Bill C-55 (Historical)

Canada-EFTA Free Trade Agreement Implementation Act

An Act to implement the Free Trade Agreement between Canada and the States of the European Free Trade Association (Iceland, Liechtenstein, Norway, Switzerland), the Agreement on Agriculture between Canada and the Republic of Iceland, the Agreement on Agriculture between Canada and the Kingdom of Norway and the Agreement on Agriculture between Canada and the Swiss Confederation

This enactment implements the Free Trade Agreement and the bilateral agreements between Canada and the Republic of Iceland, the Principality of Liechtenstein, the Kingdom of Norway and the Swiss Confederation signed at Davos on January 26, 2008.
The general provisions of the enactment specify that no recourse may be taken on the basis of the provisions of Part 1 of the enactment or any order made under that Part, or the provisions of the Free Trade Agreement or the bilateral agreements themselves, without the consent of the Attorney General for Canada.
Part 1 of the enactment approves the Free Trade Agreement and the bilateral agreements and provides for the payment by Canada of its share of the expenditures associated with the operation of the institutional aspects of the Free Trade Agreement and the power of the Governor in Council to make regulations for carrying out the provisions of the enactment.
Part 2 of the enactment amends existing laws in order to bring them into conformity with Canada’s obligations under the Free Trade Agreement and the bilateral agreements.
Part 3 of the enactment provides for its coming into force.

Canada-EFTA Free Trade Agreement Implementation Act

[Omar Alghabra, Liberal, Mississauga—Erindale, ON]

Mr. Speaker, as we always do, Canadians have a discussion about our trade dependence on the United States. As the United States is going through a recession these days, we are witnessing a significant impact on Canadian jobs and on the economy. There are always discussions on the need to diversify our trading partnerships, our exports and our imports so we are not that dependent on a single state.

I am not saying that we should not nurture, maintain and increase our trade relations with the United States, but could the hon. member comment on the value of Canada's diversification, of identifying trading partners, removing trade tariffs and the value that this expansion would have for Canadians and Canadian jobs?

[David McGuinty, Liberal, Ottawa South, ON]

Mr. Speaker, there is no doubt that the United States is going through some very difficult and troubling times. I personally predict that we will see culprits. We will see the blame laid squarely at the feet of different actors in American society who I think concocted a sub-prime mortgage scam that has affected many vulnerable Americans. I wish our American cousins all the best in the recovery that we would like to see in the United States and, of course, the spill over effects in helping to keep Canada's trading arrangements there robust and healthy.

However, there is no doubt that Canada needs to expand its reach. We are already trading all over the planet but the formalization of this trading arrangement with four nation states goes another certain distance to help us diversify. Diversification is good. Dependency on one particular market is not so good. We are seeing that there are risks now despite the fact that so many hard decisions were taken by the previous government to prepare the country to deliver 10 years of surpluses consecutively, to pay down so much debt and to lower taxation while addressing core social equity and justice questions.

Canada is well positioned and well prepared to weather the storm, although we are not sure what the fallout effects will be of the recent 30 months of decisions taken by the government.

However, more important, expanding our reach in terms of trade builds on our people. The single greatest asset we will have over time will be people: their brain capacity, their training and their skills levels. We have people from every corner of the planet now living right across this beautiful country. It is up to us now to play intelligent hockey and to build on those relationships all over the world and to strengthen our trading relationships.

[Chris Charlton, NDP, Hamilton Mountain, ON]

Mr. Speaker, I listened carefully to the comments made by the member for Ottawa South. On the face of it, when we look at this trade agreement, the member nations of EFTA all have strong social democratic traditions. They are an excellent model for how one might go about building trade agreements. They have that ideal balance, almost, between trading and yet protecting the sovereignty of their own nations. To some extent, one would think they would be the ideal trading partner for a country like Canada.

Like the member for Ottawa South, I come from a landlocked riding. There is no shipbuilding industry on Hamilton Mountain--I know that will surprise some members--but what we do have in Hamilton is a really vibrant steel industry. Well, actually, it used to be a vibrant steel industry and now of course, like much of the manufacturing sector, we are seeing devastating job losses and declines in the manufacturing sector right across this country.

Yet we are selling out an industry in this trade agreement, namely the shipbuilding industry, which could make such a profoundly positive contribution not just to those communities across this country that are actively engaged in shipbuilding, but also in communities like mine that have steel making industries. The shipbuilding industry of course uses steel. There is all kinds of potential and, therefore, all kinds of reasons that we should carve out the shipbuilding industry from this trade agreement and then talk about the trade agreement again.

In light of the fact, and I think the committee hearings demonstrated this, that this trade agreement clearly sells out Canada's shipbuilding industry without any regard to either the workers or the community interests involved, could the member comment on why he would support an agreement that clearly sells out shipbuilding but also, as a result of that, continues to sell out industries like the steel industry in my riding of Hamilton Mountain?

[David McGuinty, Liberal, Ottawa South, ON]

Mr. Speaker, I would like to go back to the preface of the member's remarks. She heralded the notion that the countries with which we are entering into this almost complete negotiation are countries with strong social democratic traditions. Her language was “strong social democratic traditions”.

If in fact these are countries with strong social democratic traditions, I do not think they have expressed in any discussions, debates, negotiations or positions they have taken their view of what the member has categorized as a sellout. If they are countries of social democratic traditions, then I would expect they would negotiate in the best of faith and would put the interests of their trading partner alongside the interests of their own.

Surely the NDP is not suggesting that as a social democratic party that does not believe in the free market, only it can understand what is happening in terms of the Hamilton steel industry. The problem is that the NDP keeps pushing and pushing, not because it would like to see a carve-out. Once there is a carve-out, it sets a very interesting precedent. It is risky business and the question becomes, what is next to carve out?

I think what the NDP is really saying, and it should level with Canadians and tell them, is that it does not believe in the expansion of rules based trading systems; it does not believe in the international trading order; it does not believe in the international economic order; and it does not believe in private capital flows. It should say so and then give us an alternative vision of the world and the order that we ought to be pursuing.

Instead of trying to scare Canadian families and workers from the steel industry and beyond, I think it should--

[The Acting Speaker, Conservative, Andrew Scheer]

Questions and comments, the hon. member for Hull—Aylmer.

[Marcel Proulx, Liberal, Hull—Aylmer, QC]

Mr. Speaker, I congratulate the member for Ottawa South. It is refreshing to hear from an expert on the matter.

I would like him to elaborate on his concerns about how supply management could be affected by this agreement. We all know that the current Conservative government will not go to bat for supply management. I would like to hear an expert opinion on this subject.

[David McGuinty, Liberal, Ottawa South, ON]

Mr. Speaker, I will just say that the government has had a terrible record concerning supply management in the last 30 months.

In Canada, we have already seen the dismantling of the call for tenders system for our aboriginal companies and communities, for example. There have been a number of situations where backroom deals took place, where the way in which the government carried out a call for tenders was compromised, and where the participating companies were complaining more and more about the tendering system.

It is up to us, as the official opposition, to pay close attention to what the government does with this free trade agreement.

[John Maloney, Liberal, Welland, ON]

Mr. Speaker, I am very happy to speak to Bill C-55.

I am a member of the Standing Committee on International Trade. The free trade agreement between Canada and the states of the European Free Trade Association, which are Norway, Iceland, Liechtenstein and Switzerland, was considered by our committee and I would like to make some comments on our findings.

First of all, I think we should look at the trade statistics between our countries which suggest that an agreement with the EFTA countries is of key importance to Canada.

We should note that the EFTA countries are the world's 14th largest merchandise traders and Canada's fifth largest merchandise export destination. They are key players. Two-way Canada-EFTA non-agricultural merchandise trade amounts to $5.6 billion. Canadian exports to EFTA totalled $5.1 billion in 2007 and include nickel, copper, pharmaceuticals, machinery, precious stones and metals, medical devices, aluminum, aerospace products, pulp and paper, organic chemicals, autos and parts, art and antiques. It covers a wide range of exports affecting many different areas of our country and affecting many different sectors of our economy.

Canadian imports from EFTA totalled $7.4 billion in 2007 and include mineral fuels, pharmaceuticals, organic chemicals, machinery, medical and optical instruments, and clocks and watches.

Canadian foreign direct investment in EFTA was $8.4 billion in 2006. EFTA foreign direct investment in Canada amounted to $15.6 billion in 2006.

This is certainly an agreement to be reckoned with.

I would like to go back to the considerations of our committee in our study of the agreement. I will give some of the history on this agreement.

In January 2008 Canada signed a free trade agreement with Switzerland, Norway, Iceland and Liechtenstein. The group is collectively called EFTA, the European Free Trade Association.

The Canada-EFTA agreement is the first agreement to be tabled in the House of Commons under the federal government's new policy of allowing members of Parliament the opportunity to review and debate international treaties by tabling those treaties in the House of Commons for 21 sitting days.

The House of Commons Standing Committee on International Trade took this opportunity to conduct its hearings on Canada-EFTA in order to contribute to these discussions.

It has been actually 10 years since a Canada-EFTA trade agreement was first proposed with formal negotiations beginning in 1998. Unfortunately they hit an impasse in 2000 on the issue of treatment of ships and industrial marine products. These issues are still of concern to some in this country.

Concerns were expressed then over the possibility that free trade with EFTA would require Canada to remove its 25% tariff on ships and expose the Canadian industry, which was already struggling with excess capacity to increase competition from subsidized Norwegian producers.

It should be noted, however, that in the time since those concerns were expressed, Norway reported that it has stopped subsidizing its shipbuilders. In fact, His Excellency Markús Örn Antonsson, who is the ambassador of Iceland to Canada, noted that several attempts were made to break this impasse but negotiations did not resume until 2006.

In June 2007 the two sides announced that negotiations were completed. In January 2008 the agreement was formally signed in Davos, Switzerland.

The Canada-EFTA free trade agreement is rather modest in scope. It is a first generation free trade agreement focusing on tariff elimination and trade in goods. Unlike NAFTA, for example, CEFTA does not include any substantial new commitments to investment services or intellectual property. These issues, as well as most safeguards, anti-dumping and countervailing duties will continue to be addressed by the World Trade Organization. However, as the committee heard, there are provisions within the agreement to allow for these issues to be revisited after three years, should the two sides wish to do so. As a consequence, it is not as controversial as some of the other free trade agreements we have dealt with.

The CEFTA is comprised of four linked agreements: a main trade agreement and three bilateral agreements on agriculture between Canada and Norway, Iceland and Switzerland, respectively. Liechtenstein is covered in the Canada-Switzerland agreement. Under the terms of the main agreement, tariffs on all non-agriculture products will be eliminated immediately upon entry into force of the agreement. The only exception is Canadian ship tariffs. Tariff reductions in agriculture are country-specific, as will be discussed later.

With respect to ships, boats and floating structures, the committee heard that the Canada European free trade agreement provides the Canadian shipbuilding industry with one-way protection by which Canadian shipbuilders gain immediate and full access to the EFTA market, while certain protections are maintained in Canada. It is not an unusual type of provision.

For Canada's most sensitive shipbuilding products, there will be a 15 year phase-out of Canada's existing 25% tariff. For less sensitive products, the total phase-out period is 10 years. In all cases, however, there will be no reduction in the import tariff for the first three years of the agreement.

The sole exception is for post-Panamax sized cargo ships, so named because they are too large to navigate the Panama Canal. According to officials from the Department of Foreign Affairs and International Trade, no Canadian shipyard claims to be able to lay down a hull of this size. The Canadian tariff on ships of this size will fall to zero immediately upon entry into force of the agreement, which makes common sense.

Moreover, the CEFTA also includes a safeguard mechanism which offers additional protection to the Canadian shipbuilding industry. If imports from EFTA are found to be causing injury to Canadian shipbuilders within the 10 to 15 year phase-out period, then the tariff rate can revert to the pre-free trade rate of 25% for up to three years. The committee also heard that the CEFTA does not oblige Canada to modify its buy Canada procurement policy for ships.

Addressing the issue of agriculture and agri-food products, which is another area of concern, certainly the content of the three bilateral agreements on trade and agriculture differ from one another, reflecting the unique sensitivities and priorities of Canada and the individual EFTA countries. Under all three agreements, most agriculture and agri-food products will be traded tariff-free. However, each country gained and/or limited concessions on certain key agricultural and agri-food industries.

For example, the committee heard that Canada did not make any over-quota tariff concessions on supply-managed agricultural products, but did grant to Switzerland tariff-free in-quota access to the Canadian cheese market. Canada also gained improved, but not tariff-free, market access to certain sensitive sectors in EFTA countries. These include frozen french fries in Iceland, frozen blueberries and durum wheat in Norway, and durum wheat and horse meat in Switzerland.

The committee heard that the expected economic gains from tariff reductions under this trade agreement will be modest. Tariffs on many non-agriculture products are at perhaps what I would say are nuisance levels, 2% or less, and many other products are already traded tariff-free.

Nevertheless, several witnesses anticipated an increase in trade to result from this agreement. Certain Canadian industries are expected to benefit from improved market access, particularly in agriculture where most of the major tariff reductions are found. Some industrial sectors are expected to benefit as well. These include wood and metal products in Iceland, apparel products in Norway, and cosmetics in Switzerland.

Witnesses also observed that the benefits of the CEFTA may not be limited to lower tariffs. Other potential gains include opportunities for trade diversification, enhanced industrial cooperation, and through increased interaction with the European business active in the EFTA countries, closer economic ties with the European Union.

The agreement will also put Canada on an equal footing with EFTA's other free trade partners, and will give Canada an advantage over countries like the United States, which do not have a trade agreement with EFTA.

The committee also heard that trade agreements have an important symbolic impact.

The vice-president of government relations for Bombardier, George Haynal, when he appeared before the committee, stated that trade deals create a level of confidence among investors, even if, as in the case of CEFTA, investment is not included in the agreement.

Per Øystein Vatne, first secretary to the Embassy of the Kingdom of Norway, when he appeared before us, observed that the very presence of a free trade agreement creates interest in the business community; the appetite for trade missions to Canada from EFTA countries has increased markedly since the CEFTA was announced.

In fact, many of their parliamentarians appeared here in Ottawa before our committee as the negotiations were going on.

Some witnesses, however, expressed reservations about the deal. There is no question about that. Representatives from Canada's shipbuilding industry, in particular, were concerned about the potential impact of CEFTA on their sector.

Mr. Andrew McArthur, of the Shipbuilding Association of Canada, noted that Norway's world-class shipbuilding industry is not subsidized today, but owes its present competitiveness to generous government support in years past.

For this reason, Canadian shipbuilders wanted their industry to be explicitly excluded from the CEFTA, as it is from the NAFTA. They eventually agreed to accept a long term phase-out of tariffs, but their support was contingent upon a new Canadian shipbuilding policy that included a buy Canada policy for government procurement, and the combination of two existing support mechanisms that are currently mutually exclusive: the structured financing facility, SFF as it is known, and provisions for accelerated capital cost allowances, ACCA.

The CEFTA includes a long term phase-out of tariffs and preserves a buy Canada procurement policy, but no action has been taken on the SFF or capital cost allowances as of yet. As per their submissions to the government, representatives of Canadian shipbuilders and marine workers were adamant that without combined access to the SFF and ACCA, the impact of the agreement would be devastating to the industry and would lead to job losses. In their view, this additional government support was critical if the Canadian industry was to survive increased competition from Norwegian producers.

It was noted, however, that the tariff phase-out schedule, and safeguard provisions, for marine industrial goods was particularly generous. According to the counsel for the International Trade Group, Cyndee Todgham Cherniak, a lawyer who specifically deals with international trade, the 15 year phase-out on sensitive ship products is the second longest phase-out she has ever encountered in her study of 100 free trade agreements. However, Ms. Cherniak also cautioned the committee that this abnormally long phase-out period could meet some resistance at the WTO from other major shipbuilding countries, like China and South Korea.

In addition to shipbuilding, some concern was expressed about the impact of CEFTA on supply management in agriculture. Terry Pugh, executive secretary of the National Farmers Union, suggested that the in-quota tariff cut for supply managed products might weaken the foundation of the supply management program.

Finally, several witnesses noted that no economic impact studies had been conducted to estimate the effect of the CEFTA on the Canadian economy. It was suggested that without such studies, it was difficult to judge whether or not the deal would be good for Canada.

Certainly, we are an open committee and we collaborate very well. I would like to draw to members' attention the considerations of the Bloc Québécois, who were certainly very concerned about supply management and preserving it.

Since the elimination of the 7% tariff provided for in the agricultural agreement with Switzerland will affect only the market segment that is already covered by imports, the impact on our producers would be minimal.

However, this will make it all the more important to vigorously defend supply management at the WTO. A quota increase, coupled with the elimination of the within-quota tariff would expose our dairy farmers to increased competition from countries that, unlike Canada, subsidize their dairy production. Certainly, this is a point that the current government must take into consideration.

The Bloc were also concerned about shipbuilding. It felt that the adjustment period provided in the agreement is quite long, as it is, but it will be helpful only if accompanied by adjustment and upgrading programs for our shipyards. Otherwise, it will slow their decline, but nothing more.

Of course, that hits the concerns of possible subsidization and Norway understood this very well. It began a vigorous industrial policy and built up a health industry--

[The Acting Speaker, Conservative, Andrew Scheer]

The hon. member for Acadie—Bathurst on a point of order.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Mr. Speaker, I think you will find that we do not have quorum in the House.

[The Acting Speaker, Conservative, Andrew Scheer]

I seem to see full quorum.

And the count having been taken:

The hon. member for Welland has approximately five minutes to conclude his remarks.

[John Maloney, Liberal, Welland, ON]

Mr. Speaker, there was a suggestion by the Bloc that Canada has neglected its marine industry for years. Today our shipbuilding sector has fallen so far behind that it will be necessary to work in double quick time to make it up to date, productive and financially healthy when the market opens up to complete competition.

The Bloc was concerned that the government must immediately develop an aggressive marine sector policy to allow our industry to adjust. This policy must facilitate the industry's access to capital, stimulate investment, give preference to local suppliers in government procurements and encourage ship owners to buy vessels here. The policy must ensure that our shipyards can count on a prosperous marine transport sector, both by stimulating coastal shipping and by putting some order into international marine transport.

I would like to make reference to the Canadian Shipowners Association, which unfortunately did not appear before committee but made some submissions subsequently. It is interesting from my perspective because I come from the Great Lakes area and the inland shipping domestic fleet is very important.

The core of the CSA fleet, however, the bulkers and self-unloaders are averaging 35 to 40 years old and must be replaced. A 50 year old vessel, even in fresh water, is at its maximum life expectancy. Typically, these vessels are 730 to 750 feet in length and carry 22,000 to 25,000 tonnes of cargo with a crew of approximately 20 to 22. The problem is that the replacement cost of these vessels is roughly in the $40 million to $50 million range.

Historically, many of these vessels were built in Canadian shipyards that existed in the 1960s and 1970s, but today it is suggested that the Canadian yards are not able to build these vessels required to upgrade the CSA fleet. It is significant to note that the last Canadian-built bulker was completed in 1985. These companies are faced with the challenge of purchasing new vessels offshore either in Europe or Asia.

When these new vessels are imported into Canada for use in the coasting trading, within domestic waters, they are subject to a 25% duty as we have referenced resulting in a duty of $10 million or more per vessel. This is not only a tax on the Canadian ship owners but also the end users of marine transportation. These costs are obviously passed on. Canadian industries and consumers will bear the burden.

In a highly competitive commercial environment, where a few additional cents per tonne are very significant, the 25% duty creates a competitive disadvantage for those companies. As a consequence, they would like to see the 25% duty reduced as soon as possible. I would certainly like to reference that because of their inability to appear before committee at the time.

Perhaps I could conclude with a brief summary. CEFTA is a basic free trade agreement covering trade in goods. It includes no significant provisions on matters such as services, investment and intellectual property, but does leave the door open for these issues to be revisited. In terms of market access, the benefits of this agreement to Canada will largely be in the agriculture and agri-foods sectors. Some industrial sectors will benefit as well, although in most cases tariffs on non-agricultural products are not significant.

Shipbuilding was the most contentious issue of the trade negotiations and it would appear from the debate here this evening that it continues to be. It appears that Canada was able to successfully obtain generous phase-out terms giving the Canadian industry considerable time to adjust to increased competition from EFTA shipbuilders. However, concerns were raised about the long term viability of the Canadian shipbuilding sector in the absence of additional government support.

Therefore, the Canadian government must without delay implement an aggressive marine policy to support the industry while ensuring that any such strategy is in conformity with Canada's commitment at the WTO. That is subsidization specifically.

This agreement promises modest gains in trade and could pave the way for an expanded agreement that includes subjects like services and investment. Moreover, the point of several witnesses is that the very presence of a free trade agreement could create interest within the business community to explore economic opportunities in Canada and the EFTA countries.

In addition to reducing the tariffs, CEFTA would also act as a catalyst for increased trade investment and economic cooperation between Canada and the EFTA countries.

We are certainly in support of the agreement, but we want to make sure that the agreement reflects what we heard. That is why we would like to send it back to the international trade committee for further consideration.

[The Acting Speaker, Conservative, Andrew Scheer]

It being 5:39 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper.

The House resumed from May 27 consideration of the motion that Bill C-55, An Act to implement the Free Trade Agreement between Canada and the States of the European Free Trade Association (Iceland, Liechtenstein, Norway, Switzerland), the Agreement on Agriculture between Canada and the Republic of Iceland, the Agreement on Agriculture between Canada and the Kingdom of Norway and the Agreement on Agriculture between Canada and the Swiss Confederation, be read the second time and referred to a committee.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, it is a pleasure to speak to the bill dealing with the European free trade agreement with Canada.

The bill is one that started its progression internationally in 1998 when the then government of Mr. Chrétien moved forward on deliberations with our partners and began dealing with this particular issue. The agreement was signed on January 26, 2008, in Switzerland and it was tabled in our Parliament on February 14, 2008.

The purpose of the bill is to eliminate duties on non-agricultural goods and selected agricultural products, giving Canadian exporters better access to Canada's fifth largest merchandise export destination. Many Canadians would find it interesting that the particular destination is a group of northern European countries, including Liechtenstein and Norway.

This particular free trade agreement is one that has broad support. The Liberal Party supports this particular bill. There are some concerns in a few sectors, including shipbuilding, but I think we have worked together quite well to put forth some solutions that would enable our shipbuilders in Canada to find some recourse because the phase-out of tariffs will be over quite a prolonged period of time.

We want to ensure that in Canada we capitalize on our areas of expertise, and one of those is, quite frankly, in the shipbuilding area. On the east coast and west coast of Canada and in my riding of Esquimalt—Juan de Fuca, we have outstanding individuals, fine craftsmen and craftswomen, who work in the shipbuilding industry and provide exceptional products.

Some of those have been built for our Canadian Forces. When Liberals were in government, we commissioned a number of projects, including the Orca class of boats that have been built in my riding of Esquimalt—Juan de Fuca by the shipbuilders there. Quite frankly, the product they have is superb.

My hope is that the government will work with our private sector to ensure that our capabilities will be exported and that those capabilities will find markets in other countries. It would certainly be a fine testament to the exceptional workers that we have in our country, in both eastern and western Canada, who have that ability.

There is one area in shipbuilding in particular that the government may wish to pick up on. We have a tariff on importing ships. A company in Canada that wishes to import a large vessel would pay an import duty. That duty goes into general revenue.

The government would be wise to consider, rather than putting those import duties into general revenue, to put them into a fund that would have to be matched by the private sector, which would double the size of the fund, so that those moneys could be directed toward infrastructure for the shipbuilding industry. The funds spent by the companies could then be recirculated within the shipbuilding industry. The private sector would then know that its import tariffs were going back into the shipbuilding industry.

Third, it would also increase the bang for the buck because the government would be putting those moneys in to match. The matching funds would share the responsibility between the private sector and the government, so there would be dual responsibility and a dual opportunity for both the private sector and the government to enable the private sector to compete with other shipbuilders, particularly those in northern Europe, who quite frankly have done a pretty good job of developing a fine product and are competing internationally.

However, those countries subsidize their domestic shipbuilding capabilities, and while they do it in certain ways, it is important that our shipbuilders not be under the gun or behind the eight-ball when they are competing with other shipbuilding companies in other parts of the world.

The scope of the bill is very interesting. As I said before, the EFTA countries are the world's fourteenth largest merchandising traders and Canada's fifth largest merchandise export destination.

The two way Canada-EFTA non-agricultural merchandise trade is, in total, $12.6 billion. Our exports to the EFTA were $5.1 billion last year and our imports were $7.4 billion. Our exports included areas such as the aerospace products industry and I want to take a moment to talk about the MacDonald-Detweiler issue when the government, I think wisely, made the decision to prevent that sale from occurring.

There is a challenge, though. While the MDA sale was quite rightly blocked because Canada and Canadian taxpayers had put more than $500 million into enabling MDA to be a world leader in the aerospace industry and paid for satellites that are some of the best in terms of earth monitoring capabilities, there is another side to this. There are over 1,200 scientists at MDA and unless they have products to sell and be competitive internationally, we will lose those scientists.

It took some 20 years to bring those scientists to Canada and to build and create the capabilities. It is of the utmost urgency that the Minister of Industry work with and listen to MDA to find ways to ensure that those scientific capabilities stay within Canada. If we do not, the very real danger is that we will lose that world class capability we have within MDA with the pool of 1,200 scientists to other parts of the world. In particular, we will lose them south of the border to the United States.

This is not something we can wait on for a long period of time. This is something that has to be done quite quickly. I would again urge the Minister of Industry or industry officials to meet with MDA officials to determine what we can do to ensure we do not have this loss of very highly skilled, extraordinary individuals.

The other issue I want to talk about is international trade, as this is a trade issue, dealing with the WTO and the Doha round of talks. This is very appropriate given the fact that we have a world food crisis on our hands. It has caused governments to collapse and food riots, and it particularly affects those citizens of our planet who are the poorest and most impoverished in the world. One billion people live on less than $1 a day and 1.5 billion people live on less than $2 a day. Two and a half billion people on our planet live on less than $2 a day.

What happens if our foodstuffs increase 140% in a matter of less than a few months? That is what happened with rice. This year, rice prices have increased 141%. Wheat, sorghum, corn, the staples of life, have increased significantly over the last two years. Some have even increased 25% in a day.

Most of us in our country have been somewhat insulated from the effects of that for various reasons, but for the poorest people in the world, that is not the case. People living on less than $2 a day have a choice between food and sending their children to school, food and having a roof over their heads, or food and health care. Those are the stark choices people would have if they lived in those countries in the world, more than 58, where there is endemic poverty.

The food crisis has not hit us yet in terms of prices but it will. When it hits, it is those Canadians who are least able to afford it who are going to be hurt, people who are single parents with very little money, people making minimum wage or a bit above it, and seniors on fixed incomes who live hand to mouth. The implications of this are quite significant.

What if people have to make choices within food groups? That is how it happens. As prices increase dramatically, people actually have to jettison vital food groups that are important not only for the health of adults but are critical for the development of children.

We know that the deprivation of micronutrients and malnutrition on a developing child is catastrophic. If children are deprived of micronutrients and are malnourished, the developing brain in particular is affected. Malnutrition and micronutrient deficiencies create long term cognitive, intellectual and physical disabilities that are permanent.

Children would grow up to be adults who are less than what they could be. The downstream effects of this are what? The downstream effects are that children who are deprived of micronutrients and are malnourished have long term physical, cognitive and intellectual disabilities that affect them when they are adults.

When they are trying to be employed; go to school; acquire training; live and work; act, behave and interact; all of those are negatively impeded by virtue of the fact of what happened when those individuals were children. Early deprivation has long term, profound implications not only for the individual but for society as a whole. The tragedy of it is that it is entirely preventable.

When we know that, it behooves us to start to tackle this issue in a pragmatic way. Let us talk about some of the antecedents as to why the food crisis is taking place. Demand, to be sure, is going up in countries such as India and China, pushing prices up.

Second, there is the issue of higher energy costs. Energy is required to produce fertilizers. Seeds are becoming more expensive. Availability is down. Biofuel, the conversion of foodstuffs such as corn into ethanol, which is put in our gas tanks, is also a driver to move prices up.

The last and the most pernicious area is the area of trade barriers. There is something we could do that would dramatically ameliorate the effects of food prices and that is the tariff and non-tariff barriers to trade that are dramatically impeding our ability to be able to produce the food that we require.

Imagine that the Doha round and WTO has ground to a halt. It started in 2001, I believe, and it has been sitting there moribund or endlessly going around in one big circle. The countries that are most responsible for this are those that are the richest. The countries that pay the price are those that are the poorest.

Imagine that. We have a world food crisis where some of the poorest people in the world are unable to put food on the table and we, as developed countries that are the richest countries in the world, are actually doing things to prevent people who need food, who live on less than $2 a day to feed their children and themselves.

Why has the government not demanded an emergency series of debates at the WTO to move the Doha round forward and to implement the Doha round of agreements? This is something that our new Conservative government has fallen flat on, among many other things on the international stage. Why has the government not done this, instead of sitting back? Why has the government not taken a leadership role to address this international challenge?

Canada can do this. We can take a role in mobilizing the more than 27 agencies such as the World Bank, FAO, IFAD, WFP, and WTO. All of those organizations, 27 in total, are tasked with a responsibility to deal with food issues.

Canada can make a profound impact at the WTO. Canada needs to get our diplomats behind this. There has to be a sense of urgency that has to come from the Prime Minister's Office. The Prime Minister has to tell our highly competent diplomats to move this forward and get the job done. They have to get the Doha round of agreements completed and mobilize this with our international colleagues.

On the development stage, we have heard very little. In fact, we have heard nothing on this. Moneys were given. A good thing the government did was to not tie the aid and I compliment it for that.

The amount of money given by the government was $50 million more than last year, but prices have increased by 40% plus for the demands that the World Food Programme is trying to meet.

We have an increased demand but we also have increased costs. As a result, the amount of money that we are actually putting forward on this is not even able to keep up with the increases in prices. This is something that is unconscionable.

What else can happen? As I said before, some 500 million small landholders live on less than a hectare. About a tonne of foodstuffs, grain and basic products can be derived from a hectare. We know what we could do. Jeffrey Sachs from Columbia University has made some very eloquent interventions. We could double or even triple the output from these small landholders, who are some of the poorest people in the world.

Imagine if Canada were to tap into some of the extraordinary research available in the International Development Research Centre and other areas in Canada to deal with the issues of better seed quality, better access to fertilizer and markets and better agricultural practices, water security and irrigation techniques. That combination could be used quite significantly to triple the output of foodstuffs from small landholders. What a remarkable thing we could do if Canada were to take up that leadership role.

I would be remiss if I did not draw attention to two areas of excellence within CIDA. One is the micronutrient initiative in which Canada plays a leadership role. I urge the government to work with the Minister of International Cooperation and other partners to support this initiative because micronutrient deficiencies have a profound impact on developing children.

CIDA has discovered high protein, high caloric, high energy bars. The government could work in this area as well because these bars would be effective during a food crisis.

I also want to talk about food security and, in particular, the fisheries issue.

A good chunk of the world relies on fish for food because it is an important source of protein. Ninety per cent of world fish species have been removed from the oceans, particularly large fish species like tuna and shark. This is a catastrophe. Our oceans are dying. Dr. Sylvia Earle from Woods Hole in Massachusetts has done an excellent job of articulating this. She calls it the dying oceans. Why is the government not dealing with this catastrophe?

I will give the House an example. As draggers fish, they destroy the beds upon which fish reproduce. Draggers are horrible, destructive elements in fishing and they are creating an environmental catastrophe. If Canada were to work with our partners to ban dragging, that would go some way toward addressing the problem of our dying oceans. The reason I mention this is because this is part of international trade agreements and trade negotiations.

We have heard nothing from the government on all these issues. We have given the government a number of constructive solutions on which it could act. It could act on the food crisis. It could act through international development and trade. The government could ensure that Canadians are not going to be affected by the storms that are wafting over the world right now. So far we have been somewhat protected, but that is not going to exist much longer.

These are big international issues that demand international action. Our country can act with authority and knowledge. I implore the government to demonstrate some leadership and do this for our citizens and for the world.