believe that the Ethyl case proves that chapter 11 prevents us from protecting the environment. That is not so. If the federal government had banned outright the use of MMT in Canada, regardless of where it was made, the Ethyl Corporation would not have been able to use the discrimination clause which was so central to its case.

Let us think about this. Let us suppose the city of Ottawa decided that pizza contained a cancer causing ingredient and then used those health concerns to support a law prohibiting anyone from bringing pizza to Ottawa from Hull. If the city of Ottawa did not force its own pizza restaurants and vendors to close, the supreme court would probably find discrimination and force it to back down, repeal the law, award compensation and find another mechanism for banning the dangerous food. However it would not deny it the capacity to ban what is dangerous. It is the same with MMT.

NAFTA chapter 11 is nothing more or less than what has been the status quo in Canada since we adopted the British legal system before Confederation. By putting such language into NAFTA and into foreign investment protection agreements, we are simply asking other countries to give our companies and investors the same respect we have long given companies and investors, both Canadian and foreign, here in Canada.

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London—Fanshawe
Ontario

Liberal

Pat O'Brien Parliamentary Secretary to Minister for International Trade

Mr. Speaker, I commend my colleague opposite from the Alliance Party for his very cogent comments. It is pleasing to hear some rational discussion, having had quite a bit of hyperbole and rhetoric from the far left earlier in the day.

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NDP

Yvon Godin Acadie—Bathurst, NB

What is your business? What is your corporation?

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Liberal

Pat O'Brien London—Fanshawe, ON

I have two questions for my colleague. As he and I recall, and as the NDP member who is hollering will recall, the FTAA was not an election issue at all. It had been negotiated for many months. When the election campaign was underway it was well known that Canada was involved in the discussions.

Why did the hon. member's leader and party fail to realize it at the time? Why are they only now jumping up and down and getting excited? Were they asleep at the switch? Did they not realize at that time that it was an important matter?

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1:40 p.m.

Canadian Alliance

James Moore Port Moody—Coquitlam—Port Coquitlam, BC

Mr. Speaker, I am reluctant to judge people's motives but they do seem suspect. If one feels passionately about an issue then one has a responsibility to bring it to the fore.

Perhaps the members of the fourth party we have heard here today have talked about the issue at the constituency level. The leader of the NDP did not bring it up in the leaders' debate. It was not raised in my constituency because the NDP in British Columbia are free traders. If federal NDP candidates in British Columbia stood and said that they were opposed to free trade, they would be contradicting 85% of their base supporters who put up lawn signs, raise money and so on. Perhaps that answers part of the member's question.

However, it is suspect that they feel passionately about the issue but did not raise it. They say the issue is central to the essence of what it is to be Canadian and will have a profound impact on our sovereignty. They knew the issue was coming down the pike and yet they said nothing. The member opposite has a point. Why did they not raise the issue? That is a good question. Perhaps we will hear an answer from members of the fourth party.