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

Committees Of The House
Routine Proceedings

May 1st, 2001 / 3:20 p.m.

Liberal

Maurizio Bevilacqua Vaughan—King—Aurora, ON

Mr. Speaker, I have the honour to present the third report of the Standing Committee on Finance regarding its order of reference of Monday, April 2, in relation to Bill C-18, an act to amend the Federal-Provincial Fiscal Arrangements Act.

The committee has considered Bill C-18 and reports the bill without amendments.

Message From The Senate
Routine Proceedings

3:20 p.m.

The Speaker

Order, please. I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed certain bills, to which the concurrence of this House is desired.

The House resumed consideration of the motion and of the amendment.

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Government Orders

3:20 p.m.

Papineau—Saint-Denis
Québec

Liberal

Pierre Pettigrew Minister for International Trade

Mr. Speaker, I am very happy to rise today in this House to take part in this third opposition motion on matters of international trade in as many weeks. Obviously, matters of international trade interest our parliamentarians and all Canadians, and that makes me happy.

Free trade and NAFTA have been beneficial for Canadians, that is clear. Since NAFTA came into effect, trade, investment and jobs have grown spectacularly in Canada and in all countries in North America.

Recently, at the Quebec City summit, the 34 countries of the Americas, the representatives of small and large countries, the heads of the most developed and of developing countries and those representing countries whose economies are especially vulnerable expressed their interest in and desire to establish a free trade area of the Americas.

A number of these 34 countries are headed by socialist leaders. Others are headed by centrist leaders and others by conservative leaders. Yet there was unanimity. They all wanted free trade in the Americas.

There must indeed be something good about this project if all countries, large and small, developed and less developed, and all leaders, socialists, conservatives and centrists alike, want free trade.

All 34 countries want in, whether they come from smaller or bigger countries, whether they come from the most vulnerable economies to the largest and stronger economies of our hemisphere. That says a great deal about the importance of international trade. It says that international free trade leads to development and to democracy. The vast majority of Canadians and the vast majority of citizens across the Americas understand that very well.

It is too bad that the opposition today on this particular motion does not want to understand what even most socialist leaders believe. Even labour leader Tony Blair said not too long ago in this House that free trade was for the poor. Only one party here does not seem to understand that.

A clear set of rules applicable to the conduct of international affairs constitutes one of the key reasons for NAFTA's success.

The rules applicable to trade and investment form a road map or navigation system, which guides and protects the flow of trade and investment capital.

Being a country more oriented towards investment and international trade than any of its competitors, Canada has an interest in maintaining the vigour of this bilateral flow of trade and foreign investment. Foreign investment helps to guarantee that Canadian businesses will have the capital they need to succeed and grow in the highly competitive world economy.

Investment creates jobs and encourages innovation through the contribution of new ideas and new technologies to our businesses. It gives Canadians access to the capital and skills which will strengthen our country.

Canadian investment abroad is equally important as this helps Canadian firms establish a presence in foreign markets and share Canadian expertise through exporting goods and services to those markets.

It should be further noted that a large proportion of profits from new investments is reinvested in Canada contributing to a higher growth rate and a rise in Canadian living standards. There is no doubt today that foreign direct investment in Canada and Canadian investment abroad have joined the international trade in goods and services to become our principal engines of growth and job creation.

Direct investment abroad by Canadian business is part of its strategic effort to increase market share and stay competitive in foreign markets. Companies are increasingly using outward investment to strengthen their operations, penetrate new markets and acquire new technologies, resources and skills. The value of Canadian direct investment abroad has increased fivefold between 1985 and 2000, that is from $57 billion to $301 billion.

Since 1995 the stock of direct investment abroad by Canadians has exceeded the stock of foreign investment in Canada. This reflects the maturity and wealth of the Canadian economy. This type of investment results in increased sales and production from home facilities.

A recent study by the OECD found that on average every one dollar of investment is followed by two dollars of export. It adds up altogether to jobs and opportunities for Canadians.

We have also seen that income from Canada's outward foreign direct investments increased during recent years helping to improve our standard of living.

More than ever, it is important for Canada to try to seek a fair, open and secure environment for international investment, both in Canada and abroad.

The part of the North American Free Trade Agreement dealing with investment, better known as chapter 11, guarantees investors fair treatment in accordance with international law. This chapter and especially the investor-state provision are a fundamental component of the agreement.

It is important to point out that the benefits Canada has gained from investment have not jeopardized our main economic and social values. Foreign investment in Canada is subject to the same legislation and regulations as Canadian investment, including those protecting the environment and ensuring higher labour, health, construction and safety standards.

When one compares the number of challenges under chapter 11 of NAFTA and the amount of the claims to the two-way trade daily of $1.9 billion between the United States and Mexico, one quickly realizes that the number of challenges these last few years has been minimal compared to the overall trade and investment activities.

Last year, the overall investments of our NAFTA partners in Canada reached $186 billion. All in all, we were able to attract, last year, a record high of $93.2 billion in new foreign direct investments.

Yet, from this important growing source of investment, and despite thousands of new laws and regulations passed by each level of government in Canada since 1993, the Government of Canada is facing only five challenges under chapter 11 of NAFTA that are currently under arbitration.

The Government of Canada believes that NAFTA, including chapter 11, works well, and we are not seeking to re-open the agreement. As the Prime Minister has noted in the House, there are many thousands of investments among NAFTA partners and thousands of measures are taken by governments that can affect investments: laws, regulations and programs of all sorts and at all levels of government. However, of all these investments and government measures, only five have resulted in complaints against Canada under chapter 11 of NAFTA.

As we have noted in the House, the Government of Canada does want to clarify the provisions in chapter 11, which would give future tribunals clearer and more specific understanding of the obligations of chapter 11 as originally intended by the drafters. There are mechanisms built into NAFTA to allow for this type of clarification.

Even more important is the fact that we want the investor-state dispute settlement mechanism to be more open and more transparent so it is more effective. In fact, Canada has already taken measures to make this process more transparent.

The foreign affairs department's website contains all publicly available documents relating to chapter 11 arbitration cases involving the Government of Canada.

We would like to make all the documents public, within certain limitations, obviously, to protect confidential trade information. We would also like to open hearings to the public.

I will stop here to allow for a brief exchange with opposition members. But that is our government's position, its true position, not based on a short sentence taken here or there, but based on its true intention with regard to NAFTA's great success.

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Government Orders

3:30 p.m.

Canadian Alliance

Werner Schmidt Kelowna, BC

Mr. Speaker, I want to congratulate the hon. minister for the depth of his understanding of the problem. The only scary part of it is that I found myself agreeing with almost everything he said.

There is one point I do want to raise. I would like to ask the hon. minister if he would clarify for us whether indeed it is true that perhaps some of the fiscal policy of the government has indeed resulted in a net increase over and above the investment that foreigners direct into Canada. Has foreign direct investment to Canada been exceeded by the direct investment in other countries by Canadian firms? There has been a shift and there is a negative balance there.

It is all very well to speak about how wonderful it is that people have invested in Canada. I think he made the statement that this reflects the maturity of the Canadian economy. I would like to suggest to the minister that he should clarify that, indeed, it is not the maturity of the Canadian economy here that has caused this negative balance. In fact, the reason that people are investing more money outside of Canada than in Canada is due to the fiscal policy of the government.

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Government Orders

3:30 p.m.

Liberal

Pierre Pettigrew Papineau—Saint-Denis, QC

Mr. Speaker, I had the opportunity to give an address to the National Press Club today at the luncheon, in which I revisited the extraordinary performance of the Canadian economy in the year 2000.

We are presenting a report on the health of the Canadian economy, on the growth in our trade. We now export 45% of what we produce in this country, of our GDP.

Last year we received extraordinary foreign direct investment of $92.3 billion, so Canada is really a land that attracts a lot of foreign direct capital and it is extremely good for our economy. Indeed, Canadians are now in a position to invest abroad and that is very good, because if we want to export our goods, if we want to export our technology and if we want to export our services, we have to invest abroad.

There was a time when trade led the global economy, that is, first we traded with a foreign country and after having traded with it for some years we would then invest in it. Instead of exporting to it we would start producing the goods in that country. Trade led the economy and investment followed. It is the other way around now, and it has been the other way around for the past 15 to 20 years.

If we want to maintain our export level and trade development we have to invest abroad because now it is investment that leads the international economy rather than trade.

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3:35 p.m.

Bloc

Paul Crête Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC

Mr. Speaker, we just saw a glaring example of the reason why people do not trust governments and of the current government's lack of transparency.

The minister mentioned the website. The website says: “Canada is not advocating the replication of NAFTA investor-state rules in the FTAA”.

On December 13, the minister himself said that he would not sign an agreement if it included a chapter 11 equivalent. He said:

“That is my position. I am very preoccupied with this”.

Today, in a way that is absolutely extraordinary but that will fool no one, they have decided to do a complete about-face and to change their position.

Does the minister not realize that, with this attitude, he is justifying the position of those asking that negotiations be done in a more transparent fashion? If the minister is able to change his position like this at a time when negotiations are not yet in full gear, we can imagine how it will be when we are seriously negotiating these issues.

Can the minister explain to us this complete about-face?

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3:35 p.m.

Liberal

Pierre Pettigrew Papineau—Saint-Denis, QC

Mr. Speaker, I must say that the Minister for International Trade, which I have been for the past year, has fought for transparency throughout the Americas. We were successful in Buenos Aires in gaining the consent of all countries to make the draft free trade agreement public. Canada directed an effort of remarkable transparency, a successful effort.

We do not need any sermons from the Bloc Quebecois member who always resorts to personal insult, to making accusations of flip flops and of lack of transparency, to laying all the blame on us. This is a deplorable way of focussing on the remarkable efforts being made by our government and our international trade policy.

My position on chapter 11 is unchanged and absolutely clear: Chapter 11 serves the interests of our investors and our policies well.

What I called for, and what our government wants, is to clarify within the mechanisms set out by NAFTA certain interpretations that have been made by the courts so that they may be taken into account in future. Obviously, we will be taking into account the improvements I would like to see in the free trade area of the Americas.

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Government Orders

3:35 p.m.

Bloc

Paul Crête Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC

Mr. Speaker, on a point of order. The minister says I insulted him personally by saying that he changed his mind.

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3:35 p.m.

Liberal

Pierre Pettigrew Papineau—Saint-Denis, QC

No. He mentioned the lack of transparency.

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3:35 p.m.

Bloc

Paul Crête Kamouraska—Rivière-Du-Loup—Témiscouata—Les Basques, QC

This government could not be any more arrogant, and this is unacceptable. I ask—

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3:35 p.m.

The Acting Speaker (Mr. Bélair)

Order, please. This is not really a point of order, it is more a question of debate.

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Government Orders

3:35 p.m.

Bloc

Francine Lalonde Mercier, QC

Mr. Speaker, I will be sharing my time with my colleague from Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques.

I would first like to say that the charge by the Minister for International Trade disappoints me. I was fairly happy with the work he had done on transparency, work we had strongly encouraged him to do, we in the Bloc Quebecois, and all the participants in the civil society. I am prepared to acknowledge what he has done, except when he defends, as he has just done, his change in position on chapter 11. That disappoints me.

Let him explain it. Let him say that the United States would not listen, but let him say what he himself has always said. What he has just said today, unfortunately, is not supported by the facts, and by the repeated quotes we can show him. This concerns me, and I think the public too.

I have been told several times by various sources that the negotiators who worked out the NAFTA agreement and the famous chapter 11 never thought it would be interpreted the way it has been by the rather special and secret courts, which evaluate complaints lodged under chapter 11.

Even the negotiators did not think businesses would be so low minded, as some colleagues would put it, as to complain, with the astronomical figures they put forward, because they negotiated in little closed private clubs. Had they asked certain union people what they thought the businesses were capable of doing, they would have been enlightened. They would have made no mistake as to the possibility of expanding these texts in a direction contrary to public interest.

The problem is that, whatever the intention of those negotiators, now, chapter 11, with a number of cases pending—and we can be sure many cases will arise in the future—is tending to limit the ability of governments, at all levels, to make laws that defend public interest.

There are a number of fairly simple cases. For example, Metalclad Corporation, is a waste treatment company from California. It settled in Mexico and asked for a federal permit. The problem is that while it was building its plants, the public was totally opposed to such activities. The governor of the state had no choice but to order Metalclad to shut down its operations. Metalclad turned around, sued under chapter 11 and won. The whole thing cost $16 million to Mexico, which decided to appeal the ruling, and the appeal was heard in Vancouver.

This ruling is disturbing in a number of ways. I am mentioning one, but there are several. In that example, the federal government of Mexico had given its authorization, but the municipality had the authority to legislate, just like the state. By using its powers, the company had the right to sue.

If the government cannot see cases that could occur here, it is because it definitely does not want to see the obvious.

They are now defending chapter 11 without any reservations, when the Minister for International Trade himself had the common sense to say that he would not ratify it again, in its present form. The minister heard many people who also displayed common sense, including Pierre-Marc Johnson, the former Premier of Quebec, who is not a hothead and who told the committee that Canada should not use chapter 11 again, at the risk of experiencing very serious environmental problems. And we know how concerned people are about the environment.

What is extremely disturbing is that Canada, which has held various positions, just boasted about signing an agreement with Costa Rica. In an agreement with Costa Rica, Canada is the one calling the shots. This is not the United States, which is a strong country, with Canada trying to manage. With Costa Rica, it is Canada that has the upper hand.

In a agreement with Costa Rica, Canada is not in a weak position. It is not like in a agreement with the almighty United States, where Canada has to find a way to manage. With Costa Rica, Canada has the upper hand. Yet, the provision of chapter 11 can be found in the agreement with Costa Rica. Canada's position boils down to what is stipulated in chapter 11 of NAFTA.

The House will soon realize that opposition members are against this. Before going any further, we need to reconsider what we are about to do. Because we are about to give more power to companies and foreign corporations. Foreign corporations can file suits for discrimination, something local companies are unable to do. But let us not forget that, abroad, Canadian companies are foreign companies, and that we promote international exports not only for the big corporations, but also for smaller businesses.

At the Standing Committee on Foreign Affairs, important business people for whom exports have no secrets told us “It is not a market for small companies, because you stand to lose your shirt again and again”.

This is a very serious issue, and I want to thank the NDP for raising it, as we did previously, so that we could hold this debate. The important thing is for parliamentarians to be able to express their views before the agreement is signed. It is crucial.

I am going to introduce a private member's bill of which I am very proud, which was introduced earlier by the member for Beauharnois—Salaberry. This bill must become law. I am sure that there are government members who share our view, but whose hands are tied right now and who will be able to do nothing but talk among themselves and look sad, hoping that things are not as bad as some are saying.

What is really being decided right now is the future, not just of Quebecers and Canadians, but also, and even more so, of the citizens of Mexico and of Central and South America.

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3:45 p.m.

An hon. member

The Americans too.

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3:45 p.m.

Bloc

Francine Lalonde Mercier, QC

Yes, the Americans too, but they have more weapons, including democratic ones, to defend themselves than we do. They have much more clout, as parliamentarians, than do Canadian parliamentarians.

Chapter 11 is not the only issue that concerns us. It is one that, along with others, poses the problem of the need to expand trade. We are all for this, but not unconditionally and not just for the rich and the strong.

It needs to be said that while free trade has produced some good results, it has not been good for everyone. This is true between countries and within countries.