Mr. Speaker, perhaps I may start by greeting my colleague, the Secretary of State for International Financial Institutions, who tabled this bill on January 31 on behalf of the Minister of Finance. Aside from the debate on the motion presented by the Reform Party last week, when I had the pleasure of making a presentation which dealt partly with international financial institutions, and in fact just before the secretary of state gave his speech, this is the first time he and I will have an opportunity to work together in the House.
He will be pleased to hear that we are probably on the same wave length regarding the general implications of the bill before the House today, and I hope this will be only the first of many such occasions.
I would now like to comment more directly on Bill C-5 which the House is being asked to consider and on the context that makes it so important, namely, export development assistance for developing countries.
This is a very short bill. It contains only one section, whose purpose is to extend for ten years-until June 30, 2004-the expiry date for the general preferential tariff applied by Canada to developing countries. Since the various provisions of the GPT have already been explained in detail by the secretary of state, I do not think I have anything to add in that respect. The bill amends section 45 of the Customs Tariff, under which the GPT was to expire on June 30 this year.
However, the government reserves the right to change subsequently, by order of the Governor in Council, the expiry date of the extension, the rate of duty provided under the GPT and the treatment given certain goods and certain countries.
Although not impressive in size, Bill C-5 has a considerable impact through what it actually does.
I may recall that in the early seventies Canada, like all industrialized countries, introduced preferential tariff treatment for developing countries. The purpose of this measure was to promote the economic growth of these countries by developing their trade with Canada.
Every 10 years, parliamentarians are asked to consider another ten-year extension for a measure that costs little and provides a form of indirect aid to developing countries. In this respect, the Bloc Quebecois reiterates its support for measures that promote international development.
The provisions of this bill ultimately provide an attractive market for the products of developing countries, removing the dependency that conventional development aid will sometimes create. This is positive aid that helps these countries develop goods for export and promotes their integration and participation in international trade, which is expected to intensify in the years to come. That is why the Official Opposition intends to support this bill.
Canada has acquired an excellent reputation for development assistance, through the expertise and activities of non-governmental organizations dedicated to international development. We must continue this tradition, and I want to take this opportunity to say that a sovereign Quebec will be guided by the same concern for international equity.
All of us have been exposed, from time to time, to the usual series of statistics that point to wide gaps in economic development and in the availability of basic resources ensuring a minimum quality of life, which is the case in many countries on this planet. More than one billion people or one-fifth of the world's population earn less than one U.S. dollar per day, comparable to a wage level that existed in Europe and the United States at the end of the eighteenth century. In the eighties, the per capita income of developing countries in Latin America and Sub-Saharan Africa declined, in real terms.
However, there is light at the end of the tunnel, and there are some indications that development programs can produce substantial positive results.
The average per capita income in developing countries, for example, has doubled over the last three decades, which is a rate of growth higher than in Great Britain during the industrial revolution, or in the United States in the 19th century, or even in Japan between the two world wars. Turkey, for instance, doubled its per capita income over a period of 20 years, from 1957 to 1977. Brazil made it in 18 years, from 1961 to 1979; South Korea in 11 years, from 1966 to 1977; and China in 10 years, from 1977 to 1987.
Infant mortality has been reduced by half and life expectancy has been pushed ahead 10 years on average. A child born in Shanghai is less likely to die before reaching one year of age and more likely to learn how to read and to live longer than a child born in New York.
Despite these very encouraging statistics, major differences and unacceptable inequalities continue to exist and in some cases to increase. It is therefore necessary to maintain our efforts in order to promote development in the countries which do not enjoy the great conditions we have here.
Clearly, magic formulas to achieve development in the Third World exist by the million.
Just think of the drastic measures advocated by the World Bank or the International Monetary Fund in order to bring structural changes to the macro-economic policies of these countries, even though they are very often accompanied by a worsening of already serious social problems.
Some experts insist on growth of local savings, while others favour a massive involvement of government in some sectors of the economy.
Others advise a total or partial closing off of the country to imports, in order to generate economic growth from the inside.
Finally, there are some who believe that opening the economies of developing countries to the world is, in the long run, the best way to achieve development. The abolition or reduction of tariff and non-tariff barriers and the adoption of measures to promote exports would be some of the roads to development.
Such measures would only ensure these countries do not remain mere observers of this tremendous phenomenon called market globalization. As for us, we must realize that we have everything to gain from a reduction of the dependence of these countries and from their involvement in, and contribution to the increasing world trade.
Therefore, I believe that one of the ways we have to encourage development in these countries is to open up our markets to their goods and services. This is why, in my opinion, Bill C-5 is a valid contribution to developing countries.
Some of these countries have already made the strategic choice of promoting export growth to improve their economic development. Results have been outstanding in most cases.
This strategic choice was made in the sixties by South Korea and Taiwan, and in the seventies by Thailand. These countries are living proof of the value of such a strategy.
Originally, the three countries had the social and economic characteristics we observe in several developing countries and those are a large and growing population, a low level of investment and an economy largely based on agriculture.
In less than three decades, they achieved an absolutely stunning rate of growth, along with some other countries in the region.
This phenomenal success is the result, among other things, of two strategic choices, one that I just mentioned, which is the implementation of export-driven policies, and manpower training as a major priority.
In this regard, Quebec is particularly sensitive to the importance of implementing a manpower policy which is consistent, flexible, structured and effective.
At the beginning of the sixties and until the early seventies, South Korea and Taiwan launched a very aggressive strategy of economic growth based on export promotion. A lot of incentives were made accessible to industry in areas that, today, we call soft sectors, for example textiles, clothing and shoes.
Following the difficult 1970s, these two countries emerged with leading annual growth rates of nearly 10 per cent between 1985 and 1991. They also succeeded in diversifying their production in favour of goods with a higher value added.
An interesting parallel can also be drawn with certain Latin American countries. Before the 1980s, countries of Latin America would have been hard pressed to pass for champions of free trade. Quite the contrary, in fact.
Most of them had adopted trade policies aimed at protecting their domestic market from foreign competition, instead of policies which would have allowed domestic firms to exploit their comparative advantages on foreign markets.
However, in the early 1970s, a number of Third World countries and many Latin American countries such as Brazil, Mexico and Peru, experienced a debt crisis. Consequently, with the blessing of the International Monetary Fund and the World Bank, these countries were compelled to adopt outward-looking policies, lowered tariff barriers, introduced import permits and quotas and adopted export promotion measures.
During the 1980s, several Latin American countries rid themselves of dictatorial regimes and replaced them with democratically elected governments. Contrary to all expectations, these governments managed to survive and, in most cases, are still around today.
Conditions in several countries in this region, chief among them Mexico and Chile, appear favourable to very significant economic growth. It comes as no surprise, then, that the adherence of other Latin American countries to NAFTA has aroused considerable interest.
It should be noted, however, that the world trading system still has some shortcomings which impede the economic growth of developing countries.
According to the OECD, sectors such as agriculture and textiles which represented the strength of many developing countries after World War II, have in no time become the target of protectionist measures imposed by industrialized countries.
As paradoxical as it may seem, the beneficial effects of development assistance policies implemented by industrialized countries have often largely cancelled out by the protectionist trade measures theses very same countries have adopted.
Under GATT, agriculture was excluded de facto from the usual applicable rules, thereby allowing industrialized countries to protect their domestic market through the imposition of tariffs and quotas.
Moreover, industrialized countries have not hesitated to subsidize their agricultural surpluses around the world, pulling the rug out from under developing countries in the process and often rendering the latter's domestic production uncompetitive. With your permission, I would like to quote an excerpt from an OECD report released last year which states the following: "Exports of Latin American agricultural products have also been affected by the high levels of agricultural production within OECD countries as well as by the ever-increasing level of subsidies. In some cases, agricultural exports from developing countries have been squeezed out of profitable markets by highly subsidized exports from industrialized countries".
Furthermore, the tariff system in place in industrialized nations penalizes imports of processed products by giving the advantage to raw materials and other unprocessed products. Developing countries would be at a disadvantage if they wanted to diversify their economies and begin producing value added products.
The success of the recent GATT negotiations should make life easier for exporters in Third World countries, particularly exporters of agricultural products, clothing and textiles. The elimination of tariff barriers on a growing number of products from tropical countries, along with the dismantling in ten years' time of the Multi-Fibre Arrangement, which will be included under the GATT rules, should also be a boost to Third World countries.
However, over the last decade or so, we have been witnessing, unfortunately, a resurgence in trade protectionism. New forms of protectionism, such as orderly market sharing agreements, voluntary restrictions on exports and other quota measures, have been introduced. Automobiles, semi-conductors and steel have been targeted, along with other industries which successfully lobbied for protectionist measures.
These measures add to those already in place for textile, clothing and agricultural products. Anti-dumping measures, so-called temporary safeguard measures and accusations of unfair trade practices are popping up everywhere these days.
Canada, as we know, is certainly not immune from this insidious and looming return to protectionism, particularly from its main trade partner, the United States, which is the market for almost 80 per cent of its exports. Our trade problems with the United States, especially with beer, steel, magnesium, softwood lumber and agricultural products, constantly remind us that free trade benefits are fragile and that we must watch our trade partners' practices more closely.
Economic development formulas vary between countries. Export promotion strategies are not, by themselves, a panacea. Although they are important, there is no question that other measures must also be contemplated.
People's happiness is not necessarily contingent on increased individual purchasing power. We must allow societies to develop at their own pace without forcing them to conform to the economic development model dictated by market forces. It is a decision that these societies must make for themselves. It is, however, important and even essential to contribute to these countries' economic growth by giving them preferential access to our markets.
Promoting the growth of developing countries' exports to industrialized nations is therefore a most commendable goal. The Bloc Quebecois does not deny it, of course. But if I may, I would like to outline a number of concerns we, on this side of the House, have about the practical application of the general preferential tariff.
We must first of all recognize that the countries that currently benefit the most from the general preferential tariff are newly industrialized countries, mainly the new economic powers of Southeast Asia. These are not, strictly speaking, third world or developing countries.
Furthermore, China and Indonesia, for instance, which are the beneficiaries of 38 per cent and 3 per cent respectively of Canadian preferential tariffs, are regularly censured for their repeated violations of human rights.
As the purpose of the general preferential tariff is to help real developing countries to grow, without hurting the Canadian economy in the process, we should be entitled to a more in-depth study of products and countries benefiting from the general preferential tariff.
This brings us to question the relevance of maintaining the general preferential tariff for developing countries that have since become newly industrialized nations. As a result, we must determine if these countries still meet the criteria allowing us to define what is a developing country, which, we agree, can be very complex.
In the cases concerning us, we should ask whether newly industrialized countries such as Hong Kong, South Korea, Taiwan and Singapore should still get preferential treatment. If all industrialized countries decided to take away from these countries preferential tariffs generally extended to developing nations, this could impact on their treatment by international financial institutions such as the International Monetary Fund, the World Bank or regional development banks.
One must know that the United States no longer gives preferential tariff treatment to South Korea and Hong Kong. Japan, Canada and the European Community, for their part, have still not made a decision on this issue.
The federal government has already announced its intention to study how desirable it would be to continue to extend the general preferential tariff to countries that have reached a high level of economic development. In fact, such a study is unavoidable in preparation for the meeting of the United Nations Conference on Trade and Development to be held in 1995, precisely about the general preferential tariff. Now that the Uruguay Round is over, the government has also announced its intention to review, and probably reduce, the extent of the general preferential tariff.
In addition, we know that the government intends to consult with Canadian manufacturers before making any decision on the general preferential tariff, a move that we wholeheartedly endorse.
It goes without saying, however, that any change to the general preferential tariff as it applies to any product or country could have major political repercussions.
Taking the general preferential tariff away from South Korea or any other newly industrialized country could lead to a deterioration in our trade relations with them since they may not like what Canada is doing.
The case of China, which has nearly 40 per cent of Canada's preferential tariffs, could also arise. Like the United States, which is wondering whether it should now deny most favored nation status to China, mainly because of the repeated violations of human rights in that country, Canada could show how important it considers human rights to be by also considering withdrawing the general preferential tariff from all countries that blatantly violate these rights.
In that the government has said many times that it intends to involve Parliament in Canada's foreign policy, and since any change in the scope of the general preferential tariff is likely to have political repercussions, would the government agree to consider the possibility of consulting parliamentarians, as well as Canadian manufacturers, before changing any component whatever of the general preferential tariff and if necessary amend this bill along those lines?
Such a consultation could proceed in a flexible and efficient manner through the Standing Committee on Finance or the Standing Committee on Foreign Affairs and International Trade.
Be that as it may, I eagerly await the government's response to this suggestion, which I am making as a request, in view of the importance which the government claims to attach to the opinion and judgment of parliamentarians.
I close by reiterating our total support for the basic principles underlying the extension of the general preferential tariff for the so-called developing countries. At the same time, I also reiterate my concerns and questions about applying this tariff to the newly industrialized countries and to developing countries which openly violate human rights.
I trust that the government will follow up our request for prior consultation with parliamentarians before any change is made to the general preferential tariff structure.