Fisheries Committee on Feb. 28th, 2008

[Dr. Rashid Sumaila]

We should also remember that these rules apply to other countries, so we are giving up some flexibility and other countries are also giving up some flexibility. A lot of the fishing that is done by Spain along Canada's exclusive economic zone wouldn't take place if fuel subsidies were not there.

[Peter Stoffer, NDP, Sackville—Eastern Shore, NS]

China, for example, has a lot of state-controlled companies, right, so—

[The Chair, Conservative, Fabian Manning]

Okay, thank you, Mr. Stoffer.

Mr. Allen.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you, Mr. Chair.

If I have any time left I'll pass it over to Mr. Keddy. I'm hoping I won't, but there's that will.

I want to start with a question of clarification, and it follows the questions Mr. MacAulay started with respect to the capital gains tax exemption, as well as the employment insurance program.

My understanding, at least in discussions that I've heard around this, and I'm by no means a trade expert, is if a program is generally available—and the capital gains tax exemption for business is, as it applies to farmers, to fishermen, to small business—then those programs are generally seen as an entire economy program and therefore not specific per se to the fishermen and therefore would not be a subsidy. The same thing with employment insurance. We have many seasonal industries. In Atlantic Canada, we're basically driven by seasonal industry. So my understanding is it applies to most of our industries, so therefore it would not be a subsidy.

Can you clarify that for me, because you took me down the red-box path when I thought it was a green-box path.

[Dr. Rashid Sumaila]

I tried to say this in the beginning when I defined what “subsidy” is. It's exactly what you say. The key thing is a few sectors benefit more when it's economy-wide. Like EI, if there are the same rules for all Canadians, then it's not a subsidy.

[Dr. Marc Bénitah]

The answer is very clear. It is clearly written in the annex that the subsidy is to the extent that it is specific. If you have a program that is generally available for all the economy, for agriculture, for every industry, and it's also applied to fishing--for example, employment insurance is not specific, so it couldn't be challenged. So you could be optimistic in this regard.

There is an ambiguity there: what is specific exactly in the context of fisheries? For example, if you have a subsidy available to all the fishing sectors, the issue is to know it is enough not to be specific, to be available for the same thing. For example, we don't know if a subsidy is available for all the agriculture sector if it's so wide that it's not specific. If it's available to all the economy, no problem, but if it's available only to all the aspects of the fishing industry, there is an ambiguity here for sure. It's exactly the same as for the agriculture sector.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you very much.

Uruguay's ambassador put this text together on November 30, 2007, and I find I'm having a hard time grasping this. Previous testimony talked about quite a number of countries, including EU countries and Japan, that support our position on some of these things, like port infrastructure and not subsidies, and we believe we're going to be able to get these folks onside.

I'm puzzled. When an ambassador puts together a working document that presents a possible compromise and this many countries appear to be in line with our position, who's on the other side of this position who could really put us in a tough spot? I would like to understand who that is. Do we really think we're going to lose the situation on this text?

[Dr. Marc Bénitah]

It's a political economy question.

My impression is that the only real debate now is for developing countries, countries like India, for example. One aspect we didn't talk about is that even when something is permitted, you have to have fisheries management. For Canada it's not a problem, but for many developing countries it's going to cost a lot.

For example, the issue of port infrastructure: is there leeway for Canada to have something modified about that? My impression is no, it's too late for that. For developing countries, perhaps they could.

Remember, in about two months, in April, we will have a general assembly of the WTO. Nothing about port infrastructure is going to change in the draft text in these two months. That's my impression. The only thing that could change is something for developing countries.

[Dr. Rashid Sumaila]

I think you're talking about New Zealand, Australia, the United States, and Brazil, which is a developing country, really supporting this in general. Most countries will say the structure of the draft is reasonable, but that they have concerns. I think Canada is probably along those lines.

These are the countries that are generally happy to some extent with what is down here.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

You've led me to my last question.

You've talked about developing countries, and I want to ask you about the special and differential treatment to developing countries. Business is pretty smart. They're going to go to where the capital is going to be the cheapest. You also talked about the pirate fishing. Is this going to create a flow of business to operate where they're going to get a subsidy and then fish out of those developing countries and create more pirate fishing?

[Dr. Rashid Sumaila]

The rules as they stand are quite strict on the conditions under which even the developing countries can give subsidies. You mentioned one. You have to have a management system. There are rules that hopefully will avoid that from happening. I agree with you that businesses are good and always find ways, but there are rules to make it very difficult for them to do so.

[Dr. Marc Bénitah]

There is perhaps an important detail here. The subsidy is targeted according to the country that gives the subsidy, not the flag of the boat. For example, if Canada gives a subsidy to a boat that has a Panamanian flag, the subsidy is targeted. It is very clear in the text. What you are talking about as leeway is limited. We target the country that gives the subsidy, so flying another flag won't help. I think that is important.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Okay. Thank you.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Maybe we could take a look at what we've clarified already.

The capital gains and employment insurance shouldn't be caught up under the umbrella at the World Trade Organization talks. They should be open.

[Dr. Rashid Sumaila]

They should be open.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

They shouldn't be countervailable. They shouldn't be put on the table, because they are countrywide.

[Dr. Rashid Sumaila]

That's right, if they are countrywide.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

The issue I'm wondering about is our conservation-based fishery. We have a total allowable catch in every species; we don't have a huge foreign fishery inside our 200-mile limit. I'm not quite certain why our treatment of port infrastructure.... It's not all port infrastructure; it's strictly fisheries infrastructure, and there is a fair amount of existing private infrastructure that the government has no investment in whatsoever. Why would that be treated as a subsidy to the fishery, when the fishery's conservation-based?

Is that an argument?

[Dr. Marc Bénitah]

If the subsidy is for management issues, it's allowed. If the subsidy is directed to the management of the fishery--for example, the environmental impact or something like that--it's in the green box.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

I'll ask it a different way.

On our port infrastructure, the fishermen fishing out of small craft harbours are fishing inside the 200-mile limit. They're not fishing in another country. They are fishing in a conservation-based fishery with the TAC. Why would they be treated the same? If the intent here is to prevent overfishing, especially by foreign boats in international waters or by foreign boats off west Africa or wherever it happens to be, we should be treated differently because we are a different fishery.

[Dr. Rashid Sumaila]

May I rephrase your question? Do you mean that if we have good management, then why worry about subsidies to the ports? Is that essentially what you are asking?

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Yes.

[Dr. Rashid Sumaila]

This is a point I hear a lot. People ask me that.

If you have perfect, excellent management, then it shouldn't be a problem--

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

I'm not saying it's perfect.

[Dr. Rashid Sumaila]

Very good; usually they are not.

There is a relationship between what management you can put out there and the amount of capacity you have out there. If it is too much capacity, you can see politicians know about this; when there is too much capacity, people are going to complain. It is going to be painful to do something about the fishery, and the tendency is actually to push the system down. That's why it is probably a good thing not to allow this to happen in the first place.