Fisheries Committee on Feb. 28th, 2008

Evidence of meeting #15 for Fisheries and Oceans in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was wto.

A recording is available from Parliament.

On the agenda

Operation and Maintenance of Small Craft Harbours

Committee Business

MPs speaking

Also speaking

Marc Bénitah Professor, Université du Québec à Rimouski, As an Individual

Rashid Sumaila Professor, University of British Columbia, As an Individual

François Côté Committee Researcher

Clerk of the Committee Ms. Julia Lockhart

9:40 a.m.

Professor, University of British Columbia, As an Individual

Dr. Rashid Sumaila

The reason we say this is that if the income support is designed properly, it can actually help fishers without leading to overfishing, so it is good. But if it is not designed properly, it can actually lead to overfishing. EI, employment insurance, has been cited by some researchers as actually tending to encourage overfishing. Because the way it was designed before--I think there have been some modifications recently--it encouraged fishers to keep trying to fish, even when they didn't make money, to meet targets in order to get their EI. In those cases, it just led to more capacity than there would be.

So that is where we stand in our report in terms of what income support can lead to.

9:40 a.m.

Liberal

Lawrence MacAulay Liberal Cardigan, PE

Okay, but would the capital gains tax exemption and all this play into the same role?

9:40 a.m.

Professor, University of British Columbia, As an Individual

Dr. Rashid Sumaila

You said the capital gains tax.

9:40 a.m.

Liberal

Lawrence MacAulay Liberal Cardigan, PE

I mean the exemption for fishermen.

9:40 a.m.

Professor, University of British Columbia, As an Individual

Dr. Rashid Sumaila

Oh, yes. Another key point about subsidies is that when you give one sector an advantage vis-à-vis the rest of the economy--if the rest of the economy is paying capital gains tax and the fishery sector is not--that is a subsidy.

9:40 a.m.

Liberal

Lawrence MacAulay Liberal Cardigan, PE

The small craft harbours repair, the $100 million that goes in every year--and everybody here at this table is looking for more money to be put into this program--would look to me like that's in the red box too. It could be considered a subsidy that is illegal according to the WTO, should we agree to it.

9:45 a.m.

Professor, University of British Columbia, As an Individual

Dr. Rashid Sumaila

Yes, it could be.

9:45 a.m.

Liberal

Lawrence MacAulay Liberal Cardigan, PE

In fact, it is already in the red box.

9:45 a.m.

Professor, University of British Columbia, As an Individual

Dr. Rashid Sumaila

Yes.

9:45 a.m.

Professor, Université du Québec à Rimouski, As an Individual

Dr. Marc Bénitah

Please, I would like to add that the category is at least subsidies that do not have any meaning in the WTO, so it's not a good idea to answer these questions by, for example, saying this subsidy is ugly--you don't find this word.

The answer to your question on income support is of course that it is prohibited. There is no doubt about that. If you provide income support under, for example, a target for the--

9:45 a.m.

Liberal

Lawrence MacAulay Liberal Cardigan, PE

But, sir, that would include everything I indicated: small craft harbours repair, capital gains tax exemption--

9:45 a.m.

Professor, Université du Québec à Rimouski, As an Individual

Dr. Marc Bénitah

Yes.

9:45 a.m.

Liberal

Lawrence MacAulay Liberal Cardigan, PE

--employment insurance, gas tax cards.

9:45 a.m.

Professor, Université du Québec à Rimouski, As an Individual

Dr. Marc Bénitah

Yes, it's an operating cost, and every time you have a tax exemption, it's a subsidy according to the WTO, because it's explicitly written.

I would like to add another thing, please. When you discuss the subsidies in the WTO, you have to take the technical definitions, because sometimes economists for their own reasons take a very broad approach to what a subsidy is. But from a legal point of view, of course, you have to have the technical definition of subsidies, and that means you have a financial contribution by the government, and you have a benefit for the recipient. For example, a tax exemption is clearly a subsidy, so it would be in the red box without any doubt.

9:45 a.m.

Liberal

Lawrence MacAulay Liberal Cardigan, PE

Just to confirm, everything else that I've mentioned will also be in the red box.

9:45 a.m.

A witness

Yes.

9:45 a.m.

Liberal

Lawrence MacAulay Liberal Cardigan, PE

So what does this cover? What do we do? What involvement do you feel we had to this point in order to let this type of thing happen?

To me and to the people I represent this is not a problem--it's a disaster.

9:45 a.m.

Professor, University of British Columbia, As an Individual

Dr. Rashid Sumaila

It's a disaster?

9:45 a.m.

Liberal

Lawrence MacAulay Liberal Cardigan, PE

Yes.

9:45 a.m.

Professor, University of British Columbia, As an Individual

Dr. Rashid Sumaila

In what respect, sir?

9:45 a.m.

Liberal

Lawrence MacAulay Liberal Cardigan, PE

In the respect that the fishermen end up with no money.

9:45 a.m.

Liberal

Gerry Byrne Liberal Humber—St. Barbe—Baie Verte, NL

Anyways, we're here to question the witnesses, not to....

9:45 a.m.

Professor, Université du Québec à Rimouski, As an Individual

Dr. Marc Bénitah

Excuse me. You know I didn't have the time to talk about it, but there is a second box—the box of subsidies that are not prohibited. There is leeway here, and there is some room to manoeuvre to help fishermen, but not in the way of the red box. It's important to have a look at the non-prohibited subsidies, because the goal of this box is to avoid the disaster you talk about.

You want to know what is....?

9:45 a.m.

Liberal

Lawrence MacAulay Liberal Cardigan, PE

In what way could that happen?

9:45 a.m.

Professor, Université du Québec à Rimouski, As an Individual

Dr. Marc Bénitah

Perhaps, if you want, I could tell you what is in the--