Foreign Affairs Committee on March 9th, 2009

[The Chair, Conservative, Kevin Sorenson]

Good afternoon, everyone. This is meeting number eight of the Standing Committee on Foreign Affairs and International Development, Monday, March 9, 2009. It is also Commonwealth Day. I think it's the 60th anniversary of the Commonwealth.

We welcome you here. We're continuing our review of key elements of Canadian foreign policy.

Today from the University of Toronto, we have Stephen Clarkson, professor of political science. From the University of Ottawa, we have Mr. Donald McRae. He is the Hyman Soloway professor of Business and Trade law. Also, appearing as an individual is Carl Grenier, associate professor with the department of political science at Laval University. Welcome.

Our committee provides an opportunity to our guests to open for approximately 10 minutes. We will then go into the first round of questioning. I'm not certain if you've drawn straws or whatever. I did mention Mr. Clarkson first, so if that would be all right, we would proceed with Mr. Clarkson.

[Prof. Stephen Clarkson, Professor, Political Science, University of Toronto]

Thank you very much, Mr. Chairman.

It's a great privilege to have the opportunity to exchange ideas with the elected representatives who govern me. But it's a bit of a challenge to reduce 40 years of researching and teaching on this question down to 10 minutes.

So let me make three sets of points. The first couple of points are about what has changed--I started working on the Canadian-American relationship in the late sixties--followed by a couple of really basic features of the new reality that Canada faces in North America, and then I'll end with a couple of ideas about what, perhaps, you will want to be addressing and the recommendations you'll be getting.

What's changed, particularly in the Canadian-American relationship, is how Canada has lost importance in some dimensions and gained importance in others, as far as the United States is concerned. It's lost militarily with the end of the Cold War because we're no longer on the flight path, so NORAD is no longer a critical institution. We've lost economically in the sense that Canada is a relatively much smaller country, much smaller economy, with China, India, and the other big countries growing. And we've lost politically in the sense that we don't cause trouble--and I don't mean it sarcastically--so we're not on the horizon and not on the radar in Washington.

On the other hand, Canada is more important than it was in three dimensions of security. It's obvious that with American paranoia about terrorism, Canada plays a huge role in their concerns about sealing off the country to any possible terrorists crossing the border. In terms of energy security, it's obviously also true that Canada is the biggest supplier of oil and the only real supplier of natural gas. So Canada plays a big role in American concerns about their energy security. And with the new president putting the environment on the agenda, Canada is a very important, if not entirely positive, factor in the United States' environmental security concerns, given the ambivalent role of the tar sands, whether as a source of oil or as a huge source of pollution. That's not to say that Canada has entirely lost its importance, but its importance has shifted, I think, quite significantly. That's the first big change.

The second change is the shift in the international context. In the Cold War, the Canadian involvement in the world was trans-polar, with NORAD and the threat of the Soviet Union, and it was trans-Atlantic, with the huge involvement in NATO, given the Soviet threat in Europe. Now, the major international context for Canada is continental with NAFTA and global with the World Trade Organization, which, overwhelmingly, are the most important organizations that Canada relates to in terms of dealing with the United States. So those are pretty big shifts over 30 or 40 years in Canada's importance and in the context within which it deals with the United States.

I'll talk about the present very briefly. The reality of North America, 15 years after NAFTA went into operation, is the almost surprising failure of NAFTA as a primarily economic effort to create an integrated North America. It's failed primarily because disparities have increased rather than decreased between the countries and they've increased rather than decreased within the countries.

This means that NAFTA is by no means seen as a successful achievement, certainly not in Mexico and certainly not in the United States, although it's seen much more positively in Canada. That's a huge part of the present reality. One then has to include the tremendous troubles in Mexico, with the talk from Washington of its being a failed state.

We have, in effect, in North America this disintegration, the symbol of that being the wall--in fact it's a double wall--the United States is building along the southern border. That's the first major reality that the committee will obviously have to take very seriously.

The second new reality is security, the tremendous fears in the United States about terrorists possibly crossing the border. The point I want to make there is that it puts Canada in the same boat as Mexico, like it or not. The Department of Homeland Security sees Canada as just as much, if not more, of a threat. I'm sure you all know, probably better than I--and it's not just on the right-wing talk shows--it's thought to be easier in general for people from the Middle East to get into Canada than into Mexico. Therefore, Islamic terrorists can get into Canada easier, and the threat of getting across the border is more real. The United States differentiates between Canada and Mexico, but I don't think it sees Canada in a different light in the sense that Canada, along with Mexico, is a source of threat, not through its own citizens, but from people coming into those countries, just as it is seen as a source of illegal narcotics.

Mr. Chairman, about the future, the irony of the present situation is that Canada's political and economic elite, which brought us NAFTA, is now saying we should, in effect, get out, try to disconnect from Mexico, and try to re-establish a Canadian-American relationship, which in the 1960s was thought to be special--every country thinks it has a special relationship with the United States, of course. But the current line--with former Ambassadors Dereck Burney and Allan Gotlieb and the former advisors to the government who pushed for free trade, like Michael Hart--is that we are now being contaminated by our relationship with Mexico and we should create some kind of new Canadian-American relationship that is distinct from Mexico in some way.

I'd like to address that issue because I think it's naive to try to turn the clock back, or, to use another clichéd metaphor, to unscramble the omelette. I'm sure the members here from the west will know more about the drug problems in southern B.C. than I do, but I read in The Globe and Mail--and therefore it's true--that the drug crisis in British Columbia is directly connected to the cartels in Mexico. If you read The Globe and Mail a couple of days earlier, you'd have seen another report about how the drug cartels in Mexico are directly connected to the Mafia in Sicily, which has a new business plan, namely to work with Mexico.

The point there is that it's not possible to disconnect ourselves from Mexico. It's not possible to tell Bombardier to take their aircraft plant out of Querétaro. It's not possible to tell Magna to take their 19 plants out of Mexico and go home; we're going to pretend that Mexico doesn't exist. I think the reality is that we are in the omelette.

My own view is that Mexico should be dealt with, not denied. I don't think we can deny Mexico's great problems. We can't deny either that it's a growing market for us. We can't deny that it has a population of 110 million, which is three times that of Canada, that it's going to be stronger than us in due course, and that it is already stronger than Canada is in Washington.

Before the last election, over 5,000 American citizens of Mexican origin had been elected in some capacity in state, municipal, and federal government. Some 60% of illegal immigrants in the United States are Mexican. Some 30% of legal immigrants in the United States are Mexican. In the last Congress, there was a caucus of 27 Hispanics, most of whom are Mexican.

The point is that Mexico may cause trouble within the United States, but it is taken more seriously. I think Canada needs to work with Mexico in dealing with Washington on many issues in which we have a common interest, borders being one, trade and investment rules being another.

I'll just conclude with the notion that if we had spent $20 billion not on a futile military effort in Afghanistan but on building a partnership, on helping Mexico develop its infrastructure so that it could get into a development orbit, then I think.... Anyway, that's speculation, but I think it behooves Canada to work with Mexico in dealing with Washington on many common issues.

Thanks very much.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Clarkson.

We'll move to Mr. Grenier.

I'm also aware that right at 4:30 p.m. we have a break, when we'll bring in our next witness. We also want to leave time for questions and answers.

Mr. Grenier, you have 10 minutes.

[Carl Grenier, Associate Professor, Department of Political Science, Laval University, As an Individual]

Thank you very much, Mr. Chairman.

I want to thank the committee for inviting me to speak to you today. I'll try to divide my remarks into three segments, somewhat as Mr. Clarkson did.

First, I'm going to remind you why Canada entered into a free trade agreement with the United States, which was eventually extended to Mexico. Then I'm going to talk about how that agreement has evolved in relation to Canada's priorities at the time. Lastly, I'll make a few suggestions for the future, in view of the change in context and administration in Washington.

I am well aware that this committee is the foreign affairs and international development committee and that there is a separate committee for international trade, but you will agree with me that a large segment of relations with the United States is first of all trade-related.

When Mr. Mulroney wrote to President Reagan in September 1985, he stated two objectives for Canada: first, he wanted more secure access to the U.S. market and, second, better access. What did that mean? It meant that Canada was essentially seeking that free trade agreement with the United States, which was the result of 150 years of effort, first to consolidate the gains it had made in the GATT negotiations. There were seven at the time. We wanted to consolidate those gains because, at the time, we were using contingent protection measures, such as countervailing duties in the case of subsidies, and anti-dumping duties, in cases of alleged dumping. By paying a price in terms of openness of its own market, there was an erosion of gains made by Canada with the United States. Already at the time, we had the first softwood lumber case; in fact that was more than 25 years ago. It was a very clear concern of Canada's.

The second objective was to improve access. Indeed, U.S. tariffs of approximately 4% were applied to Canadian exports.

When you take an overview, you can see that we have improved our access: most tariffs have been eliminated on both sides. In Canada, we've kept quite high tariffs on certain agricultural products because of the GATT negotiations that were conducted in the 1990s and that transformed a certain number of quotas that we considered necessary at the time for the Canadian supply management system for dairy products, poultry and eggs. Those quotas were transformed into tariffs, and, despite certain cuts, those tariffs nevertheless remained quite high. We have gained better access; we can confirm that.

Safer access meant a better trade dispute settlement system. That soon became the main issue in the 1987 negotiations, in particular, such that Canada's chief negotiator, Mr. Reisman, ultimately broke off negotiations because no progress was being made on the crucial issue, for Canada, of a better trade dispute settlement system.

Negotiations eventually resumed and we got what we call Chapter 19. That chapter established a completely new dispute settlement system. For the first time, the United States agreed that the decisions of their agencies could be reviewed by non-Americans. They didn't like that from the outset, but it must be said that, in the first phase, that of the Canada-U.S. Free Trade Agreement, the system worked well as planned, that is to say that waiting times were reduced to approximately 315 days, whereas previous time frames, in the U.S. courts, were more than 1,000 days. Costs were also cut because there were no appeals; under that system, the decisions by the panels were final.

Matters seriously deteriorated when we signed NAFTA. Was it because we added a new country, Mexico, which is a developing country? I doubt it. Instead I believe that U.S. interest groups, the very powerful lobbies in Washington, managed to convince U.S. authorities to oppose Chapter 19 systematically. A range of measures were then deployed to counter the operation of Chapter 19.

I won't go into the genealogy of all that; I believe it's already been quite well documented. Whatever the case may be, as a result, today, an average of nearly 1,000 days is required to settle a dispute. Some cases, such as magnesium, have taken 2,300 days. In the last episode, numerous softwood lumber cases took approximately 1,700 days. Obviously, in these conditions, you can't say the process has successfully met Canada's second objective. It must be kept in mind that that was the principal issue for Canada. The main issue for the United States, as we learned later, was more secure access to energy resources. Professor Clarkson just alluded to that.

So, as far as we're concerned, this hasn't worked. That's due not only to protectionist pressures in the United States and to efforts by lobbies to literally destroy what was agreed upon at the time of the first negotiations, but also to our own government. The Canadian government has engaged in a more or less wilful neglect—and I think it's been more wilful rather than less in certain cases—that has undermined the system, by not appointing, for example, panel members within the prescribed deadlines, by accepting unacceptable deadlines set by the U.S. and by never challenging U.S. decisions through the extraordinary challenge mechanism, whereas the Americans have literally made it an appeal mechanism. I don't think that's a partisan criticism, in view of the fact that a number of successive governments have also experienced wrongs, which is unfortunate. That mechanism has been eroded, and I believe we can seriously wonder whether it will be really useful in future.

I don't believe either, somewhat like Mr. Clarkson, that we can unscramble the omelette. We're in it, and so we have to do the best we can. What can we do? The new U.S. administration and the arrival of Mr. Obama have obviously raised considerable hopes around the world. Mr. Obama clearly views matters in a very broad and very practical way. The crisis in which he has found himself on arriving in the White House will probably reinforce that attitude. For example, in reading his trade policy statement, which appeared on February 27, one is struck by the fact that he puts a lot of things in the same basket. I think that, if Canada wants to be heard by the new President, it will have to take that fact into account.

The shopping list, that is to say our approach of going to Washington with a list of items of interest to us, doesn't work. However, Canada has a lot of advantages. The President himself moreover emphasized one when he came here a few weeks ago, the regulation of our banking system. We have a lot of advantages to put forward, on which we can base a new approach to the new U.S. administration. I'm thinking, for example, of a less degraded environment and of energy sources—some of which are highly polluting—that are already of considerable interest to the United States.

I think that, if we want to improve our relations with the United States, while dropping this moralistic approach we often adopt, we will literally be able to put ourselves on President Obama's agenda.

Thank you.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Grenier.

We'll move to Mr. McRae.

[Professor Donald McRae, Hyman Soloway Professor of Business and Trade law, University of Ottawa]

Thank you, Chair. I appreciate very much the opportunity to speak with you today.

I'd like to focus on a somewhat narrower issue, although it's related to some of the things Mr. Grenier has said. It concerns how Canada and the United States settle their disputes.

Obviously, you have disputes or differences with the United States all the time. Sometimes they're resolved privately. Sometimes they're resolved with a great deal of public fanfare. And sometimes they're submitted to dispute settlement processes. The question I want to look at is whether dispute settlement processes have been useful and whether there is an opportunity to expand them, or perhaps not.

I'll start with a little bit of history. Before Canada became responsible for its own external foreign relations, the United States and Great Britain did use arbitration on a number of occasions in an attempt to settle boundary and water differences on both the east and west coasts, including the infamous Alaska boundary dispute in 1903. Maybe because of that dispute, after 1903 we stopped. We didn't, in fact, have any other dispute settlement process with the United States, really, until 1984, when we went to the International Court of Justice on the Gulf of Maine maritime boundary dispute. Of course, at that time, there was a lot of concern about whether this was a good idea. What would be the political fallout from Canada litigating an issue it had with the United States? Would the United States retaliate if it lost? In fact, I think what the Gulf of Maine case showed was that we could litigate a case with the United States and we could win, and the political relationship would not be damaged by it.

The major change in dispute settlement between Canada and the United States really occurred with the Canada-United States Free Trade Agreement, NAFTA, and the WTO. NAFTA has three different dispute settlement processes that are referred to often: chapter 20, which is disputes between Canada and the United States, state to state--it's only been used once, in fact; chapter 19, which Mr. Grenier referred to, which is intended to deal with anti-dumping and countervailing duty disputes and which has come into disrepute as a result of the softwood lumber debacle, as one might call it; and chapter 11, which allows investors to bring claims against one of the NAFTA state governments.

The World Trade Organization has just one broad dispute settlement process. Disagreements over the interpretation of WTO agreements go to a panel. It has also the useful addition of having decisions of the panel potentially reviewed by appellate bodies. The process is compulsory, it has set time limits, and it's generally regarded as successful. There have been a number of Canada-United States cases before the WTO dispute settlement process.

So in the area of trade disputes there has been considerable experience in Canada and the United States with the use of dispute settlement processes. In other areas, there has been practically no experience. I mentioned the Gulf of Maine case, but it stands out as the one example, really, of the use of a formal dispute settlement process.

What have we learned from this? I think one thing we can say we've learned is that Canada is not necessarily disadvantaged by this process. The idea that the United States will always win and that we'll always lose is simply not correct. If you look at the trade disputes, it's probably rather balanced in terms of wins and losses at the WTO and in NAFTA.

Second, the idea that the United States will not comply with any ruling I don't think is borne out by the facts, if you look at the range of cases at the WTO and in NAFTA. Softwood lumber stands out, but it really is the exception rather than the rule. I won't dwell on softwood lumber.

The third point is that not every dispute is susceptible to being sent to arbitration or to a court. Sometimes that is not the best way to deal with a dispute. I would illustrate this by reference to the Pacific salmon dispute I was involved with in the late 1990s. There, it seemed, in the mid-1990s, that Pacific salmon was completely intractable. We couldn't agree on catch allocations. Passions ran high on the west coast. There was a blockading of an Alaskan ferry in Prince Rupert. At that time, it was argued that we should submit the dispute to arbitration. The United States was not prepared to accept arbitration, and we had no way of forcing them to arbitration, as we could have under a trade agreement if it had been a trade dispute, or at least under the WTO.

Even if we had forced the United States to arbitration on that issue and had won, I'm not convinced that the United States would have complied. I'm not saying that because I think the United States does not comply with its international obligations. I think it really relates to the nature of the dispute. That was a very complex dispute involving competing interests in the domestic fishery in the United States, competing interests between Alaska and the State of Washington, and the tribal fishery. They were interests that the United States federal government simply was unable to reconcile. Therefore, it was unable to get itself into a position in which it could accommodate the potential outcome of any kind of arbitration.

So I think in many respects we can draw a parallel between Pacific salmon and the softwood lumber dispute. Both sides had quite different interpretations of any relevant rules in the area, and they represented fundamentally different perceptions about what the rules were trying to do in that area. There were also powerful domestic constituencies, I would say, on both sides of the border, which the federal governments had to deal with and which Mr. Grenier has referred to. Ultimately, as we saw, softwood lumber was resolved through an agreement. Ultimately, the Pacific salmon dispute was resolved through an agreement. I'll come back later on to a few things we might learn from that, but I think we do learn that not every dispute should be sent to a third-party process. Not all are susceptible to third-party settlement.

I think there are three conditions that we want to think about if we're thinking about procedures to settle disputes. One is that clear and agreed upon rules between the parties have to be determined, rules that can be interpreted through processes of legal interpretation and that would have some legitimacy. The result would have some legitimacy within the processes of interpretation.

Second, I think you have to be sure that the other side will have a good chance of being able to implement any decision of the court or tribunal.

And third, which I think is related, is that both sides have to be able to handle the domestic consequences of an outcome of any dispute-settlement process. In other words, to put it simply, you have to be ready to lose if you go before a court or an arbitral tribunal.

In light of this, one wonders whether dispute-settlement processes should be extended into areas beyond the trade area, and, I should say, the investment area as well. In the past there have been proposals for broader-ranging mechanisms for dispute settlement between Canada and the United States. I think there are some disputes that could be resolved that way. An obvious example is the Beaufort Sea boundary dispute between Alaska and Yukon, in which there's a clear set of maritime boundary limitation rules. Tribunals have had experience in this, and it could be done. Both Canada and the United States have experience in this as well.

But apart from those kinds of disputes, I would suggest there ought to be some caution about adopting arbitration or dispute settlement processes for other areas of Canada-U.S. relations. I think trade disputes are, to some extent, a bit unique. Trade agreements have fairly precise rules that can be interpreted. They're not always precise--that's one of the criticisms of WTO agreements--but they are capable of interpretation. I think in other areas the nature of the dispute is that you do not always have clear rules, and you often have disagreement about the relevant rules.

What can we say generally about the process? In respect of trade disputes, we really have to ask, in the context of Canada and the U.S., whether we really want to use WTO or NAFTA. I think the WTO has been the mechanism. It has a better dispute settlement mechanism. It has an appellate process. It has a system for dealing with non-compliance. The NAFTA does not have many of those things. Though chapter 20 of NAFTA is really the alternative, there are reasons the parties really haven't used that.

Outside the trade area, instead of looking for new dispute settlement mechanisms, I think we might be able to build on some of the existing mechanisms. We do have, in the International Boundary Waters Treaty Act, for the International Joint Commission a process of arbitration. But the parties have never used it. It's there. The commission could arbitrate a dispute between Canada and the United States, but neither party has been prepared to send a dispute to that process.

We have processes under the NAFTA side agreements that could be developed, whereby complaints could be brought against the NAFTA parties for failing to enforce their own environmental laws. The governments have been very reluctant to allow complaints to be brought, and have narrowed the scope of the complaints, and narrowed the scope of the conclusion of a factual record, which is the outcome of that dispute. I think that's an area that deserves strengthening.

But if we also want to strengthen dispute settlement, we have to focus on something we learned from softwood lumber, which is that the ultimate test of any process is implementation. A decision of a court or a panel or a tribunal is of little use if one party is free to ignore it. I think that has implications for how we go about implementation. It means that dispute settlement decisions have to be binding within the domestic law of the two parties.

In the European Union we talk about this as direct effect. The decisions of the European court automatically are binding. If one is moving in the direction of more dispute settlement processes, I think we have to have those processes integrated into the domestic laws of the two countries. That means closer integration between the two countries, and I know that raises a whole range of other questions and concerns about the extent to which we'd be prepared to accept that kind of integration. But if we want to have dispute settlement, I think it's the only way to go.

The reality is that most disputes between Canada and the United States are going to be negotiated. We're not going to have a Court of North America. I'd go back briefly to the Pacific salmon negotiations of the 1990s to see what we learned there. I think we learned that power imbalance does not necessarily mean you end up with a bad agreement. There are many agreements Canada has entered into with the United States that would not be regarded as lopsided bargains.

Second, it shows that negotiating with the United States is not simply state to state. Canada cannot sit across the table from the United States and assume the United States federal government is the correct interlocutor on any dispute. We saw that back in the 1970s, when we negotiated the east coast fisheries agreement with high-level officials and the support of the White House, and Congress said no to the agreement.

With the Pacific salmon dispute, we negotiated with the State of Washington. We negotiated with Alaska. We negotiated with the tribal fishers. Instead of thinking we are simply negotiating with the United States, we have to get behind the United States and deal with the domestic interests.

The reality of many disputes that Canada has with the United States is they are multiple and varied in that way. You cannot simply expect that the United States federal government is the correct interlocutor and that it will be in a position to implement what can be agreed across the table.

Thank you.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. McRae.

We're going to move quickly to Mr. Patry and Mr. Pearson, who are splitting their time.

We're probably only going to have one round. I know Mr. Grenier has to catch a plane at 5:30, so we'll go as quickly as we can. We'll probably end up with one round.

Mr. Patry.

[Bernard Patry, Liberal, Pierrefonds—Dollard, QC]

Merci beaucoup.

Thank you to all our guests this afternoon. It's always very interesting.

Mr. Clarkson--and to all three--you said within NAFTA we need to live with the omelette as it is right now and try to improve it.

Mr. Grenier, you said that President Obama was raising a lot of hopes. You told us about his speech on February 27. You also said that Canada had to get President Obama's attention, but not show up with a shopping list.

My question is very simple. How can we get onto President Obama's agenda? Do we have to do it in a continental or international way, while not forgetting to include in the negotiations the problems we have with regard to the Arctic or Afghanistan, as well as security issues?

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Patry.

[Prof. Stephen Clarkson]

I think that depends precisely on the issue negotiated. Since Canada has little political weight in Washington, I think its involvement on international issues will be very important, with a view to cultivating an attitude in Mr. Obama that will make him take what Ottawa has to say seriously.

I find it hard to answer because your question is very general. Could you clarify it a little, sir?

[Bernard Patry, Liberal, Pierrefonds—Dollard, QC]

Mr. Grenier.

[The Chair, Conservative, Kevin Sorenson]

Very quickly. We have five minutes for questions and answers.

[Carl Grenier]

I probably have the same difficulty answering that question as Mr. Clarkson. However, I think it's clear that Mr. Obama does not have any specific trade policy experience. In fact, he views matters in a very comprehensive way. I believe that's how we should view them as well. I also don't think he has a very ideological approach compared to those of some of his predecessors, his immediate ones in particular.

He takes a practical, pragmatic approach, particularly since the theories on which the economic plan were based have recently been shot down.

We will have to determine our own priorities—they are still very general—and try to see in what fields or sectors Canada can make its contribution. I mentioned two or three earlier. As regards environmental issues, for example, I don't think we really need to be embarrassed by our environmental policies, with one or two exceptions, compared to U.S. or Mexican policies. We definitely have a certain advantage in the area of financial regulation; that's now recognized around the world. As for equity among social classes, things are nevertheless a little better here than in the United States, where the situation has vastly deteriorated in recent years.

There are issues on which we'll probably be able to contribute, but my impression is they will go very largely beyond trade issues. You mentioned Afghanistan. I get the impression that matter will be aired very soon.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Grenier.

Very quickly, Mr. Pearson. Give him time to answer.

[Glen Pearson, Liberal, London North Centre, ON]

As a question and a point of clarification, you talked about how there's a tendency within our country to kind of dump the Mexico part and concentrate more on Canada-U.S. relations. Given that our present government is trying to emphasize the Americas, is it kind of at cross-purposes that we would dump Mexico but concentrate on the Americas?

Secondly, what is Mr. Obama's outlook on Mexico and the future of NAFTA?

[Prof. Stephen Clarkson]

On the first question, I think the government has talked about shifting its aid effort from Africa to the Americas. I work every winter in Mexico because I can't study the Canadian-American relationship without knowing what the Mexican relationship with us and the United States is. There isn't much evidence that the Canadian government is putting more effort and more money into its relationship with the United States. We have, for instance, only 17 scholarships for Mexican students to do graduate work in Canada.

On Mr. Obama, in his campaigns for the nomination and then for the actual job, I don't think he said much about Mexico. He voted in favour of the wall during the Bush administration. He said nice things to the National Rifle Association during the election.

This suggests, in his first period in power in any case, that he's not going to look at the root cause of the drug problem, namely, the consumer demand for drugs, which itself causes the cartels to make their huge profits and kill off thousands and thousands of people in Mexico. Also, he hasn't shown any willingness to risk political capital on the immigration question.

Nevertheless, he is obviously conscious of the Mexican problem, but given his other priorities, which are urgent on the economic front and urgent on the international financial front, I wouldn't expect him to spend political capital on Mexico.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Clarkson.

We'll move to Monsieur Crête.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you, Mr. Chairman. I'll be sharing the time allotted to me with Ms. Deschamps.

I would ask each of you to suggest to us an action that must be given priority. Everyone in Canada agrees on the importance of our relationship with the United States. Is there a single action that you would like to see expanded or put forward? I would appreciate a brief response from each of the three participants.

[Prof. Stephen Clarkson]

Perceptions of terrorism should be changed because U.S. paranoia is the principal factor undermining the entire vision of an integrated North America. It's this unreal paranoia that leads Americans to close their borders as much as possible. That's also the Mexican priority.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Grenier.

[Carl Grenier]

I'd say the priority is here in Ottawa. I think that, when you commit to a dispute settlement system, for example—and I differ with Mr. McRae here—you stick to it. We must be prepared, precisely as he said, to lose if we lose and to apply sanctions. Obviously, the partner must do the same thing. Given the asymmetry in relations between Canada and the United States, which won't be disappearing any time soon, we really must not constantly go back to diplomacy. We don't carry enough weight to do that. So we have to rely on the system and make it work properly.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Asymmetry, that's our 30 million citizens versus 300 million in the United States. That's 10% of their economic weight.

[Carl Grenier]

That's it.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. McRae.

[Prof. Donald McRae]

I'd like to move to a slightly different area and something that also concerns me--I believe you'll have hearings on this at a somewhat later stage--and that is the Arctic. I would say to stop being so defensive about what we think the United States thinks about the Arctic, to simply go ahead and act as if the Arctic archipelago and the Northwest Passage are Canadian and run by Canada and not be concerned about what the United States says.