Foreign Affairs Committee on May 17th, 2006

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Martin.

Mr. Ambassador.

[Michael Wilson]

On the WHTI, we have discussed the possibility of a delay, as I indicated when I answered previous questions, but until we get the specific information on the status of the technology, the infrastructure, the distribution of these documents, it is more difficult to be precise and ask (a) should there be a delay, and (b) how long should that delay be?

We felt the best thing we could do is engage in a working group, as I described in previous responses. I should say to you that we used the example of a convention being deferred or being moved to another city in the United States, away from British Columbia, as an example of what was happening, why time was of the essence for us to get the answers to allow us to make the proper judgments, because there's a time delay or an advance notice that you need for convention planning. That made an impact. I can tell you directly it made an impact on our counterparts across the table.

On softwood lumber, your question was, does this affect the use of dispute settlement mechanisms under NAFTA?

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

Does it affect the veracity of future--

[Michael Wilson]

The answer is no. The dispute settlement mechanisms in NAFTA will continue operating as they have. Both countries will still be able to call upon those mechanisms, as you've seen quite recently in the way the corn dispute was resolved.

On chapter 7, with Darfur, there has been dialogue at the United Nations with a number of countries on who would be able to commit forces, who is in a position to commit support personnel who would be able to advise on technology, communications, training of soldiers, and the logistics requirements. There has been active discussion on those aspects of it.

On the specific commitment of military personnel in the form of combatants, peacekeepers, that may have been discussed. I'm not familiar with that, since my responsibilities don't extend to the United Nations. I do know there have been discussions on those earlier matters that I just referred to.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, Mr. Martin and Mr. Wilson.

Mr. Obhrai is next for five minutes, please.

[Deepak Obhrai, Conservative, Calgary East, AB]

I have one question for the ambassador, and then I will give it over to my colleague, Peter, for the second question.

Ambassador, once more, congratulations on your appointment. Your appointment was well received in Canada, considering your background.

I have just one question. The issue of passport control has become quite an important one for Canadians, specifically when a family of four has to have passports to go across...it costs quite a lot of money, and all these things. In the last couple of days we have seen a lot of governors of bordering U.S. states joining in the voice to ease the flow of travel, and against the passport issue, I would think--with our own premiers as well.

I wonder how much influence the governors in the border states have with the White House to really make a change and address this issue. What is your opinion on that one?

[Michael Wilson]

Thank you very much, Mr. Obhrai.

You're quite right that we have a number of allies in the governors or members of Congress from those border states. That also stretches down into the southern states, because people in those states see a lot of Canadians going through in the winter months. So we do have supporters. We have like-minded people and we talk to them a lot. We work with them in trying to get a better understanding of the issues to which we should be responding.

Your specific question was on whether the governors have influence. Yes, they do. You bet they do. They are the leading legislators in their states. We shouldn't lose sight of the fact that in the past 25 or 30 years, every President but one has been from the governor's office. So governors talk to each other and are very sensitive to points of view that are being expressed.

Do we work with the governors and have we been in touch with them? Yes, particularly through our consulates across the country, we spend a lot of time with them. I'm going to be meeting with a number of the governors on May 31 in Gimli, Manitoba. It's an annual get-together between governors and premiers, and I've been invited to attend. I'm sure that WHTI will be an active topic of discussion there.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Wilson.

Mr. Goldring, you have two minutes.

[Peter Goldring, Conservative, Edmonton East, AB]

Thank you, Mr. Ambassador.

Perhaps you could advise us, as a bit of an update, on the BSE and the cattle border closing that we experienced for a number of years. Is the border fully open yet? We basically had one cow that was sick and the border was closed for several years. Many people wondered why.

Has there been any intervention work done to have a quick-react team, so if this scenario should happen again there will be more direct action and the situation can be remedied an awful lot quicker than the two or three years it took?

[Michael Wilson]

I attended a meeting where Minister Strahl and Secretary Johanns, the Secretary of Agriculture in the United States, met, and one of the key points they discussed was BSE. A very interesting point that they both stressed in the course of that discussion was the importance of science in the decision-making on both sides of the border.

The secretary was quite complimentary about the speed with which Canadian authorities identified a problem and were able to isolate the nature of the problem using scientific methods, and he made the point that this sort of response allows us to keep open the borders as effectively as we can.

I think you're aware that there is a distinction between cattle under 30 months and cattle over 30 months. That has not been resolved--cattle over 30 months--and that trade is not taking place at this point. But we're hopeful that it will change shortly.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Ambassador.

Madame Bourgeois, cinq minutes.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Mr. Ambassador, I am going back to the issue of softwood lumber.

Earlier, you replied that the industry wanted to see a settlement with the United States. I simply want to point out, first of all, that our corporations agreed, because they were at the end of their ropes, and because many of our sawmills had been sold. People thought that it was time for something to be done.

You are, nonetheless, the father of this agreement. You were there when it was negotiated. In the dispute on softwood lumber, Canada has always won. Decisions have all been in Canada's favour.

Why did we accept a cut-rate agreement when we were right? Does that mean that the dispute settlement mechanism does not work and will never work with the United States? That is my first question.

Secondly, the very day the agreement in principle on softwood lumber was reached, the Americans filed an extraordinary challenge under NAFTA, with the hope that NAFTA would not be able to provide a definitive ruling that our forestry system does not constitute a subsidy. But Washington, which is afraid that this body will not provide its ruling before the conclusion of the agreement, decided not to appoint a judge, which has had the effect of delaying the setting up of the tribunal. We understand their logic, but we have now learned that Canada decided not to appoint a judge either. I want to know why.

I will conclude by repeating the question that I asked you earlier. Under the terms of the softwood lumber agreement, will the interest reimbursed to the corporations be based on the $4 billion amount to be returned to them, or on the $5 billion that the corporations paid?

Those are my three questions. Thank you.

[Michael Wilson]

There are three questions, Madame Bourgeois. Let me respond to each.

I think I've responded, actually, to the first one: will the dispute settlement mechanism work in future? There's no reason why it can't; however, I have to say to you, to be quite direct, that it has been a frustration for Canada and for the Canadian lumber industry that the United States has not responded positively to decisions that were being taken. They had their reasons and explained their reasons. We disagreed with those reasons, and the fact that there was that disagreement about the nature of some of those decisions has led to the protracted nature of this particular dispute.

It's for that reason that we felt, and many in the industry and in the governments felt, we should go the negotiation route. Admittedly, we would have preferred to have the results we thought could and should have come with the other route, but that's in a sense the world we live in with the softwood lumber business.

On the extraordinary challenge, the U.S. had to apply for an extraordinary challenge by April 27 if they were going to maintain their legal options. We indicated to them that we had obligations too; that Canada had made commitments through the government to the industry that if there were not to be a satisfactory resolution on this, then we would have to provide some support in one form or another to the industry. We said we have to keep our options open on that.

In effect, we have both kept our options open on further steps we might take, which in both cases will expire at the time this agreement comes into effect, hopefully in the next couple of months.

On the third, the interest will be added to the pot. The Americans will receive a billion dollars of that amount, and the balance will go to Canadian producers. Depending on how long it takes to get this whole thing resolved and the moneys repaid, those deposits will continue to earn interest.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Wilson.

Mr. Allison, you have five minutes, please.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Thank you, Chair.

I want to add my congratulations, Mr. Wilson, on your appointment. I think Canada is in great shape, and I certainly look forward to what you will do and what you've already done in the short period of time you've been there.

If you could help us with the frame of reference around the softwood lumber, the question I have is this. If we didn't solve this problem today—we have $5 billion that the U.S. has been sitting on—what potentially could the downside be to letting this drag out through litigation over a couple of more years?

I realize maybe we're taking less than we would probably like to take at this point in time. What we don't always consider is that if this dragged on for a couple of more years—not to mention the uncertainty, not to mention the fact that jobs could be lost.... My question is, what kinds of dollars would we be looking at potentially, in your opinion, as we move forward, if this were to be constantly tied up in litigation and tariffs, etc.?

[Michael Wilson]

I can't put a number on it, Mr. Allison. I don't have it at the top of my head.

Also, we don't know how long this could have gone on for. The legal advisers were telling us that with various forms of appeal, it could have taken another year or two. And because there's a strong difference of opinion on the part of the two industries, there could have been a launching of what we call Lumber 5. Who knows how long that would have gone on for?

So we felt—and many people in and around the industry and the provinces felt—that it was really important to get this behind us. On a number of occasions, Minister Emerson said the way to proceed became clearer and clearer, and negotiation was the way to resolve this. The important considerations were to get a seven- to nine-year period of stability ahead of us, during which the rules of the game are known, and some new provisions—and I've described these, so I won't repeat myself.

Some people have asked the question, was all the litigation for nought? Again, I draw your attention to Minister Emerson's comments that the litigation provided us with the leverage to move ahead in the negotiation in a way that allowed us to get a settlement that was reasonably satisfactory to Canadian producers. So I think the decisions are pretty clear as to why the uncertainty was significant, and the cost could have been fairly large.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Thank you.

As a follow-up, Mr. Van Loan talked about the WHTI, and I guess we automatically make some assumptions because it's been mentioned that a passport would be required. There are other options the U.S. administration is presently looking at that we've brought to their attention. Is that correct? Are they looking at other avenues, such as photo ID?

I realize that they've got a NEXUS program in place. So if I'm correct in what I've heard, we'll be looking at multiple approaches to getting across the border, such as fast-tracking certain individuals who've got a card and have used it for trade or other means. But there's also the possibility of trying to reduce some of the requirements. I realize the U.S. government is going to have to make that decision, but does that seem to be where we're going?

[Michael Wilson]

It's very clear that—don't hold me to the time here—shortly after the legislation was passed, the United States realized that the option of requiring everybody to have a passport was not practical. It doesn't lend itself to fast-reader technologies, with which you can put a card in front of a reader and swipe it, or whatever the technology would be.

It was more practical to have a new type of document. As I said earlier, it could have been a birth certificate, a driver's licence, or other forms of documentation that people readily have. Right now, it seems that people are looking at a new type of card, although there is still discussion in the United States about having an upgraded licence. That requires time because the states would have to produce the licence. It would have to have more capabilities than current licences, and it would have to be consistent across the country. So there are complications, but some people see it as the best way to go.

These are the options being reviewed, and hopefully we'll have a decision from Homeland Security and the State Department as to what the preferred option is. Then we can take it from there. As the legislation provides, it may well be a combination. So we still have some work to do, and they have some more work to do, before we see the conclusion.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Ambassador.

I should mention that in the orders of the day you were scheduled for one hour. I just want to check. Can we extend that a little bit and get a few more questions in? You seem to be handling them quite well, and the questions are coming....

[Michael Wilson]

If I miss my plane tonight, you're in trouble.

[The Chair, Conservative, Kevin Sorenson]

We wouldn't want that to happen, but we would find a way to get you back home, I'm sure.

Mr. Julian, five minutes, please.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you very much, Mr. Ambassador, for staying for a few minutes longer. I appreciate that.

I'd like to come back to the issue of dispute settlement that a number of my colleagues have raised as well, because, if I recall, back in 1992 you were one of the champions of the issue of having a binding dispute settlement mechanism. I can quote from the Commons debates, but some of the comments you made in 1992 were that the maintenance of binding dispute settlement is absolutely critical to North American free trade negotiation and that the binding dispute settlement mechanism is a centrepiece in Canada's approach on the free trade agreement with the United States.

You did mention earlier that you don't think the dispute settlement is affected, though I don't believe any serious observer actually agrees with you on that. In fact, what has come out consistently is that dispute settlement is effectively dead. We have a mechanism--chapter 19--that could have been invoked by the Liberals back in August as non-respect for NAFTA's binding dispute settlement mechanism. I'm wondering, once you assumed your position, whether or not you advised the government that they should be invoking chapter 19, that in fact using the dispute settlement mechanism, which was open and available to us, those rights, was an option. Did you advise them of that?

[Michael Wilson]

The dispute settlement mechanism has been used. I said earlier that I'm disappointed as to how this has proceeded as it relates to lumber. There are differences and different interpretations between the United States and Canada on this. I'm not sure whether this is the place to go into the technicalities of that, but there were differences of opinion. They felt they were dealing with it in an appropriate way and we felt we were dealing with it in an appropriate way as a country.

Having said that, the fact that there have been difficulties as it relates to this industry doesn't toss out the whole chapter 19. As I indicated in an earlier response, we've just seen it working quite effectively as it relates to corn. I think it's important that both countries try to maintain the integrity of this dispute settlement system and maintain it as an effective tool in dealing with disputes.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

I'm speaking specifically to non-compliance. In the question of corn, we don't have the systematic non-compliance, which is what we've seen with the United States, continuous appeals on softwood lumber, even though we win. Under chapter 19 provisions we would have had, as I know you're aware, 180 days to invoke non-compliance. That is specifically my question. Was that ever an option? The Liberals certainly did not use the chapter 19 provisions. Was that ever discussed? Was that ever communicated to you, or did you ever communicate to Ottawa that it was an option that should be considered?

[Michael Wilson]

The decision was taken earlier on in the mandate of this government that a negotiation was the appropriate way of proceeding to try to get this behind us once and for all and in as permanent a way as possible. Based on that, we proceeded with the negotiations in the direction that we have spent a lot of time discussing today.