Debates of March 16th, 1994

Prescription Drugs

[John Solomon, NDP, Regina—Lumsden, SK]

Mr. Speaker, pursuant to Standing Order 36, I am pleased to present a petition which has been duly certified by the clerk of petitions of the House of Commons as to form and content.

The petition is signed by Canadians from my constituency of Regina-Lumsden and from other parts of Saskatchewan, including Estevan, Kamsack, Moose Jaw, Biggar, Saskatoon, North Battleford and Sturgis, to name a few.

These petitioners are extremely worried about the impact of Bill C-91 which was passed in the last Parliament. It extends the patent on some prescription drugs for up to 20 years and guarantees drug manufacturers monopoly prices and substantial profits at the expense of Canadians. Prescription drug prices in Canada are the highest in the world as a result of this bill.

These petitioners are calling for the repeal of Bill C-91 to reduce the financial burden on health care consumers in need of prescription drugs and on provincial government drug plans.

Justice

[Darrel Stinson, Reform, Okanagan—Shuswap, BC]

Mr. Speaker, today I rise to present a petition on behalf of 25 constituents of my riding of Okanagan-Shuswap.

The petition requests Parliament to enact legislation to change our criminal justice system to provide greater protection for children against sexual assault and also to provide greater assurance that offenders will be convicted.

This petition has been duly certified by the clerk of petitions.

(Questions answered orally are indicated by an asterisk.)

Questions On The Order Paper

[Patrick Gagnon, Liberal, Parliamentary Secretary to Solicitor General of Canada]

Mr. Speaker, the following question will be answered today: No. 11.

Question No. 11-Mr. Easter:

How many new appointments were made between June 1992 and January 1994 to the personnel of the Department of Agriculture at the level of director and above? How many were internal transfers within Agriculture Canada? How many were transfers from other federal departments? How many were designated as exempt staff? How many new personnel were retained by the department on the basis of contracts? What were the names of the individuals involved, the positions they held previously, the positions to which they had been appointed and the dates of their appointments?

[Ralph Goodale, Liberal, Minister of Agriculture and Agri-Food]

Between June 1992 and January 1994 there were 44 appointments to Agriculture Canada at the level of director or higher. Of these, 33 were appointments from within the department, 10 were from other federal government departments, and one was from the Quebec provincial government.

Details concerning the appointees, their current and former positions and the dates of appointment are listed below. None of the employees appointed at these levels were exempt staff. This list does not include any contract employees, since people retained under contract are not appointed to specific classified positions in which case it cannot be determined whether their assigned duties are at the director level or higher.

[The Deputy Speaker]

The question as enumerated by the parliamentary secretary has been answered.

[Patrick Gagnon, Liberal, Bonaventure—Îles-De-La-Madeleine, QC]

I ask, Mr. Speaker, that the remaining questions be allowed to stand.

[The Deputy Speaker]

Shall the remaining questions stand?

[Some hon. members]

Agreed.

Motions For Papers

[Patrick Gagnon, Liberal, Parliamentary Secretary to Solicitor General]

Mr. Speaker, I ask that the notice of motion for the production of papers be allowed to stand.

[The Deputy Speaker]

Is it agreed?

[Some hon. members]

Agreed.

Message From The Senate

[The Deputy Speaker]

I have the honour to inform the House that a message has been received from the Senate informing this House that the Senate has passed Bill S-2, an Act to implement a convention between Canada and the Republic of Hungary, an agreement between Canada and the Federal Republic of Nigeria, an agreement between Canada and the Republic of Zimbabwe, a convention between Canada and the Argentine Republic and a protocol between Canada and the Kingdom of the Netherlands for the avoidance of double taxation and the prevention of fiscal evasion with respect to income taxes and to make related amendments to other Acts, to which the concurrence of this House is desired.

I wish to inform the House that pursuant to Standing Order 33(2)(b), because of the ministerial statement Government Orders will be extended by 18 minutes.

Supply

[Lucien Bouchard, Bloc, Leader of the Opposition]

moved:

That this House urge the government to follow up on its election promise to protect and strengthen Canada's publishing industry by renewing the Baie Comeau policy adopted in 1985 and by declaring that a public investigation will be held into the circumstances surrounding the takeover of Ginn Publishing by Paramount.

Mr. Speaker, there are many different reasons for submitting a question for debate. For instance, a decision was made and one feels it should be questioned because it was wrong, or it may be necessary to shed some light on the circumstances surrounding the decision-making process or on what was actually done. Or again, one would want to prevent a recurrence of something that just happened and which was unacceptable.

We have here a situation where all these reasons converge to require a public debate on a transaction that has just been authorized by the government. We are, of course, referring to the decision made by the government and the Minister of Canadian Heritage on February 18 to authorize the sale of Ginn Publishing Canada, a Canadian publishing company based in Toronto, to Paramount, the American communications and publishing giant.

The conclusion of this transaction is shrouded in mystery. I would say it is an enigma. Consider the following sequence of events: everything started in July 1985, when Cabinet met in Baie-Comeau and adopted, at the request of the Minister of Communications at the time, the so-called Baie Comeau policy which was aimed at further protecting the Canadian publishing industry.

The gist of the policy was, first of all, to authorize the creation of new Canadian publishing companies or the acquisition of Canadian publishing companies, provided, and I quote, "the proposed investment takes place within the framework of a joint enterprise controlled by Canadians".

Second, the policy provided that in the case of the direct acquisition of a company controlled by foreign interests but operating in Canada, the transaction could be authorized, provided that control over ownership was transferred to Canadians within two years, at a price reflecting market value. Third, the strongest component of the Baie Comeau policy, in my opinion, is the section pertaining to indirect transactions which ensures that in the case of foreign takeovers, Canadian publishing houses controlled by foreign interests are returned to Canadian owners. This means that 51 per cent of the shares of these Canadian subsidiaries must be transferred to a Canadian owner in the event the parent company operating abroad undergoes a change of ownership.

What are the objectives of this policy? Many members of the cultural community have congratulated themselves for supporting it. The following assessment was made by the hon. member for Mount-Royal, the Liberal Party critic at the time, who had been following this issue very closely. On June 7, 1993, she delivered in this House a speech in which she assessed the implications of this Baie Comeau policy. She asked what the results of this policy were? She stated the following and I quote: "Initially it was very exciting. It was very positive".

And she goes on to give examples. "The major retail chain, W.H. Smith, became Canadian controlled. An important book wholesaler, John Coutts Ltd., returned to Canadian ownership. The Doubleday Book Clubs were brought under Canadian control with a resulting fivefold increase in sales of Canadian authored books. For the first time"-still according to the Liberal critic at the time last year-"Canadian controlled publishers handled an increasing share of the distribution of imported books".

Let me continue to describe the sequence of events. In 1986, one of the first effects of the policy was-and here we are getting to the heart of the matter-to require Paramount to return Ginn Publishing and G.L.C. Publishers to Canadian control. And events continued to unfold.

In 1989, after the expiration of the two-year period required by regulation following Paramount's decision to put Ginn Publishing and G.L.C. Publishers up for sale, since no private buyer had expressed an interest in these companies, the federal government, acting through the Canada Investment Corporation, intervened to acquire 51 per cent of the shares of these two companies at a cost of $10 million. The government had no choice but to act to ensure that Paramount did not retain control over its shares following the expiration of the two-year waiting period.

A very important event occurred in January 1992, namely the amending of the Baie Comeau policy. This came about as a result of the enormous pressure exerted on the federal government and on the Conservatives, primarily by the Americans. The Conservative government caved in to these pressures and watered down its Baie Comeau policy which had achieved excellent results since 1985, even according to the Liberals in the House. So, the policy was amended. While the direct takeover of Canadian publishing houses by foreign interests was still prohibited, as far as indirect takeovers were concerned, however, foreign investors could now acquire ownership of a Canadian publishing house, provided that they made commitments likely to benefit the Canadian publishing industry. They were required to demonstrate that Canada was likely to derive a net benefit from this transaction. This change occurred in 1992.

We can ask ourselves what all of these provisions mean and why the fuss over the publishing sector? The answer is that we wanted to step in to protect the publishing industry, a cultural industry that is clearly very much at risk in Canada. In 1991-92, Canadian publishers controlled only 50 per cent of a $1.2 billion market. During this same period, 80 per cent of Canadian authors had their works published by Canadian book publishers.

The imbalance between the two is clear. Canadian publishers are far more likely than foreign controlled publishing houses to publish the works of Canadian authors.

Therefore, since the publishing industry is important to Canada and to Quebec and indeed to all Canadians and since it plays a meaningful role in the protection of our cultural identity, it must be protected. And that was what the Baie Comeau policy purported to do.

Of course, when the policy was watered down, howls of protest arose from cultural circles. Everyone in cultural circles-I would say it was a rare case of unanimity in Canada and Quebec-protested, including the Liberal Party now in office.

On February 14, 1992, we heard in this House the hon. member for Mount Royal, who is now a member of the Liberal Cabinet, complain about what happened and ask very tough questions to the then Minister of Communications, and I quote: "Is the government going to permit the foreign takeover of Canadian publishing subsidiaries like Harper-Collins, Collier-Macmillan and Grolier which are presently before Investment Canada? Is it going to sell off $150 million of our book publishing industry to foreigners?" That amount was worth a lot more back then.

So here we are today with a new government whose members harshly criticized the watering-down by the Conservatives of the very welcome measures they had taken in July 1985.

We would have thought that this government would tighten the screws in line with the old Liberal tradition to defend Canada's cultural identity. We thought that a Liberal government more sensitive to the important realities and symbols of cultural identity would come to the rescue of this threatened industry. The red book even contained a very explicit commitment in this regard, that the government does not like to quote very often but that I will quote today: "A Liberal government will help Canadian books, films, and sound recordings to increase their share of the domestic market through the establishment of policies and legislation with respect to marketing, distribution, and exhibition". They talk about culture in very lyrical terms that must have won them many votes in the last election.

And I quote: "Culture is the very essence of national identity, the bedrock of national sovereignty and national pride. At a time when globalization and the information and communications revolution are erasing national borders, Canada needs more than ever to commit itself to cultural development".

Nobody could have put it better. But as for honouring its commitment to protect cultural industries, the first time this government was put to the test, it failed miserably and disappointed a lot of people.

I am talking, of course, about Ginn Publishing that Paramount had to return to Canadian interests in 1989 under the Baie Comeau policy. We do not know exactly what happened, we may find out in this debate, but Paramount eventually managed to get Ginn back with the agreement, I would say the complicity or the complacency at least, of the heritage minister. How could a great victory for Canadian cultural identity be erased with a stroke of a pen by the minister who must defend Canada's heritage, a member of a government that promised to do the opposite? How is it possible?

Because the current legislation and even the 1992 guidelines contained the policies considered by the Liberal Party to be diluted, feeble, insufficient. Even the Liberal Party had, through its heritage minister, violated the Tories' already very diluted rules. In other words, they were more lax than the Conservatives themselves by allowing Paramount to regain Ginn Publishing. Under the rules in the 1992 policies, it should have been demonstrated that Ginn was in financial trouble, which is not the case. It should also have been demonstrated that Canadian buyers had the opportunity to make an offer. Nothing of the sort happened, no matter what the people opposite are saying. All Canadian publishers feel they have been pushed aside. All Canadian publishers are unanimous in their complaints. We would have found people to buy this publishing house but everything was done on the sly to allow the American company to reclaim Ginn quickly.

I would like to table a letter proving that at least one Canadian buyer expressed interest on May 7, 1993. This letter was addressed to the then owner of Ginn by Canada Development Investment Corporation.

I would like to file this letter before the House because it is evidence that there was at least one Canadian interested.

[The Deputy Speaker]

Is there unanimous consent for the member to table the letter?

[Some hon. members]

Agreed.

[Lucien Bouchard, Bloc, Lac-Saint-Jean, QC]

This letter is very important because it gives irrefutable evidence that there was at least one Canadian owner who was very much interested in buying the interests in Ginn. The letter is dated May 7, 1993 and is signed by Mr. Ronald Besse, chairman and president of Canada Publishing Corporation. It is addressed to Mr. Patrick Keenan, then chairman of CDIC, and reads as follows:

Dear Mr. Keenan:

I would like to formally express my interest in purchasing the 51 per cent equity held in Ginn Publishing by the Canadian government. We are a successful educational publisher, 100 per cent Canadian owned, and we have identified Ginn as a company with excellent synergies with our future business plans.

Would you please have someone contact me if you are interested in selling this equity position.

We have this evidence. The government felt obligated to say no to the transaction. Why did it not say yes? The only answer is that-

[Dennis Mills, Liberal, Broadview—Greenwood, ON]

The previous government.

[Lucien Bouchard, Bloc, Lac-Saint-Jean, QC]

This government had the decision to make. We all know we have a new government and the decision was in the hands of this government.

Why did the government say no? The excuse was a previous verbal commitment by someone existed that might go back as far as 1989. We do not know exactly. There are many questions to ask.

The first question would be: Where is the legal advice that the government is invoking? The government is basing its decision on the fact it has been provided with a legal opinion from the justice department supporting the decision to let the transaction go, the sellout. We never saw this legal opinion. I think we should have it. It should be tabled.

Second, where is the contract confirming the deal between CDIC and Paramount dated 1989? We have never seen it. If it exists we feel it would be very important for us to see it.

Third, who has made this commitment? This is quite a mystery. Is it possible for a national government policy decision to have been taken because someone we do not know said something to someone else in a meeting on a date we do not know? Is it possible that everything has swerved because of that? The question has been asked and I think the government should answer it.

We must ask ourselves whether there effectively was a sale of Ginn to Paramount in 1989. Where is the contract to establish that?

There was an interesting sequel to the letter sent to CDIC by Canada Publishing Corporation. It is very interesting because the letter was sent on May 7, 1993 and on August 13 of the same year the corporate counsel of Canada Publishing, Mr. John Evans, met with Mrs. Benita Warmbold of CDIC to express Canada Publishing's interest in acquiring the 51 per cent equity in Ginn in accordance with what the letter said before. There was a meeting, a letter, and another meeting.

Then what happened? On August 19 the chairman of Canada Publishing Corporation who signed the letter, Mr. Ronald Besse, received an answer from Paramount. The answer came from Paramount through a phone call inquiring: "Why are you doing that? What are you trying to do? We are not interested in selling our equity in this company. We would like to control the whole company". That was the answer from the American company.

Those are the facts. The government used its ministerial discretion to get out of the obligations under the guidelines. The only motive was that he had a verbal agreement, a verbal commitment. We should know the name of the person. Is it a minister? Is it a public servant? Who is it? We should know it.

I do not think the minister is right when he says in answer to a question in the House that we should protect the name of the person. I do not think this man, this person, has a right to anonymity. Surely the public has the right to know who killed the Baie Comeau policy and who was instrumental in depriving Canada of one of its publishing companies.

I see that my time is coming to an end. We are asking the government to table the legal opinion. We are asking the government to table the contract between CDIC and Paramount. The government should not be afraid to confront anyone in court with the facts, with the public policy and the fact that only one man or one woman would have reached an anonymous, hidden, secret verbal agreement on behalf of Canadians, throwing aside the policy of government discussed in Parliament.

As far as legal opinions are concerned, I am a lawyer and I have seen many legal opinions in my life. There is always one legal opinion against another legal opinion. I respect the people in Department of Justice but we would like to see the legal opinion. I know lawyers; there must have been some nuances in the legal opinion. They should describe the full circumstances wherein such a commitment would have been made.

We have the right to ask for it. We have the right to ask the government to change its policy and go back to the Baie Comeau policy. We would like the House of Commons to vote on the question of knowing if there should be, as we think there should be, a public inquiry into those obscure circumstances.

[Monte Solberg, Reform, Medicine Hat, AB]

Mr. Speaker, I thank the leader of the Bloc Quebecois for his speech.

There is no question the Ginn Publishing scandal leaves many unanswered questions. It is proper to pursue it to find out exactly what transpired in the sale of Ginn Publishing.

To me that is not the largest issue. The largest issue is whether or not we should be erecting barriers to protect Canadian culture. I personally believe the Canadian publishing industry can stand on its own two feet. All aspects of Canadian culture and the people behind it-the creators, the singers, the writers and the performers-are more than capable of standing up and competing with culture from around the world.

I have a question for the Leader of the Opposition, a person who would have his own country if he could and presumably would be part of a free trade agreement. Why would he want to return to a Baie Comeau type policy if he believes strongly that his own people can compete in the world?

[Lucien Bouchard, Bloc, Lac-Saint-Jean, QC]

Mr. Speaker, I thank my colleague for asking a very relevant and important question.

We are free traders. We think there should not be any economic barriers between our partners, that we should have completely free exchanges in every aspect of our economic life. When it comes to cultural identity, when it comes to the soul of a country, whatever country it is, we have a duty to protect it.

That is why one of the main victories won by Canada during the negotiations with the Americans on the free trade agreement was the cultural exception. It was a great victory. It was the first time that Americans had to accept from any country in the world, from any of their partners, that they should respect the cultural identity and the cultural sector of a country. It was taken out of the scope of the free trade agreement.

We should not forget also that this question has been very much at the heart of the political landscape and preoccupations of Canada. For example if you look at the Investment Canada Act you will see two provisions where it is really strongly affirmed that the cultural sector is a special case. For example section 20 of the Investment Canada Act states that one of the criteria to approve transactions is the "compatibility of the investment with national, industrial, economic and cultural policies".

If you look more precisely at section 15, which is a very strong provision, it states very clearly that cultural activities are very special and that we should assess quite differently any transaction that would bear on this sector when it comes to be reviewed by Investment Canada. Subsection (a) of section 15 reads: "It falls within the prescribed specific type of business activity that in the opinion of the governor in council is related to Canada's cultural heritage or national identity".

To resume my answer, there is a wide consensus from every part of Canada, from every walk of life, that we should protect our identity from a very strong and invading neighbour. The Americans have a universal civilization and culture. It is quite dynamic. We admire them. But in a way we have a duty to protect what we are. If we do not protect what we are we will never be in a position to do anything right. There would never be any dialogue if we have nothing to say. We have a contribution to bring to the universal realities, to the universal values, and it stems from what we are so we have to protect what we are.

[John Nunziata, Liberal, York South—Weston, ON]

Mr. Speaker, I am sure other members besides myself and indeed Canadians are somewhat amused at what the Leader of the Official Opposition is doing.

He just said a few moments ago that he wants to protect our identity. We have to protect what we are. I find it passing strange that someone who is dedicated to separating from the rest of Canada would want to protect what we are.

I was wondering if the Leader of the Opposition, a dedicated separatist, can explain exactly why he is standing up today defending Canadian culture. Can it be interpreted as a change in his basic philosophy? Can he explain to Canadians and indeed to Canadians in the province of Quebec what he is doing fighting for Canadian sovereignty, Canadian identity?

[Lucien Bouchard, Bloc, Lac-Saint-Jean, QC]

Mr. Speaker, I would like to say that the main reason, maybe the sole reason for which I am a separatist, as my colleague just said, is exactly because I want to protect what I am. I want to protect Quebec sovereignty.

I fully expect the rest of Canada to protect its own identity. It happens there are two identities in this country. That is my feeling. That is my vision of the future for us and of the present reality.

The rest of Canada is perfectly legitimate in fighting for its sovereignty against the Americans for example. It is perfectly legitimate to fight for your own identity. No one is better placed to understand that than a Quebecer. We think that Quebecers have won a great victory for the last 350 years in protecting their identity.

In this case, both our identities are threatened. If any government allows the invasion of the American publishing industry into Toronto it should be possible also in Montreal. As long as we are in the federation in Quebec, we are exposed to the same threat. I do not accept that.

This is a case where we have a common cause. This is a case where the interests of the rest of Canada and of Quebec are the same. Therefore we should act together. I would expect the national government which made such strong commitments to respect that.

This is a case where the government can fight the good fight for Quebec and the rest of Canada, for our own respective identities.

[Dennis Mills, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, I would like to begin by picking up on my colleague's remarks.

For a moment it sounded hopeful when we heard the Leader of the Opposition speak about Canada's interests. I know that this member who has fought for Canada and has a deep feeling for Canada must have moments of doubt, especially when we are dealing with an issue like this one today. Maybe eventually he will convert back to his Canada-first policy, which he once had. I say that sincerely and hopefully. I hope it is a temporary difference we are having.

My question has to do with the actual transaction. The original transaction on this Ginn Publishing deal stemmed from when Gulf and Western had to offload it. When there was no

Canadian purchaser, the CDIC purchased it for $10.2 million. However there was a condition attached to that transaction and it was that if the policy of the government changed, if the Baie Comeau policy changed, then Paramount had the option to buy back Ginn Publishing.

Can the leader not see that there was a sale and agreement that was consummated in 1986? This was really a conclusion to that deal because of the policy shift. As a government, in effect, we were boxed in.

[Lucien Bouchard, Bloc, Lac-Saint-Jean, QC]

Mr. Speaker, I would very much like to assure my hon. colleague and friend that there is nothing personal in our differences. It is really a question of collective perception of what the future should be, what should be best for our two collectivities, what kind of political structures would achieve in the best way the welfare and development of Quebec and the rest of Canada. Therefore, it is nothing personal but just personal consideration.

If it were possible to bridge our differences through personal appreciation, through friendship, I am sure it would already have been done. However even though we have all those good feelings and respective consideration for each other, it was not possible when it came time to table collective and concrete proposals to satisfy Quebec's aspirations. It is collective and it is the political dynamics of the country that has conducted us where we are.

Coming back to the specific deal, the hon. member said there were conditions attached to the 1989 transaction. There might be but we do not know. How come there was a very extensive contract? I suppose it exists. That is why we asked for it. There was a very extensive and comprehensive written contract as there always is when there is a transaction where all the conditions were stated and clearly expressed. How can we explain that one of the main conditions of the contract, one of the main considerations of the contract was taken out of the document? How can we explain that? It never happens.

I practised law for 22 years. I was involved in these kinds of deals. It never happened in my life that someone took the liberty of contracting a verbal agreement which was not couched in the contract. It is very dangerous too because chances are that the court would not sanction the commitment. That is why I do not believe for one moment that the legal advice is binding on the government. It is quite possible if the government hired good lawyers, and they have lots of good Liberal lawyers, it could go to court and fight for Canada and fight for the cultural interests of Canada.

Why does the government not do that? It did it for a $6 billion contract when it cancelled the helicopter deal in Quebec. It did it for the Pearson International Airport with a $1.6 billion contract which will be brought to court now. We read in the papers that the government will be sued for close to $200 million, but it did it anyway because it thought it was in the interest of the people.

Why does the government not do that with something which amounts to about $10 million, which is not a very big amount of money for a government, but so huge, so symbolic and with cultural interest?

[Albina Guarnieri, Liberal, Parliamentary Secretary to Minister of Canadian Heritage]

Mr. Speaker, the motion before us today calls for the reinstatement of the Baie Comeau policy which was adopted by the previous government in July 1985.

The late Conservative government introduced a foreign investment policy for the book trade in July 1985 which came to be known as the Baie Comeau policy. The objective of the policy was to Canadianize the book publishing and the book distribution industry by flowing distribution revenues from imported books through Canadian controlled firms. More specifically when a foreign investor acquired a book publisher or distributor in Canada it was obliged to divest control of the business to Canadians.

While I am sure all members of the House, including I might add rather ironically the leader of the Bloc, would agree that Canadianizing the book trade is a laudable objective, the chosen instrument of the previous government, the Baie Comeau policy, simply did not work. It is patently absurd to demand a reinstatement of that policy.

To begin with the policy was implemented through the Investment Canada Act, a statute also instituted by the Conservatives. This legislation was designed to attract foreign investment into Canada, not to discourage it. This led to a situation in the publishing industry in which foreign investors created sham Canadian corporations; that is firms which met the technical definition of Canadian control under the act but which effective control continued to rest with the foreign investor.

Under the free trade agreement the guarantee of fair, open market value to investors obliged to divest control exposed the government to significant financial risks without any benefit to Canadian publishers. Furthermore the policy was not linked to any incentives for Canadian ownership. To put it another way the Canadian control sector of the industry was too weak to profit from any opportunities provided by forced divestiture.

There was nothing to prevent foreign publishers who acquired these Canadian subsidiaries from withdrawing to the U.S. and serving Canadians directly from there. This completely undermined the objective of supporting a strong Canadian based industry and a strong east-west distribution system. For example Grolier Canada and Doubleday Canada were both implicated in indirect acquisitions between 1985 and 1992. A significant portion of their warehousing and fulfilment operations were transferred to the United States. A government cannot simply rely on indirect acquisitions, that is transactions in which

Canadian businesses are incidentally involved in international mergers and acquisitions to achieve domestic policy goals.

The track record of the Baie Comeau policy was an extremely disappointing one. The one instance in which Canadians gained a 51 per cent interest in a foreign book publisher occurred because the taxpayers themselves stepped in and made the purchase.

I refer, of course, to the CDIC's purchase of the 51 per cent interest in Ginn Canada for which the taxpayers paid $10.3 million to a hostile foreign partner. As a result of the government's recent decision to resell its interest in Ginn back to Paramount, the taxpayers will recover this investment.

The publishing community has criticized the government's decision to resell Ginn and company to Paramount. Let me underline the fact that the government weighed all the facts before it made its decision.

In January 1992 the previous government announced a new package of measures for the book publishing industry. I use the term new advisedly. What the government did in fact was claim for itself a longstanding Liberal approach to book publishing policy. That approach was based on a mix of program and policy instruments which together formed the basis of a comprehensive and coherent industrial and cultural strategy for the book publishing and the book distribution sector.

The two key elements of the 1992 announcements were, first, a revised foreign investment policy and second, increased funding for the book publishing industry development program. The revised foreign investment policy marked a return to the regime which prevailed under the Foreign Investment Review Act and which had been introduced by a Liberal government in the 1960s. The book publishing industry development program was initially introduced by a Liberal government in the late 1970s.

Increasing Canadianization of the book trade in Canada has always been an objective of the Liberal government and it continues to be so today. Foreign investment policy is one instrument for achieving that objective but it must be applied in a way which will achieve tangible results.

The guidelines of the amended foreign investment policy are as follows: new investments in the book publishing industry will be limited to joint ventures under Canadian control; takeovers of Canadian-controlled companies will not be allowed.

Under extraordinary circumstances, the government might consider an exception to this guideline. In such a case, the government must have credible evidence from the vendor that the company is in obvious financial distress and that Canadians really had an opportunity to buy it.

If a non-Canadian is chosen as a potential buyer, his proposed investment will be subject to a net benefit review.

If a foreign investor wishes to sell a Canadian company regardless of any other transaction, Canadians will have an opportunity to bid; indirect acquisitions by foreign companies will be allowed provided that they are of net cultural and industrial benefit to Canada and to the Canadian-controlled publishing industry.

More specifically, Investment Canada will normally seek to obtain one or more commitments from the foreign investor, such as the commitment to support Canadian authors, in particular by establishing joint ventures with Canadian-controlled publishers so that the Canadian authors whom they publish have access to new national and international markets; the commitment to support the book distribution infrastructure, for example by distributing imported titles through an exclusive Canadian-controlled publisher/distributor; by maintaining in Canada fully integrated warehousing and fulfilment operations for recent publications and back-list items; by participating actively in co-operative projects with the industry on marketing, distribution and order fulfilment operations.

Contractual access to the company's marketing and distribution infrastructure in Canada or its international network by Canadian-controlled publishers whose interests are compatible;

Financial and professional assistance to institutions that offer teaching and research programs in the publishing field.

Mr. Speaker, I would like to draw your attention to the results obtained by this government for the Canadian-controlled publishing sector by applying this policy on indirect acquisitions.

In the case of Maxwell Macmillan, this government was able to obtain a commitment from Paramount to entrust the distribution of high-volume imported books, a Canadian market estimated at some $4 million in 1993, to Canadian-controlled publishers and agents. This is a very important precedent because the previous government was unable to obtain similar commitments for indirect investments, as in the Harper-Collins case.

In announcing the Baie Comeau policy the previous government was effectively putting all its eggs in one basket. The megaproject approach to automatic forced divestiture has proven to be illusory. The focus on automatic forced divestitures as a cure for the ills of the publishing industry has been proven to be counterproductive. The only time it ever worked was when the taxpayer was forced to send money to a large U.S. multinational

corporation whose need for Canadians' hard-earned cash was at best questionable.

Surely Canadian taxpayers' money, increasingly limited as it is, ought to be spent in Canada on the Canadian-owned publishing industry. The Liberal approach to book publishing policy has been seen to strike a balance between financial and foreign investment policy, providing publishers with the financial resources to grow and seeking undertakings from foreign investors which will benefit the Canadian-owned and controlled sector of the industry. It is a longer term strategy but ultimately a more effective one.

No policy is ever perfect. There is always room for improvement. This government does not question the objectives underlying the instruments now in place to support the book trade. As far as the foreign investment policy is concerned we are more than willing to sit down with the publishers and discuss what improvements could be made to the guidelines.

I would like to make this as clear as possible: This government strongly believes in the economic growth of the Canadian-owned publishing industry and in the industry's progressive Canadianization. Any improvements to the policy guidelines would be made in the spirit of these policy objectives.

I would like to talk to you briefly about the publishing industry development assistance program.

The main purpose of this program is to strengthen the ability of the Canadian-held and controlled sector of the industry to publish and market Canadian literary works, nationally and internationally.

This program was implemented especially to encourage Canadian-held and controlled publishing houses to increase their efficiency and to reward those that are able to improve their long-term economic viability; to give Canadian-held and controlled companies the tools they need to become more competitive so that they can build up capital and finance their growth and development; to facilitate the development of the market, in particular through new publishing technologies; to promote Canadian ownership; to ensure the continued diversity of types of books by Canadian authors that are published.

The beneficiaries of the program are publishing houses that are at least 75 per cent Canadian-held and controlled, as well as industry groups and associations. The annual budget for the program is about $24 million.

The government also provides significant financial support to Canadian-owned and controlled publishers, distributors and booksellers for the physical distribution of books across the country as well as for the marketing in Canada of Canadian titles. This is of crucial importance in a domestic market which is small, linguistically fragmented and spread across a vast geographical area.

Indeed, national and international marketing support is also crucial to enable companies to recoup their production costs in our small domestic markets.

Now I would like to say a few words about the copyright policy.

At present, exclusive publishers and agents have no official legal protection for enforcing contractual book publishing or distribution agreements in Canada. This very regrettable situation makes us almost unique among our main trading partners. It results in a loss of income for Canadian publishers and makes it more difficult for them to maintain a solid financial footing.

In an effort to consolidate the financial base of Canadian publishers and distributors, we intend to make two amendments to the Copyright Act as part of Phase II of the review.

The Copyright Act should be amended to strengthen the protection of copyright holders from pirate works, to provide better protection to exclusive licence holders for their publishing rights on the Canadian market, and to give better protection to exclusive distributors for their distribution rights on the Canadian market.

These changes will not create new rights under the Copyright Act; however, they will give exclusive licence holders and exclusive distributors the possibility to sue for enforcement of their territorial rights.

If I may, I would like to draw a parallel with magazine publishing. The government's objectives in this sector are the same as they are for the book trade: to strengthen the Canadian industry and ensure that Canadians have access to a wide range of Canadian writing.

The report of the task force on the Canadian magazine industry is expected very shortly. I can assure the House that the government intends to respond quickly to the task force report in a way which will strengthen the Canadian magazine industry's economic foundation.