House of Commons Hansard #10 of the 38th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was industry.

Topics

Canada Shipping Act
Government Orders

12:25 p.m.

The Acting Speaker (Mr. Marcel Proulx)

In my opinion the yeas have it.

And more than five members having risen:

Canada Shipping Act
Government Orders

12:25 p.m.

The Acting Speaker (Mr. Marcel Proulx)

The recorded division on the motion stands deferred until later this afternoon.

International Interests in Mobile Equipment (aircraft equipment) Act
Government Orders

October 18th, 2004 / 12:30 p.m.

Outremont
Québec

Liberal

Jean Lapierre Minister of Transport

moved that Bill C-4, an act to implement the Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment, be read the second time and referred to a committee.

International Interests in Mobile Equipment (aircraft equipment) Act
Government Orders

12:30 p.m.

Scarborough—Agincourt
Ontario

Liberal

Jim Karygiannis Parliamentary Secretary to the Minister of Transport

Mr. Speaker, it gives me great pleasure to stand before the House today in support of introducing Bill C-4, which is proposed legislation that seeks to implement the Convention on International Interests in Mobile Equipment and the Protocol to the Convention of International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment. The convention and aircraft protocol were concluded in Cape Town, South Africa in November 2001.

I believe we all agree that a strong competitive aviation industry is an important underpinning of Canada's economy today and into the 21st century. Furthermore, I think we all recognize that this sector has faced significant challenges over the past few years.

As the House is aware, the aviation sector is particularly vulnerable to economic shocks and other world events: 9/11, SARS and record high fuel prices. All have had a negative effect on the sector. Industry stakeholders have been calling on the Government of Canada to implement broad measures to assist the difficult situation facing the airline and aerospace sectors.

The proposed legislation is one way the government is demonstrating its commitments to long term viability of the Canadian airline and aerospace industries. Adopting the bill will help these industries compete more effectively in the global economy by facilitating their access to capital markets.

Improving the competitiveness of the Canadian airline and aerospace sectors will work to maintain highly paid, specialized jobs in Canada leading to positive spin-offs in all regions of Canada and throughout the economy. Consumers also will benefit through increased airline services and/or lower fares. Another benefit of facilitating the acquisition of modern aircraft is that air transportation can become safer and environmentally cleaner.

In summary, through this bill and the ratification of the convention and aircraft protocol, the Government of Canada will actively support all elements of Canada's aviation sector.

Canada played a leading role in the negotiation and the development of the Cape Town convention and aircraft protocol. The convention and aircraft protocol represent an unparalleled example of cooperation between governments and industry in creating an international regime. In fact, it was a Canadian delegate on to the International Institute for the Unification of Private Law, or UNIDROIT, that first proposed the establishment of an international registry for security interests in aircraft in 1988. Since then, governments and industry worldwide have cooperated in developing the convention and aircraft protocol.

Canada's active involvement in the negotiations leading up to the adoption of the convention and aircraft protocol highlighted Canada's commitment to seek global solutions to global problems in cooperation with the rest of the international community.

While it has taken more than 15 years for this initiative to come to fruition, it has met with approval from both the airline and manufacturing elements of the aviation industry as well as those providing financing for it. Throughout the process leading up to the tabling of this initiative, these stakeholders have been continuously consulted. Representatives of the Canadian industry were present and participated in many of the meetings leading up to the diplomatic conference at Cape Town as well as the meetings that formerly adopted these international instruments. It is clear that the adoption of the bill will be an important step in the creation of an international regime that the aviation industry sees as beneficial.

The convention and aircraft protocol will establish an international legal regime that includes remedies to creditors in case of default. New rules will reduce the risks associated with financing and provide greater certainty to creditors and aircraft manufacturers. This will lead to larger amounts of credit being made available to airlines at a lower cost, ultimately generating increased airline earnings and profitability and important spin-off benefits to the broader economy.

The convention and the aircraft protocol will create an international registry for rights in aircraft and will set the order of priority among purchasers and creditors. The creation of a single international registry will provide considerable advantage in terms of time, cost savings and improve certainty in resolving questions of priority of interests.

The proposed bill will give force of law to the provisions of convention and aircraft protocol that fall within federal jurisdiction. Amendments to the Bank Act permit the carving out of larger aircraft equipment from its purview and direct registrations to the international registry. Amendments to the Bankruptcy and Insolvency Act, the Companies' Creditors Arrangement Act and the Winding-up and Restructuring Act will provide greater certainty for aviation creditors, thus benefiting Canadian aircraft manufacturers, financiers and airlines on the international level.

The bill would provide for a special remedy in the case of insolvency that would impose a fixed date period of 60 days. After this period, creditors could reclaim an aircraft or aircraft equipment on which they have security, if the lessee has failed to meet its obligations under the lease. The adoption of this stay period would increase certainty in the system and would provide a level playing field between Canada and the United States. The U.S. industry already benefits from a similar provision under the U.S. bankruptcy code.

On March 31 Canada became the 28th state to sign the convention and aircraft protocol. Our signature was added to a list of all countries with significant aviation and aerospace industries including France, Germany, the United Kingdom and the United States. Implementation of the convention and protocol in Canada will reaffirm Canada's leadership role in international civil aviation. The introduction of this legislation establishes that Canada is taking an important step toward eventual ratification of the convention and aircraft protocol.

Stakeholders have conveyed that substantial benefits are expected following the passage of this proposed legislation and Canada's ratification of the convention and aircraft protocol.

Airlines expect that the new regime will enhance their ability to obtain financing for their aircraft because the system would provide increased security for creditors. Since the rules provided for in the convention and aircraft protocol, and the bill reduces their financial risk, it is expected that creditors will make greater levels of credit available at a lesser cost. This will have a direct financial impact on an airline's bottom line by reducing the cost of borrowing money.

Aircraft manufacturers are expected to benefit from increased sales resulting from reduced financing costs. Consumers can also expect to benefit. Passengers stand to benefit from airlines that pass their realized cost savings to their end users. Furthermore, air transportation can become safer and environmentally cleaner by allowing airlines to purchase more modern aircraft at reduced costs.

Not only will Canadians benefit by the adoption of this treaty, so will other developing nations. When implemented in developing countries, this convention and aircraft protocol will result in reduced financing costs and will make financing available when it is not otherwise available. As a result of increased certainty that is afforded to creditors, airlines will be more willing to allocate surplus aircraft to developing markets. These markets will then benefit from obtaining safer, more efficient and more environmentally friendly aircraft than they may currently use.

A second major feature that will be achieved through the adoption of the convention and aircraft protocol involves the creation of a worldwide Internet based international registry. This will be available to any individual or company 24 hours a day, seven days a week. The existence of a single, worldwide, electronic international registry for recording and searching aircraft equipment is viewed by stakeholders, including the legal community, manufacturers and financiers, as a considerable advantage in terms of time, cost savings and improved certainty.

The international registry will be set up and operated by Aviareto, an Irish-based company that was selected through a tendering process supervised by the International Civil Aviation Organization. A permanent supervisory authority will oversee the operation of the registry. It will, among other things, have the authority to appoint and dismiss the registry operator, make regulations dealing with the operation of the registry, establish procedure for receiving complaints, set the fee structure and report to contracting states.

As a signatory party and a key participant to date, Canada will continue to work through ICAO to ensure Canadian interests will be protected throughout this process.

It is important to note that provincial and territorial implementation legislation is also required before the convention and aircraft protocol can take effect in respect of Canada. The provinces and territories have consistently demonstrated their interest and support for these instruments.

Already, Ontario and Nova Scotia have passed implementing legislation that we could expect to enter into force following Canada's ratification of the convention and aircraft protocol. The provinces and territories continue to be consulted through the Uniform Law Conference of Canada and through the Department of Justice advisory group private international law.

For a country like Canada, the convention contains only a few major innovations. However, it will provide other countries with a considerable measure of legal improvements that may well assist them in getting the most out of their economies while at the same time providing enhanced opportunities for Canadian businesses.

As already outlined, the benefits to Canada of implementing the bill and ratifying of the convention and aircraft protocol include: greater security for creditors; increased competitiveness of the Canadian aerospace and airline industries; maintaining jobs in Canada; and spin-off effects for various regions within Canada.

I want to emphasize that the government consulted widely with stakeholders prior to signing the convention and aircraft protocol, and they remain supportive of this initiative.

The bill has been introduced prior to ratification of the convention and aircraft protocol because federal, and at least some provincial and territorial implementation legislation, must be in place before the agreements can come into force in Canada. Ontario and Nova Scotia have already passed implementing legislation and it is expected that other provinces and territories will follow suit, especially those with significant aviation interests.

In conclusion, adoption of the bill is an important step toward eventual ratification of the convention and aircraft protocol, which would confer significant benefits to the airline and aerospace industries and the Canadian economy more broadly.

International Interests in Mobile Equipment (aircraft equipment) Act
Government Orders

12:45 p.m.

Bloc

Yvan Loubier Saint-Hyacinthe—Bagot, QC

Madam Speaker, the introduction of this bill gives me cause to wonder. Although we are prepared to support this bill to bring our practices into harmony with certain international agreements, it really makes me wonder about Canada's lack of aerospace policy.

Recent events have added concern to my reflections this weekend, in particular, the problems Bombardier is having and the kind of international prying the company is being subjected to by the Americans and the British. It worries me. In general, what the management of Bombardier and Pratt & Whitney in my hon. friend's riding of Longueuil—Pierre-Boucher are saying is that the government's approach is inconsistent. Probably the Minister of Transport, through his colleague, will be able to answer my question.

This industry is important for Quebec; the aerospace industry is to Quebec what the automotive industry is to Ontario. The economic benefits of this sector are extraordinary. We are talking about 40,000 jobs in Quebec, not just in the big businesses, but also in the small and medium-sized ones serving the sector. I believe annual sales are around $14 billion in Quebec alone.

Are we on the verge of formulating a genuine, consistent aerospace policy, with adequate support for the aerospace industry, so that this sector can prosper? We must not forget that nearly all the parts used in making intermediate and final products come to Canada from elsewhere. Therefore, there is a huge potential for our businesses. Is the government working on that? We are ready to help.

International Interests in Mobile Equipment (aircraft equipment) Act
Government Orders

12:45 p.m.

Liberal

Jim Karygiannis Scarborough—Agincourt, ON

Madam Speaker, we are dealing with a lot of things, be it international competition, Bombardier, or spinoff industries. My colleague talked about 40,000 jobs in Quebec. It is equal in Toronto right now with thousands of jobs in DeHavilland and in Bombardier.

The Minister of Transport and the Minister of Industry have been consulting and a policy is in the works. It will be announced in the upcoming days as we go along.

International Interests in Mobile Equipment (aircraft equipment) Act
Government Orders

12:45 p.m.

Conservative

Rob Nicholson Niagara Falls, ON

Madam Speaker, the parliamentary secretary said that this would come into force when provincial legislation was passed. Could the parliamentary secretary let me know how soon he expects to have provincial legislation in place and, in particular, what indication he has from the province of Quebec, which has a huge aeronautical industry within the province, of the timeline for it to pass this? Could he also tell me how many provinces it will take to pass this before it is considered to be in effect after the Canadian Parliament passes it?

International Interests in Mobile Equipment (aircraft equipment) Act
Government Orders

12:45 p.m.

Liberal

Jim Karygiannis Scarborough—Agincourt, ON

Madam Speaker, the comments that my hon. colleague made, especially about Niagara Falls being the capital of the world--

International Interests in Mobile Equipment (aircraft equipment) Act
Government Orders

12:45 p.m.

Conservative

Rob Nicholson Niagara Falls, ON

The honeymoon capital of the world.

International Interests in Mobile Equipment (aircraft equipment) Act
Government Orders

12:45 p.m.

Liberal

Jim Karygiannis Scarborough—Agincourt, ON

The honeymoon capital of the world. I am sure a lot of Canadians, as well as a lot of international people, have flown using Air Canada or other carriers to go to Niagara Falls to see the wonderful delights that my hon. colleague mentioned.

Getting to the gist of the question, which is when will the legislation come into force, it is expected that it will come into force no later than the time when Canada assumes its international obligations under the convention and protocol throughout the act of ratification. Canada would not assume any international obligations until a sufficient number of provinces have also passed implementing legislation covering matters within their jurisdiction.

The federal legislation allows that certain provisions can be proclaimed into force before ratification. The option would only be exercised in respect to provisions that may be implemented outside the framework of the convention on aircraft protocol.

International Interests in Mobile Equipment (aircraft equipment) Act
Government Orders

12:50 p.m.

NDP

Brian Masse Windsor West, ON

Madam Speaker, I am happy to hear that there could be something available in terms of an aerospace policy. It is something that is very important.

We on this side have been very frustrated with the lack of similar action on an auto policy. What we have witnessed in both these sectors is massive subsidization and grants being provided against our own production through the United States.

Does the hon. member believe that this intervention, which I hope actually happens, will be something concrete and accessible and will meet the standards of the industry? Also, will we see an auto one coming next? That is very important. It has been over two years in the making. I have been part of the discussions and it is unbelievable how long it has been taking.

Is this a further admission that the North American free trade agreement that the government signed on to has been a failure?

International Interests in Mobile Equipment (aircraft equipment) Act
Government Orders

12:50 p.m.

Liberal

Jim Karygiannis Scarborough—Agincourt, ON

Madam Speaker, I want to reassure my hon. colleague from Windsor West that not only is the government working very hard on coming up with an aerospace policy, but I also want to reassure him on something that is in my mandate given to me by my minister regarding the autopact and the auto industry.

There have been extensive discussions going back a few years. The Department of Transport, the Department of Industry, the Department of Finance, the Department of Natural Resources and the Department of the Environment are working together to make sure we come up with a policy as far as the auto industry is concerned. Not only are we going to tell the auto industry this is the way to make cars, we have a responsibility as custodians of the future of the country, as custodians of the global environment. We have a responsibility, not only to the manufacturers and the people who work on the line, but we have an outstanding responsibility to our children.

We cannot continue doing business as we are. We cannot just continue pumping out cars as we know them. We have to pump out cars that are more fuel efficient and more friendly to the environment. If we do not have that policy in place, by the year 2016 our health costs will have ballooned way over $160 billion.

We need to come up with responsible legislation. This is why the departments I mentioned, the parliamentary secretaries and the ministers of the departments, are working hand in hand to make sure we come up with a policy that respects the environment as well as represents the needs of Canadians. I reassure the House that this will be done in due course and very quickly.

International Interests in Mobile Equipment (aircraft equipment) Act
Government Orders

12:50 p.m.

Conservative

Rob Nicholson Niagara Falls, ON

Madam Speaker, I am pleased to be able to make a few comments with respect to Bill C-4, an act to implement the convention on international interests in mobile equipment and the protocol to the convention in mobile equipment on matters specific to aircraft equipment. This would provide a continuation of the development of the security law sector. It is a step forward in the right direction. I think it should be viewed by members and Canadians as part of a continuation of the history of providing security.

Hon. members in the House who know or practice law will know that going back a couple of hundred years the only security generally that one could get was the mortgage on one's property or house. It worked very well because lenders were prepared to lend money on the basis that if they were not repaid the house or property could be seized. As a result, the lowest interest rates were always available for mortgages.

However, with the development of trade and other types of assets, it became necessary to find a way to provide security and obtain financing. For the most part, in the 18th and 19th centuries, that was confined to shipping, which was the common way of trade between countries. Over a couple of centuries, a body of law developed, which was referred to as the admiralty law, that contained a whole host of rules and obligations to govern shipping throughout the world. For the most part it worked well because it lent certainty to individuals who were in the business of trade throughout the world. There were consequences to those individuals or countries that did not pay attention to the rules.

A number of instances took place in the 19th century where ships were seized or impounded in various places around the world and in short order a number of individuals and countries discovered that a royal navy gunboat was in the harbour to back up the security.

As the 20th century developed, that style of enforcement of securities did not lend itself as well to modern trade, not only because of the directness of that approach but because there were other types of security. The development of the aircraft industry in the 20th century meant that other types of security would be necessary.

That has been very difficult because if we do not have a way of enforcing security throughout the world, lenders, understandably, become nervous about forwarding money. If one owned an airplane in Canada and the person wanted to fly to various countries around the world, those providing the financing would, understandably, want to know what would happen if the owner could not pay, especially if the plane were in a part of the world with different laws or perhaps no laws at all. As a result, lenders were very reluctant to forward money on that basis because they could not be certain of the security or of being able to realize on their security if the aircraft or other piece of equipment on which financing had been forwarded were in some other part of the world.

It was difficult for people in the aircraft industry to obtain financing and if they could obtain financing it was very expensive. That really did not work in anyone's interest. It does not work in the interests of those in the aeronautical industry and it does not work, quite frankly, for passengers. Those of us who use airlines want the fares at the lowest possible price but if the aircraft company is having difficulty getting financing that gets passed on the passengers and in turn it is bad for everyone.

I see something like a convention that would include, among other things, as the parliamentary secretary said, aircraft, aircraft engines, helicopters, railway rolling stock which is another type of equipment that moves outside of the country, and, interesting enough, space assets. Presumably we could put security on a satellite.

The good thing about it is that it is one stop shopping. Apparently, it will be available on the Internet so that throughout the world individuals can check to see what the security is on a particular piece of equipment. This would give peace of mind to everyone involved.

Canada has a very important aircraft industry. This will assist it. There has been quite a bit of talk about the struggles within the airline and aircraft industries. If they are able to obtain financing, this will go a long way to helping them. It would benefit everyone.

I asked the parliamentary secretary about the question of provincial jurisdiction and I would like to explore it a little bit further when this matter goes before the transport committee. For the most part contract law is within provincial jurisdiction. Each province has laws and rules that govern contracts. Indeed, the province with which I am most familiar, Ontario, has something similar to that called the personal property security act.

If we obtain financing for an automobile, it gets registered, and it goes into the computer. Anyone interested in buying or otherwise financing our car would be able to quickly find out through a computer station located at registry offices across Ontario what the security interest is in it. The province already has a regime in place, as do other provinces, and it has a huge interest in it.

I, for one, would be very interested to know when other provinces will be ratifying this agreement because we cannot have the federal government ratify something like this when so much of the jurisdiction is with the provinces. In particular, I would be interested in knowing the timeline of the Province of Quebec, which has a huge stake in the particular industry covered by the bill. Indeed, I would be very interested in the comments it may have on this. That is one of the aspects I would like to see addressed in committee and to hear what the provinces have to say.

Be that as it may, I want to assure the House that we believe on this side of the House that the bill should go forward. This is a step in the right direction and I will be interested to hear from all the players in the industry. I think it will be widely accepted and quite frankly, welcomed. Any time we get anything that is 100 pages long, there may be some surprises in it, but let us deal with it at the second reading stage in committee because I definitely think this is a step in the right direction. I look forward to Canada ratifying it, our provinces ratifying it and indeed, all the other countries of the world getting on board with this regime.

International Interests in Mobile Equipment (aircraft equipment) Act
Government Orders

1 p.m.

Bloc

Caroline St-Hilaire Longueuil, QC

Madam Speaker, I am pleased to speak to Bill C-4, an act to implement two international agreements, the Convention on International Interests in Mobile Equipment and the Protocol on Matters Specific to Aircraft Equipment.

The purpose of the convention is to create an international legal framework to address the order in which creditors are paid and the seller's rights. The basic objective of the convention is the efficient financing of transportation equipment, which will assist in the development of expensive modes of transport using modern technologies, especially related to aeronautics.

The purpose of these agreements is to have the signatory countries standardize their legislation with respect to the security lenders take on mobile equipment such as aircraft, for example. These agreements also allow for the creation of an international aircraft registry that will make it easy for lenders to find out about the state of an aircraft or whether it has been mortgaged, by how much and by whom.

The huge outlays involved in the financing of such equipment make it essential for the creditor to be able to have confidence that if the debtor defaults in payment or other performance the relevant legal regime will respect the creditor's contractual and proprietary rights and provide the creditor with efficient and effective means to enforce those rights.

Normally in the case of conflicting legislation, that of the country where the secured property is located applies. When dealing with immovable property, it is quite simple. However, for mobile equipment constantly moving from one country to another it is more complicated and a costly source of uncertainty both for the lender and the borrower.

If these countries do not standardize their laws, especially with respect to the order in which creditors are paid, endless legal battles can ensue leading to long and expensive delays when the airline company is unable to make payments. Furthermore, contradictory legislation causes a great deal of uncertainty and increases the risk for the lender, who often compensates for this by charging much higher interest.

Hence the need for international legal rules giving the creditors the required level of security and containing measures for the debtor's protection. This would represent a competitive advantage for the airline industry. Since the risks associated with the loans or the lease agreements will be reduced, funding will be easier for the air transportation companies to obtain.

Moreover, a reduction in the costs of borrowing can be expected. All this should help the carriers who want to buy new aircraft and ultimately improve perspectives for the aerospace industry that builds them.

We all know that there is a crisis in the airline industry. The fears generated by the events of September 11, 2001, cut passenger traffic. The creation of the low cost carriers resulted in a reduction in the price of tickets. The increase in oil prices, which represent 16% of the air carriers operating costs, is resulting in higher operating costs. All that reduces the carriers profit margin.

As a result, many airlines are in a state of crisis. Air Canada has filed for protection under the Companies' Creditors Arrangement Act. Sabena and Swissair have declared bankruptcy. Alitalia and American Airlines are having a very difficult time. It is easy to understand that lenders hesitate to provide them with the funds they need to upgrade their fleet, which funds are essential if they want to stay in business. The guarantee that the lender will be able to recover the aircraft in the event of non-payment can only be beneficial.

The goal of these conventions is therefore particularly appropriate and beneficial for both carriers and equipment manufacturers, and that is the reason why the Bloc Québécois supports the principle of Bill C-4 provided, of course, that the committee finds that it is, in all of its details, in compliance with both international conventions.

Of course the bill can deal only with matters under federal jurisdiction. Issues related to loan guarantees come under civil law, which is an area of provincial jurisdiction. The implementation of the protocol and treaty will only be possible if the provinces amend their own legislation.

That is one more example of why Quebec and the provinces need to be closely involved in negotiating and reaching international accords. In addition to allowing them to defend the interests of their fellow citizens, such involvement would make implementation of international treaties much easier.

That being said, Bill C-4 is a step in the right direction. However, it does not solve the real problem in the aerospace industry, which is the lack of an aerospace policy. It is a good thing that Canada is taking the lead in signing this treaty, but it must do a lot more and put in place a real aerospace policy.

The situation is more urgent than ever as witness the events of last week, when we heard that Bombardier was being courted by three American states wanting the company to locate its facilities on their territory to build 100 and 115 seat planes. It would appear that they each are offering more than the $700 million Bombardier is seeking from the federal government.

Ottawa is procrastinating. Support for research and development is anemic. Technology Partnerships Canada is underfunded. Export contracts supported by Export Development Canada are far too few.

The federal government must act quickly, otherwise a whole sector of a flourishing industry might suffer.

Quebec's aerospace industry, which has sales of $14 billion and which employs more than 40,000 people, accounts for close to half of high-tech jobs in Canada. Of the 250 companies in this sector, 240 are SMEs, which act as suppliers to big business. Together, those 240 SMEs represent 10% of the total sales of Canada's aerospace industry.

Those SMEs could do much more. Indeed, foreign companies represent roughly two thirds of suppliers to Quebec's aerospace industry. This indicates the potential for growth of Quebec's SMEs if they succeeded in taking over part of this market. To do it, though, they need help.

To be certified as supplier in the aerospace industry, a SME must meet a series of very strict criteria set by the contactor. It must be able to be associated with the development of any new product, from the beginning of its design and through its finalization. In addition, it must meet the particularly strict demands of the contractor in terms of quality and competency of its workforce. All these demands are very costly, sometimes too costly for an SME to assume alone.

The federal government must support those companies which would be ready to move from the status of small business with precarious finances to that of a medium-sized business able to take the market head on, if given the means to do so.

We also know that two of the main employers in Quebec's aerospace industry are Bombardier and Pratt & Whitney. The latter has facilities in Longueuil in my riding. Both of these jewels of Quebec's industry have condemned the insufficient federal support for an industry which is facing strong competition. If the federal government does not act, the United States or Great Britain will move in.

Endangering these two jewels of the aerospace industry would not only threaten 40,000 jobs; it would also be a hard blow to numerous small and medium-sized enterprises serving that sector.

As the present Minister for Transport was saying, the aerospace industry is to Quebec what the automobile industry is to Ontario. I want to say to the Minister of Transport that he should stop condemning a situation that we all know only too well, and move quickly to implement a real aerospace policy. Ontario has been benefiting for decades, in terms of federal support, from special regulations, substantial grants and even special trade agreements like the Auto Pact.

Ratification of international agreements is one thing, and the Bloc Québécois supports Bill C-4 in principle. However, we also must act swiftly on the domestic scene. Besides, Canada has nothing to be proud of, since it is practically the only developed country which has no clear and consistent policy in this area.

Everywhere else in the world, it has been acknowledged that this sector must have the support of high technology research and development before it can design its final product. In other words, huge investments must precede marketing. Therefore, this industry is highly research and development intensive. Other countries have understood that, but Canada still has not.

This is why the Bloc Québécois has for years been calling for an aeronautics and aerospace policy which should include several elements.

Let us take industrial research support, for instance. Developing a high technology product, whether it is a drug or an airplane, takes a lot of time and money.This is a stage where government funding is crucial.

As Mr. Louis Chênevert, President of Pratt & Whitney Canada, so aptly put it:

Pratt & Whitney Canada is a leader internationally because it has acquired a unique technology through its investments in research and development over the last 20 years.

He added this:

Because the federal government has contributed to this effort through its Technology Partnerships Canada Program, it will reap the benefits...Indeed, it pays to invest in research and development.

Through the Technology Partnerships Canada Program, Ottawa invests in product research and development and gets its payback in royalties. As you can well understand, it is a win-win situation.

However, while spending on industrial research is increasing by approximately 8% per year, the amounts invested by the government in the program remain more or less constant. This poses a serious threat to the aerospace industry, which, as I have already noted, is one of the shining lights of Quebec industry. It exports 89% of its production and must be in a position to stand up to competitors, which get much more support. In that sense, the program, created 8 years ago, is now significantly underfunded.

In the United States, for example, the Pentagon is investing US$45 billion in research and development, of which some $6.5 billion is going directly to Boeing, Raytheon and United Technologies.

Bombardier recently announced the elimination of 2,000 jobs in Montreal, and the worst might well be yet to come, if Canada continues to drag its feet and Bombardier accepts the American offer.

It is for all these reasons that the Bloc Québécois is asking for a substantial increase in the federal investments in the Technology Partnerships Canada program.

It is also important to promote export. As the Canadian aerospace market is limited, our companies can amortize development costs only by investing in the international market. The aerospace sector exports 89% of its production. However, since Ottawa is not promoting exports nearly as much as many other countries do, our companies have a hard time remaining competitive.

In the past three years, Export Development Canada, or EDC, the federal agency financing all export contracts, has financed an average of 41% of all Bombardier regional aircraft sales. By comparison, in the same period, the Brazil Development Bank financed over 80% of Embraer sales.

Worse yet, EDC's support dropped to 37% in 2003. The majority of the funds released were for existing contracts, while Embraer received the support of the Brazilian government for almost all its financing needs.

The Bloc Québécois is thus calling on the government to increase its participation in the financing of export contracts to the levels our foreign competitors might be granted.

There are a variety of steps the federal government could take if it really wanted to help the aerospace industry. Today, the consideration of Bill C-4 is a step in the right direction, but the fact remains that the government must implement as soon as possible a real policy for the aerospace industry.

Besides, with a surplus of $9.1 billion for 2003-04, money is certainly not an issue, especially since, as I tried to demonstrate, investments in that sector generate substantial economic spinoffs. I hope that the Minister of Transport and the Minister of Industry realize that. With such a return on investment, it is profitable for the federal government and also for the public as a whole.

Investing today will ensure the viability of a critical sector of our economy in Quebec.

International Interests in Mobile Equipment (aircraft equipment) Act
Government Orders

1:15 p.m.

Liberal

Ken Boshcoff Thunder Bay—Rainy River, ON

Madam Speaker, I will be splitting my time with the hon. member for Ancaster--Dundas--Flamborough--Westdale.

I am pleased to have this opportunity to discuss the consultation process surrounding the international interests in mobile equipment act. A crucial element in the development and adoption of any legislation in Canada is consultation with and the support of affected stakeholders and other relevant parties. Canada played a leadership role in the negotiation of the convention and protocol because various groups, including provinces, territories, airlines such as Air Canada, industry associations such as the Air Transport Association of Canada, and aircraft manufacturers such as Bombardier and Pratt & Whitney Canada, have supported the objectives of the convention and protocol.

On March 31, Canada signed the convention on international interests and mobile equipment and the protocol to the convention on international interests and mobile equipment on matters specific to aircraft equipment. Justice Canada officials regularly consulted with the provinces and territories throughout the negotiations leading to the adoption of the convention and protocol.

The provinces and territories continue to be consulted through the Uniform Law Conference of Canada and through the Department of Justice advisory group on private international law. They have consistently demonstrated their interest and support for these instruments.

Canadian airlines, aircraft manufacturers and financiers have also been consulted throughout the process. All have expressed strong support for the convention and protocol. They foresee that the implementation of the convention and the protocol will provide creditors with an increased certainty and improved ability to realize on their security, thus reducing their financial risk. Consultations have also indicated that the Canadian aviation finance bar and insolvency stakeholders support the implementation in Canada of the convention and protocol.

Ratification of the convention and protocol would be premised on implementation by a sufficient number of provinces and territories. A uniform act to implement the convention and protocol throughout Canada was developed by the Uniform Law Conference of Canada with the participation of provincial and territorial representatives.

Based on this uniform act, Ontario and Nova Scotia have already passed implementing legislation that would enter into force when the instruments take effect in Canada. It could also be expected that other provinces and territories will also pass implementing legislation, especially those provinces with significant aviation interests.

Adoption of this bill would encourage the remaining provinces and territories to pass their own legislation to implement the terms of the agreements that fall within their jurisdiction. This would facilitate Canada's eventual ratification of the convention and protocol. The Government of Canada has worked cooperatively with the provinces and territories throughout this initiative. This bill is an important step in this regard. Finally, early implementation of the convention and protocol in Canada would reaffirm Canada's leadership role in international civil aviation.