International Trade Committee on May 3rd, 2007

[Teresa Healy]

Our understanding or analysis of this process has led us to the conclusion that the process as a whole needs to be discussed, debated, and thought through very carefully.

We see discussions about a reinvestment in infrastructure. In principle, we are in favour of infrastructure development in Canada. However, we want to see this governed by the principles of the public economy and related to a generalized economic development project that makes sense for regions in this country. We don't want to see new infrastructure built that is meant to receive containers of manufactured goods that are brought into the country. We want to see a discussion about what kind of infrastructure, about what kind of economy we are building this infrastructure for.

We have a manufacturing crisis in Canada. We know that in both the United States and Mexico there are very serious job issues and manufacturing issues that need to be dealt with. We need to have the kind of discussion that is going to acknowledge the seriousness of the jobs and manufacturing crisis. We need strategies that are going to develop the resources of communities and of industries.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Healy.

Thank you, Mr. Bains.

For the Bloc Québécois, Monsieur Cardin, for seven minutes.

[Serge Cardin, Bloc, Sherbrooke, QC]

Thank you, Mr. Chairman.

Ladies and gentlemen, good morning. Welcome to the Committee and thank you for your interest in such an important topic as this.

I want you to know, right from the start, Mr. Chairman, that I will be sharing my time with my colleague. We don't really know how things will go afterwards; we may not have another opportunity.

Based on what we have seen, the SPP clearly represents a threat to Canada's sovereignty. You may be surprised to hear that I am concerned about Canada's sovereignty, but it is a tremendous concern to me because, without Canada's sovereignty, Quebec will have difficulty asserting its own. That's the reason why I see this as an important issue. I want things to be perfectly clear.

In March of 2005, there was an SPP meeting. A number of things were discussed at that time: outlining approaches, developing strategies and fostering economic growth, competitiveness and quality of life. In that part, it was also stated that every country had agreed as well to establish departmental working groups, through the Security and Prosperity Partnership of North America, whose mandate would be to consult stakeholders. The intention was obviously to consult the business community. That is the whole rationale for this partnership—these are business executives. Mention was also made of state and municipal governments, and even non-governmental organizations. Earlier, the questions made it clear that not one of you with no direct connection to the business world had been consulted.

We know that any economic issue involves a societal choice, and that those choices have to be consistent with what individuals are seeking. That is the reason why people talk about consultations. Some say that everything should be completely rejected.

What are you suggesting in the way of a real consultation process? How would you participate in such a process?

[Normand Pépin]

That is a very good question. We were struck by the lack of desire to hold broad consultations, as you have noted. But, first and foremost, this is a matter for Parliament to examine. This gentleman stated earlier that these sessions were televised. But we are not talking about Canadian Idol here. Few people have been following these discussions. If this matter is debated in Parliament, there is a greater chance that it will be in the headlines and that people will talk about it. If that happens, people will pressure their own member of Parliament to be given as much information as possible about the SPP. Other than that, I really don't know what we could suggest.

In his report to the leaders, Minister Bernier said that now that the CCCE had been consulted—and that is the only organization that was—he would consult other organizations. That was back in September of 2006, and it never happened. We invited the Minister, with four months' advance notice, to attend an evening briefing session that we held on March 23, the SPP's anniversary date. He replied saying that his schedule did not permit him to come and talk to us. It is clear that governments have no desire to engage us on this.

[Guy André, Bloc, Berthier—Maskinongé, QC]

My questions are along the same lines. I read your report with interest, albeit quickly, because I only received it this morning. You talk a great deal about deep militarized integration and a neo-liberalism phase.

Ms. Burrows, you stated that this process doesn't take into account our values and that it is undemocratic, since the Committee is meeting behind closed doors and that no information is being made available about its work. Both the direction and specific goals of the Committee are well-defined and affect our environmental, social and health care policies.

The idea of the United States, Quebec, Canada and Mexico harmonizing these policies is of concern to you. Basically, how will the harmonization of our policies with those of the United States and Mexico affect our values as Quebeckers and Canadians? How does this affect our own evolution?

[Nancy Burrows]

We talked about sovereignty. We are concerned that this kind of harmonization will result in lower standards. Quebec and Canada have social policies, whether they relate to health care, drugs or the environment, that may be different from those in effect in the United States. But we are under no illusion: Canada is less powerful in North America than our neighbours to the South. Our fear is that our policies will be modelled after those in effect in the United States.

Security is a good example of that. The fight against terrorism is a concern for the United States. That commitment forces us to make all kinds of changes to our own laws and policies, in order to meet the needs of a third country. However, that does not jibe with our social vision.

[Guy André, Bloc, Berthier—Maskinongé, QC]

At the same time, entrepreneurs often have interests in both the United States and Mexico and, in a way, they set our social norms.

[The Chair, Conservative, Leon Benoit]

Merci, monsieur Cardin.

An extremely short answer, please.

[Nancy Burrows]

Consultation with the civil society is also important. We talked about the importance of a public debate in the House of Commons. Civil society organizations must be consulted. In our opinion, it is a complete aberration that business executives are directly involved and have direct influence over the process, even though parliamentarians and the civil society, which represents the citizens of this country, are unable to talk about their own needs.

[The Chair, Conservative, Leon Benoit]

Merci, monsieur Cardin.

Mr. Allison, from the government side, for seven minutes.

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

Thank you, Mr. Chair.

I'm always amazed how the war in Iraq is brought into talk about a security and prosperity agreement here in Canada and how we can move the goods and services across the borders a little bit more easily.

I have enough questions for about 20 minutes, but I have only seven minutes, so we're going to try to make this go as quickly as possible.

Mr. Hart, how long were you with DFAIT? What's your history with foreign affairs and trade?

[Prof. Michael Hart]

I was a government civil servant for 22 years, most of that in DFAIT, most of it concentrated on trade negotiations.

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

Great.

Would it be fair to say that you were involved with NAFTA then? What was your involvement with NAFTA?

[Prof. Michael Hart]

I did all the preparatory work for the Canada-U.S. Free Trade Agreement and was part of that team. I advised the NAFTA team, but I had other responsibilities at that time.

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

Okay.

It has been alluded to here by certain groups that bulk water is included in NAFTA. Is that true?

[Prof. Michael Hart]

No.

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

Thank you.

We talk about prosperity all the time. Most businesses in Canada are small businesses. I want to talk again, Mr. Hart and Mr. Lennox, about goods and services going across the border. We hear constantly from the NDP that we have a prosperity gap, that things are happening. But I don't know where we're going to do trade if we're not able to get our goods and services across the borders.

Mr. Hart, can you talk a bit more about the process of trying to streamline the borders? You talked about a couple of things regarding regulations that would make some sense as we move forward.

[Prof. Michael Hart]

Statistics Canada did a study a few years ago in which they counted the number of Canadian firms that are engaged in exporting. They counted something like 42,000 of them, about 35,000 of which do trade with the United States. So we have 35,000 companies in Canada--not just large corporations but quite a large range of corporations--that are engaged in this kind of trade. And the kind of trade they're engaged in is what economists are now calling “integrative trade”. They are participating in the making of things.

An economist, Stephen Blank, at Pace University in New York, says that Canada and the United States no longer trade with each other; what we do is we build things together. Given the fact that we build things together, the fact that there's a border in between the two parties who are building things together is a potential disincentive to investment in Canada. If you are an investor looking for a new opportunity or to expand an existing opportunity, one of the things you're going to look at is the kinds of problems you are going to have at the border. If you think you're going to have problems, you'll say, “Well, I'll tell you what. I'm going to locate in the big market and export what I need to the small market, rather than locate in the small market and face the hassle of 90% of my goods that need to go into the network in the United States having to cross that border.”

So I think it is a legitimate and very important objective for Canada to see what's being done at the border and ask what we can do to reduce the disincentives that the border creates. I give the Canada Border Services Agency and the Government of Canada full marks for having done as much as they can on a unilateral basis. We have done a tremendous amount in streamlining what we do, in putting in place programs that use electronics, that use pre-clearance and so on, to move things away from the border. I think we cannot do much more unless we do it together.

The main objective we should be pursuing is asking what we can do together with the Americans. Now, in order to do it with the Americans.... The Americans are not preoccupied by the border as a revenue issue or an economic issue. They're preoccupied with the border now as a security matter. That's why the two are so much tied together. You cannot build a more open border, which I think is what we need, unless you enhance the confidence that the Americans have in Canada as a security partner. That's why I think it is important that this is tied together, but that's why it's also important that we work with the Americans in enhancing their confidence in us as a security partner so that we can reduce the number of things that the Americans feel they must do at the border.

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

Mr. Lennox, one of the questions I have is that we keep referring to big business. I have a guy in my riding whose name is Ken Westerhoff. He owns Cedarway Floral. He has fresh cut flowers that he tries to get across the border. He is not big business. And I'd assure you that if his truck gets stopped at the border for any reason, any excuse...those are perishable items that cannot be used tomorrow. It's not some kind of freight...and we can talk about just-in-time inventory or anything else. Talk to those people about the importance of pre-clearance programs and how we need to make this thing work better.

[Ron Lennox]

You're absolutely right. The trucking industry isn't different from a lot of other Canadian industries in that it is primarily made up of small businesses. There are over 10,000 carriers in this country. There's a handful of large ones and a lot of very small ones. It's fundamentally important that those guys be able to cross the border without delay. Again, we operate, as Professor Hart indicated, in a just-in-time environment. A truck at a standstill makes no revenue for the carrier, and the driver probably isn't making anything if he's held up at the border. Of course, you also run into issues such as those you indicated for perishable products.

As was mentioned in Mr. Bradley's prepared remarks, we hold out some considerable hope that through harmonized pre-clearance processes the situation at the border will get better. I use this term all the time--it's kind of nuts and bolts things. The U.S. has developed what they call an automated truck manifest. We provide information in advance--certain data elements, cargo, crew, conveyance information--electronically. It's mandatory at certain locations on the U.S. land border, and it will be at all locations on the U.S. land border by the end of this year.

Canada is just embarking on a similar process. It's referred to as ACI--automated commercial information--I believe. There's a commitment in SPP to harmonize those two processes, so trucking companies are not building different systems, depending on which way the data is going. It's extremely important for us.

We are involved in a consultative process that has been established by the Canada Border Services Agency that in fact includes representatives from U.S. Customs. Business groups of all kinds are part of that consultative process. It's one of our top priorities right now.

[The Chair, Conservative, Leon Benoit]

Mr. Allison, you have time for one more short question, if you'd like.

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

Mr. Hart, you talked about a dual regulatory system. There are regulations on the Canadian side and the American side. It doesn't mean they need to be harmonized, necessarily, because there are different regulatory processes.

Do you want to just comment quickly on that?

[Prof. Michael Hart]

There are quite a number of ways in which you can achieve regulatory convergence, which is a term I like better than harmonization. You can have mutual recognition agreements. You can agree on a certain set of standards and leave it up to the individual country or industry or so on how to implement them.

What we need to do is get rid of those differences that are really quite small and develop cooperative approaches to achieving the same regulatory outcomes. In most cases, both countries want the same regulatory outcomes, so why not cooperate?

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Allison.

We now go to the New Democratic Party, Mr. Julian, for seven minutes.

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

Thank you, Mr. Chair. Thanks to each of you for coming here today.

What the testimony has very clearly indicated is that this issue, this agenda, goes far beyond smart borders. I was interested in your commentary, Mr. Lennox, that even on the smart borders initiative, which is a tiny portion of the overall SBP agenda, the government has manifestly failed on moving forward even that component. That's an interesting point that I hope we can come back to.

I'd like to touch on the issue of prosperity, and I'd like to ask you something, Dr. Healy, as well as Mr. Pépin and Ms. Burrows. Government spokespeople continually say that somehow the Canada-U.S. Free Trade Agreement has succeeded enormously, NAFTA has succeeded enormously, and that somehow the SPP--more of the same medicine--is going to increase Canada's prosperity. However, Statistics Canada belies that myth.

Statistics Canada points out very clearly that since 1989, since the signing of the Canada-U.S. Free Trade Agreement, most Canadian families are actually earning less in real terms than they were back in 1989. There's no clearer manifestation of failure on economic and trade policy than the fact that the poorest Canadians have actually lost a month's income in real terms, that working-class Canadians and middle-class Canadians have each lost, on average, about two weeks of salary in real terms. Even upper middle-class Canadian have had absolutely no progress on the economic front. Those who have profited from the Canada-U.S. Free Trade Agreement and from NAFTA are the wealthiest of Canadians. They're making money hand over fist. Most Canadian families are actually earning less. What a failure on the bottom line of trade and economic policy.

So my question to all three of you is how we address this issue of prosperity, and really what this agenda is all about. If the Canada-U.S. Free Trade Agreement and NAFTA have failed, on the prosperity front, to deliver prosperity to most Canadians, then what is this agenda really about in your opinion?

If you don't mind, you could perhaps comment after Ms. Healy.