Debates of May 29th, 1995

Agreement On Internal Trade Implementation Act

[Ian McClelland, Reform, Edmonton Southwest, AB]

Mr. Speaker, if I left the impression that the rest of the country would not trade with Quebec, I certainly did not mean to do that. The point I wanted to make was how important trade is among all the provinces of Canada, including Quebec, and how vitally important trade is to the province of Quebec, probably more so than other provinces in the country, because Quebec has a resource very much built on trade and export.

What I did say was that the people of Quebec should not be misled into thinking that it would be automatic that things would go on as before. If the people of Quebec think for one minute that they would be able to exist behind trade barriers that would not be the case.

I would certainly hope, and I agree with my hon. colleague, that we would not do anything to shoot each other in the foot. That would not do any good. It would be a hard nosed commercial relationship. It would mean that instead of having our market, our critical mass would be 25 per cent lower. We would not have the same economies of scale. It would be far more difficult for Quebec in an international world market to be a world scale producer, because Quebec could not depend upon having the Canadian domestic market to enable it to be an international producer. It would hurt everybody, and it would hurt Quebec perhaps more than the rest of the country.

I would not suggest for a moment that we would do anything to shoot ourselves or Quebec in the foot.

[Jean-Paul Marchand, Bloc, Québec-Est, QC]

Mr. Speaker, I would also like to respond to comments by the member for Edmonton Southwest and I will have an opportunity to do so during the debate on Bill C-88. However, I must first provide a few details on the bill.

Often, when we are discussing bills in the House, people tune us in on television or come in to the House not knowing what the discussion is about. This is why I would first like to provide a few details about Bill C-88 itself. This government bill is aimed at promoting freer trade between Canada's provinces. It puts a number of administrative measures into effect to permit freer trade as of July 1, 1995, that is, in barely a month or two.

A whole series of measures are involved, as are a number of laws governing, for example, transportation, public liability, communications and other matters. Therefore, first and foremost, this bill, puts into place the measures that will lead to freer trade in Canada.

When we speak of liberalizing trade, we mean that, in principle, people, capital and goods should move as freely as possible and that uniform standards and rules will be established so that one province cannot prevent the free movement of goods, capital and people.

The most striking example is, of course, the limits on the movement and production of beer in Canada. Each province was required, so to speak, to produce a certain volume of beer, which could not be exported from one province to another. Quebec could not export its production to Ontario and vice versa. Marketing will now be freer, and not only for alcoholic beverages, but also for such sectors as farm products, food, communications, transportation, energy and, of course, manpower.

This bill from all appearances improves the trading system in Canada. I should point out that, as regards the liberalization of trade in Canada, Quebec has always been in favour of freer trade. It strongly supported free trade with the United States. We believe in unrestricted competition. In Quebec, we believe in the ability to compete on the open market.

However, this bill contains a few flaws, important flaws, such as the fact that a panel can be set up if disputes arise. Problems may occur. Disputes may have to be settled. In such cases, this bill provides for the creation of a panel to review disputes. Should one province accuse another of not playing by the rules, the mandate of such a panel would be to review the situation and recommend retaliatory measures on behalf of the injured party, the one that would have been somehow wronged.

This panel would have no power to enforce. It would only have the authority to review the problem and recommend retaliatory measures where required. And here we come to the troubling part, since, in the end, retaliatory measures will rest in the hands of the federal government.

Not only will the members of this panel and of the committee that will oversee the enforcement of this piece of legislation be appointed by order in council without being ratified by the House of Commons-which is a flaw one must point out-but once again, through this bill, the federal government is seizing additional powers, the authority to enforce the panel's decisions, and even to intervene when it, the federal government, is not involved.

Indeed, the wording of clause 19-or more precisely article 1710, but mainly clause 19-leaves room for interpretation, in such a way that if there is a dispute between two provinces, and the federal government is not directly involved, it can intervene. It can exercise its power of judgment so that one province is favourably judged, even favoured over another.

In fact, the federal government is taking on a lot of power, too much power, in our view, the power to intervene in disputes between provinces, if need be. These are powers it has assumed, without being asked to. The federal government is assuming the power to intervene in disputes between provinces. We think that this is in fact an abuse of power. Why would the federal

government interfere in interprovincial disputes in which it is not involved?

This is not the first time this government has tabled a bill in an attempt to give itself additional powers. As you probably know, it tried to give itself additional powers through Bill C-52, for example, which would allow the government to compete with engineering and architectural firms in Canada, and Bill C-91, which would change the mandate of the Federal Business Development Bank. Again, the federal government gives itself new powers that would allow it to centralize operations and intervene in the country's development, thereby putting some provinces at a disadvantage compared to others.

In the case of Bill C-52, for example, it is obvious that the powers the federal government tried to give itself could be used against Quebec in particular, since we know that engineering and architectural firms are concentrated in Quebec. In the case of Bill C-91 regarding the Federal Business Development Bank, we can ask ourselves if the government is once again giving itself additional powers and trying to compete with very successful Quebec institutions such as the credit unions and the FTQ and CNTU solidarity funds, which are very effective in developing small and medium size businesses.

We also know that small and medium size businesses have experienced significant growth in Quebec over the years. That was one of the reasons why Quebec supported free trade with the U.S. Industry and trade in Quebec are locally based. Quebecers have worked to set up their own businesses and establish themselves in Quebec. It is something that should be pointed out to those who do not know Quebec.

The difference is visible for instance between Quebec and Ontario. As we know, Ontario benefited from American investments and most major business concerns established in Ontario were American companies' subsidiaries. In fact, that is one of the reasons why so many jobs were lost in Ontario after the free trade agreement with the U.S. was signed. American companies established in Ontario simply packed up and moved back to the U.S. They can trade with Ontario from the other side of the border. But many jobs were lost because of this in Ontario, where there are more people on UI and welfare today than just about anywhere else in Canada.

While we, in Quebec, were hit quite strongly, and we can say that the federal government did not do much to help us, we nonetheless are blessed with a strong small and medium size business sector which is still developing in many areas. In Bill C-88, as in Bill C-91 and Bill C-52, the federal government is abusing its authority. It gives itself powers that it did not have before, which could have the effect of putting Quebec at a disadvantage in rulings on trade between Quebec and the other provinces.

Finally, this is the main reason prompting us to propose to the government an amendment providing that the federal government be required to rule only when it is directly involved, instead of any time it feels like stepping in to tip the scales in favour of one province at the expense of another.

As I said at the very beginning on my remarks, Quebec has always been for free movement and the freest trade possible, because this is in our interest in Quebec, since our economy is solidly grounded. Much remains to be done, but we are nonetheless building on solid ground, relying on small and medium size business firmly rooted in Quebec. Much remains to be done to strengthen it.

Were it not for this abuse of authority on the part of the federal government, interprovincial trade liberalization would be great for the rest of Canada as well as for Quebec. Again, Quebec is in favour of this kind of liberalization. For example, Quebec imports from Ontario alone goods and services totalling $25.852 billion per year, while its exports to this province total $22 billion. That is almost $30 billion in trade just between Ontario and Quebec.

In fact, trading between Quebec and all Canadian provinces is quite substantial. In Alberta, Quebec sells $2.8 billion in goods and services and buys $3.25 billion in petroleum, natural gas and the like. In the central region, we buy wheat. I think that these trade relations will be maintained after sovereignty is achieved. We are working at making Quebec realize that it will be to its advantage, in the medium and long term, to opt for sovereignty, take charge and be in control of its economy and its future.

Once Quebec has achieved sovereignty, existing trade between the provinces will most likely be maintained. There is no reason to believe that it will be reduced. It would be disadvantageous to the other provinces, including Ontario and even Alberta, to refuse to sell their products to Quebec, and vice versa. It would not make economic sense. In fact, economic sense dictates that current trade be maintained.

We live in a world where trade liberalization is increasingly more prevalent. For example, GATT was set up precisely to liberalize trade between all the countries of this world. Some agreements and regulations were implemented under GATT, and they will also be maintained once Quebec becomes a sovereign nation.

The same is true as regards free trade agreements with the United States. There is no reason to believe that these agreements will not be maintained and that trade will not continue. It is only those who seek to instill some unfounded doubt or fear who say: "We will cut or block trade between Quebec and the

other provinces". This is nonsense. It goes against economic sense. It goes against the common sense which governs existing treaties, including GATT and the free trade agreement.

Bill C-88 does includes many provisions which make it appealing to the Bloc. As I said earlier, Quebec has always been in favour of liberalizing trade between provinces and countries, and it always will be, because this is its forte. We can compete with others. We supported free trade because Quebec has the economic, cultural and social confidence required to face its North American competition.

It is for these reasons that Quebec will be in an even better position once it achieves sovereignty, and that is also true for the other provinces. Indeed, English Canada will also benefit. I think it will get along better with Quebec, and it might even manage to reduce the power of the federal government, which is not necessarily concerned with the interests of the individuals or provinces. It is concerned with its own interest. And the federal interest here in this Parliament is not the same as that of the provinces.

This is why we oppose Bill C-88 which is another example of abuse on the part of the federal government, which seeks to gain additional powers, to centralize, and possibly interfere in interprovincial trade so as to favour the interests of one province at the expense of another. This is one of the reasons why we will oppose Bill C-88.

[Marlene Catterall, Liberal, Ottawa West, ON]

Mr. Speaker, I am pleased to reply to the various points raised by my colleague across the way.

I believe he substantially misrepresents the clause about which he obviously has some qualms. I believe it is clause 9 of the bill.

It is interesting to note that while the current minister of restructuring of the Quebec government was president of the Quebec Manufacturers' Association he totally supported the elimination of interprovincial trade barriers. Yet when the agreement was signed at the time when Mr. Parizeau was premier he dismissed the agreement as laughable because the dispute resolution mechanism did not have new devices for sanctions or retaliation.

We now hear the Bloc Québécois member saying that the provisions for sanctions are far too strong and are a grab for power by the federal government and would act as a disadvantage to the provinces.

Let me begin by saying that this bill is the result of a long process that in my view demonstrates admirably-

[The Deputy Speaker]

I think the hon. member may have misunderstood. This is questions and comments. Is the member asking a question or making a comment or is she making her speech?

[Marlene Catterall, Liberal, Ottawa West, ON]

Debate.

[The Deputy Speaker]

Are there any questions or comments regarding what was just said?

Is there anybody who wishes to ask a question or make a comment to the speaker who just finished? The hon. member for Esquimalt-Juan de Fuca, on a question or comment.

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

Mr. Speaker, I thought this was resuming debate.

[The Deputy Speaker]

I am sorry. I said in French, questions or comments. Does the hon. member wish to make a question or a comment?

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

No.

[The Deputy Speaker]

The deputy whip for the government has the floor on debate.

[Marlene Catterall, Liberal, Ottawa West, ON]

Mr. Speaker, I believe I was in the process of saying that the procedure by which this bill comes before us and by which the internal trade agreement that gave rise to it was reached was a demonstration of how federalism can work for all partners. It was a totally co-operative process, involving the provinces, the territories, the federal government, and the private sector, which had the unanimous agreement of all parties.

On behalf of the Minister of Industry, I appreciate this opportunity speak on Bill C-88. This is one more step in a process that has been under way in Canada for the better part of a decade to create a new internal trade regime. Our objective is to reduce barriers to interprovincial trade and remove restrictions on the movement of people and capital within the domestic marketplace.

Passage by Parliament of Bill C-88 will be a necessary step to implement the agreement on internal trade that was signed last year by every province, the territories, and the federal government.

At the invitation of the Prime Minister, first ministers met in Ottawa last July to formally accept and sign the agreement that the committee of ministers of internal trade had finalized at the end of June. With this accord we were committed to have the appropriate legislative and regulatory changes in place so that the agreement could be legally implemented. In this sense, putting this legislation before the House is meeting an obligation to provincial and territorial governments that we incurred when we signed the agreement in June 1994.

This was an important step in the quest to create an integrated domestic market in Canada. This seems to have been a pattern in the development of our nation. As we go back through history to the voyageur and the Hudson's Bay Company, we see that trade is what has opened up the vast expanse of this northern half of the North American continent. As we thought to link ourselves together with the national railway and later with the national highway and national airline, trade has been one of the driving forces both for the development of the links among us as a people and for the development of the prosperity the country has enjoyed.

However, in the 128 years since Confederation, we have also seen a hodge-podge of protectionist measures and trade conventions develop which have inhibited interprovincial trade and restricted the flow of goods, capital and talent between and among provinces. These measures range from outright restrictions to bidding on government contracts to a patchwork of regulations and incompatible standards.

The government has felt strong and repeated pressure from the private sector to deal with the problems associated with internal barriers to trade and conflicting regulations on cross border flows of people and of capital.

We have received representations from the Canadian Manufacturers' Association, the Canadian Chamber of Commerce, the Business Council on National Issues, the Canadian Federation of Independent Business, the Canadian Bankers Association and the Canadian Construction Association. The list is long and the problems are deeply felt and broadly experienced.

Such barriers put Canadian businesses at a competitive disadvantage by restricting the size of their available marketplace by shrinking the domestic market for Canadian businesses in a time of increasing global competition and more open markets in other parts of the world. This can have the negative result of putting Canadian businesses at a disadvantage to international competitors even in our own market.

In addition, there is an economic cost related to marketplace inefficiency. The Canadian Manufacturers' Association has estimated that barriers to trade cost Canadians about $7 billion annually in direct job and income loss. However, let us consider the other side of the story which is equally telling.

A Canadian Chamber of Commerce report released on May 17 highlighted the importance of international trade and investment as powerful generators of economic growth and job creation throughout Canada. The study indicates that Canadian interprovincial trade was worth $147 billion; almost 21 per cent of GDP in 1993. It estimates that 1.9 million jobs are directly or indirectly dependent on internal trade within Canada. The report shows that the provinces and territories constitute one of the most economically interdependent regions of the world and that interestingly, Quebec is the province most dependent on internal trade, the province that benefits most from internal trade and has the most to gain from improvements in internal trade.

The study attributes 470,000 Quebec jobs, 20 per cent of the province's GDP directly and indirectly to internal trade and values the province's trade with the rest of Canada at $64 billion. With a trade surplus of $1.1 billion with the rest of Canada, Quebec exported more to Ontario than it did to the United States, more to Nova Scotia and New Brunswick than to any European country.

The report confirms that businesses across Canada have been able to take advantage of the political and economic links created by the federal structure to forge a large national market that has worked to the benefit of all Canadians.

In years past when external trade barriers protected economies like ours from international competition, the economic cost of internal trade barriers were tolerated and maybe tolerable. When Canadian industry was sheltered from international competition by tariff barriers of 10 per cent or even 20 per cent, the economic cost of internal barriers were not so obvious. However, a marketplace sheltered from international competition is no longer the reality. Barriers and tariffs are down. The market is global and the competition is fierce. We will not, we cannot be successful in an open global market if we operate in a closed market at home. We need to adapt to the realities of trade in today's global economy.

Bill C-88 and the agreements it implements is an important aspect of the process. It is part of the more fundamental process of economic renewal that the government is following toward its strategic objectives for economic growth and job creation.

Last December the Minister of Industry introduced in the House the government's plan for building a more innovative economy. We outlined our intentions for improving the economic climate of Canada in four ways: to build a positive entrepreneurial climate and to help small businesses grow; to expand markets for jobs and growth through trade; to create an efficient and modern infrastructure; and to make technology work for Canada.

These are areas in which the government can have the greatest impact on job creation. While Bill C-88 will support all of these objectives, it has special relevance for the objective of expanding trade. To grow and prosper business needs an efficient and open marketplace, an environment which encourages innovation and expansion free of unnecessary barriers.

With the agreement on internal trade and now with this bill we have the elements to establish a new internal trade regime, one which will allow us to make the most of our interprovincial

domestic market by encouraging innovation and expansion and by removing unnecessary barriers.

The Canadian economy is in a period of transition. Fundamental changes are taking place because of the globalization of trade and the rapid pace of technological change. The competitive advantage in today's world depends less on location and natural resources and more on innovation, the ability to respond to changing market conditions and to achieve economies of scale.

As we continue the transition from a resource based economy to one where innovation, knowledge and flexibility are the underpinnings of competitive advantage, we need to ensure that the domestic trading environment will accommodate and expedite the necessary changes. Bill C-88 will provide a supportive environment for the economic transition process that we are now experiencing.

The legislation before the House is the result of a long process of negotiation and consultation which has involved many Canadians; Canadians with many different perspectives: ministers of the federal government, ministers of all the provincial and territorial governments, officials of all of these governments and representatives of the private sector.

It is interesting to note that political parties of all stripes have co-operated in the negotiations leading to this agreement. They have different perspectives and different priorities, but a shared belief that a more open trading environment will be good for Canada and good for Canadians.

A striking feature of the process leading to the bill has been the high degree of co-operation and good will that has been demonstrated on all sides. Those Canadians who have been involved in the process understand the compelling need to open up our internal markets and to ensure that the Canadian marketplace works to the advantage of all Canadians.

Over the last two years the negotiations and background work were under the guiding hand of Mr. Arthur Morrow, a well known Canadian businessperson, who acted as chair of the committee of chief negotiators and worked tirelessly to keep the process moving toward its objective and in producing the agreement that ministers signed last year. The work leading up to the bill was exhaustive and thorough, and it will be ongoing. It is our duty to keep the process moving.

The process began in June 1988 when federal and provincial agriculture ministers compiled a list of barriers to internal trade in agriculture and food products. While the focus of this group was relatively narrow, the process had begun. Governments were now dealing with the problems of internal trade barriers in an organized way. Federal-provincial discussions continued and the focus widened. Ministers began to consider the need for a dispute resolution mechanism as part of more comprehensive trading arrangements between provinces and territories.

In December 1989 a memorandum of understanding on internal trade in agricultural products was signed by seven of the provinces. The process was beginning to move. Negotiators continued to meet. Agreement was reached and memoranda of understanding were signed on a number of individual issues such as transportation and government procurement, a major economic factor in our economy.

By December 1992 the committee of ministers of internal trade at the time recommended the process be accelerated and that all parties commit to the goal of reaching a broad and comprehensive internal trade agreement by June 1994.

Agreement was reached on three specific principles: that governments treat people, goods, services and capital equally regardless of where they originate in Canada; that governments reconcile standards and regulations to provide for the free movement of people, goods, services and capital within Canada and that governments ensure their administrative policies operate to provide for that free movement of people, goods, services and capital within Canada.

An intensive series of meetings was held during the period of January to June last year. These culminated in ministers agreeing to the text of the internal trade agreement at the end of June. Finally, in July 1994 the Prime Minister and all other first ministers affirmed their acceptance of the agreement with a formal signing on July 18.

Last year's agreement on internal trade was a major step in a long process. It has demonstrated that all governments can work together to achieve a common objective that will benefit all Canadians.

The agreement on internal trade sets out general rules that prohibit any new barriers to trade and eliminate old ones in 10 specific sectors or issue areas. Unfortunately there is no time left to read them all. However, it is fair to say that while this bill does not solve all the interprovincial trade problems that have built up since Confederation it has moved us a considerable way along that track. It is an ongoing process. For instance, in the energy sector a separate set of negotiations is under way toward a similar deadline this year.

With this legislation we are ensuring the framework is in place and we are confirming our belief that the fundamental principles of free trade will work within Canada. Trade agreements deepen and broaden with use and experience and this one will too. Bill C-88 will provide the foundation of moving toward a domestic trading environment that will allow for the free flow finally of goods, services, people and capital within Canada.

The Prime Minister and other ministers, including first ministers, have been actively involved in broadening the marketplace for Canadian goods and services in export markets and the Team Canada approach has been highly successful in doing that. We must bring the same spirit to improving the domestic market for our businesses and workers. Bill C-88 is an important step in that direction, which is why we brought it to Parliament and support it.

[The Deputy Speaker]

The House will now proceed to the consideration of a motion to adjourn the House for the purpose of discussing an important matter requiring urgent consideration, namely the current situation in Bosnia-Herzegovina.