House of Commons Hansard #85 of the 35th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was israel.


Canada-Israel Free Trade Agreement Implementation ActGovernment Orders

10:50 a.m.


Joe Volpe Liberal Eglinton—Lawrence, ON

Mr. Speaker, I compliment the hon. member from Peace River. He and I sat on the international trade committee and on the foreign affairs committee for about two years. He has been insistent and persistent in his approach in defending the interest he feels he was elected to defend. I say that with no disrespect. It is important that members keep their minds on the issues.

In the course of those debates in that committee he pointed to this issue on more than one occasion. In fact, he was part of a series of studies that the committees undertook and participated in to bring just such issues forward.

The question of adjustments is not one that is going to be answered immediately in one debate in the House, nor dare I say, as we both found, in one committee. He pointed to the fact that Canada found itself isolated but that is part of the negotiating process. We entered into GATT, we entered into the World Trade Organization precisely because we wanted to ensure that the world recognizes certain standards, certain rules for dealing, for trading. We had to defend our own interests until we can find an alternative way to defend those interests.

In the context of those two organizations, we had to negotiate and we continue to negotiate for the interests of Canadians. I do not think we need to apologize for that, notwithstanding the philosophical positions other people have.

If farmers in Canada feel unhappy about the fact that we have defended their interests I would like them to say so. If what the member is saying, that defending our interests runs counter to the philosophical positions espoused by other countries and promoted by other countries to their own interest, that is a discussion that we can have a little later on. However, that is not what I am going to apologize for.

Canada-Israel Free Trade Agreement Implementation ActGovernment Orders

10:55 a.m.


Stéphane Bergeron Bloc Verchères, QC

Mr. Speaker, I find the debate that has been going on between our colleagues for the last minutes interesting. It illustrates quite well what my colleague for Terrebonne referred to yesterday, that is, for almost the last three years now, we have been amazed to hear the Liberal government speak in favour of free trade in this House and on at forums around the world, since it was so opposed to the Free Trade Agreement with the United States and, later on, to the North American Free Trade Agreement. Thus, like our colleagues of the Reform Party, we are very happy to see this quite spectacular conversion on the part of our Liberal colleagues.

This being said, I am happy to rise today in this House to speak on Bill C-61, an Act to implement the Canada-Israel Free Trade Agreement.

I must say at the outset that, even though we are critical of the way in which the Liberal government singularly excluded the official opposition from the negotiations along with all the other players interested in expressing their points of view on this matter, the government can be assured of the support of the Bloc Quebecois because we are in favour of free trade and globalization of markets, which anyway reflect an irreversible trend in world trade.

After the United States and Mexico, here is a third state, which is a lot farther from our frontiers, that will in all likelihood, in January, 1997, enter the group of countries with which Canada will remove all trade barriers.

The Bloc Quebecois favours the establishment of closer ties between Israel and Canada. We think that Quebecers and Canadians can only win from such an agreement, since the free flow of goods and the increased competition promoted by free trade will give our respective peoples access to a larger range of products at better costs. For these reasons, the Bloc Quebecois is in favour of this free trade agreement, which, as I said, will allow Canadian businesses to increase their presence in Israel and eventually in other countries in the Near or the Middle East.

This free trade agreement with Israel is designed to eliminate practically all duties on products traded between the two countries. Israel, with a population of 6 million-which, by the way, is just a little smaller than the population of Quebec-will have closer ties to Canada since tariff barriers that have restricted the free movement of goods until now will soon be eliminated.

This bill, which is divided into three parts and includes 62 clauses, will provide, among other things, for the elimination of duties on all industrial products as of January 1, 1997, except for two products for which the elimination of duties will be done more gradually, namely women's bathing suits and certain cotton fabrics.

In addition to those two products, the agreement also provides for a reduction of duties on most agri-food products, except for dairy products as well as egg and poultry products, as agreed by both parties.

This agreement comes just at the right moment to promote trade between Canada and Israel. In 1995, bilateral trade between the two countries reached $450 million or so, a 37 per cent increase from the previous year. As for Canadian exports to Israel, they stood at $236 million in 1995, up practically 50 per cent from 1994.

Trade between Canada and Israel has been increasing constantly over the last few years.

This is why the time has come to eliminate the trade barriers between the two countries. As Quebec's Deputy Prime Minister was saying, in October 1995, in a letter to the federal Minister of International Trade, Quebec, and I quote: "[-] has always been a strong defender of freer trade between countries-he was referring to the Free Trade Agreement, the North American Free Trade Agreement, the General Agreement on Tariffs and Trade and the World Trade Organization-and still supports freer trade as an instrument of growth". The Bloc Quebecois is in complete agreement with this view.

What is special about the State of Israel is that it is located in a geopolitical context completely different from ours. The history of the Jewish state has not been all peace and tranquillity, for most of the neighbouring Arab countries have been in an official state of war against it since its creation in 1948.

Certain events in the recent history of Israel are more significant than others. For example, the Six Day War that took place in 1967, culminating in Israel's victory over its neighbours, resulted in the occupation of territories that unfortunately has continued right up until the present.

The names of these territories continue to be well known to us today, because they are still at the centre of world news. Naturally, this presence only adds to tensions between Jews and Arabs, because even though Israel withdrew from the Sinai in 1982 and from the Gaza Strip in 1994, it still occupies East Jerusalem, the Golan Heights and the greater part of the West Bank.

However, in spite of the peace process set in motion in Madrid in 1991, followed by the signature of the 1994 accords between Israel and the Palestine Liberation Organization, better known as the PLO, the peace process still has a long way to go.

The tragic assassination of Prime Minister Yitzhak Rabin on November 5, 1995, dealt a disastrous blow to the peace process. This man, whose goal for many years had been to see the people of Israel finally able to live free of conflict, said in his last speech, just moments before being shot down by a young fanatic: "I was a man of war, but today we have a chance at peace. I believe we must take this chance, so deep is our yearning for an end to the conflict".

His assassination led to a deterioration in the situation. Last spring, the repeated suicide bombings by the Hezbollah prompted the Israeli army to carry out air raids and bombing attacks on southern Lebanon. These attacks left over 150 Lebanese dead, most of them civilians.

A few weeks ago, the decision by the new government of Benjamin Netanyahu to reopen the underground gallery leading to the site of the Al-Aqsar Mosque, the third most sacred Islamic religious site, led to riots in which some fifty Palestinians and some fifteen Israelis were killed. We sincerely hope that Prime Minister Netanyahu will re-examine his current hard line with respect to Palestinian autonomy.

It may be worthwhile to point out that the present Canadian government constantly maintains that human rights are promoted through trade links. Yet, the state of Israel has already signed a free trade agreement with the United States, in 1985, followed by a similar one with the European Union in 1988, and now with Canada. But have we seen any improvement in the situation? No.

We believe that the Israeli government ought now to be seeking solutions for reconciliation with the Palestinian authorities. After all, is politics not the art of compromise? Speaking of compromise, it would certainly be worth while to explore the possibility of expanding this free trade agreement to the Palestinians living in the occupied territories.

The first step would, of course, be to obtain the go-ahead from the Palestinian authorities, in order to have the assurance that their inclusion in an Israel-Canada treaty was indeed what they wanted. It is possible that, expansion of the agreement to include the Palestinians would result in increased employment in the occupied territories, which might eventually contribute to stabilizing the social climate.

The negotiations leading to the signature of this agreement were held throughout this entire troubled period. They began in November 1994, and ran until January 1996, and led to an agreement signed by the Minister of International Trade for Canada and the Israeli Minister of Trade and Industry, on July 31, 1996.

As the party forming the official opposition, we have difficulty accepting that virtually the entire process leading to this agreement was held in secret, with no public debate whatsoever. It is understandable that the negotiating process itself needs to be carried out behind closed doors, that is natural. We know that the negotiators are faced with a tough job and have to negotiate many pitfalls and obstacles, but we would appreciate progress reports on the negotiations.

Now we are not asking for parliamentarians to be present at the negotiating table, but we do believe that in a democracy, it is important to avoid any systematic exclusion of those who represent the people.

Remember that the most important issue in the 1988 election was the free trade agreement between Canada and the United States, to which the Liberals were opposed. Many groups that knew they would be affected by the agreement could therefore take part in the debate.

It was by defending their points of view and by making representations to the political authorities, that stakeholders, company directors and spokespersons for community and environmental groups were able to influence the tenor of the clauses included in the agreement before it was signed.

During the negotiations leading up to the North American Free Trade Agreement, the unions took a position on labour-related issues and expressed their fears about NAFTA. Environmental groups also expressed their concerns about environmental issues. Although the results were not satisfactory to all stakeholders, the fact remains that before the agreement was signed in December 1992, there had been had a major debate in the public arena.

The treaty dealt with in the bill before the House today has now been signed. Negotiations have been finalized and nothing can be changed. Without repeated interventions by the official opposition, which managed to draw the government's attention to the problems that such an agreement would represent for the lingerie and bathing

suit industry in Quebec, decisions that would have had a disastrous impact on this sector might have been made.

In fact, this industry would have been in serious jeopardy, since the State of Israel imports its fabrics from the European Union duty free, which it gives it a competitive edge on Quebec and Canadian markets. If we had not raised this issue in the House in November 1995, it is not certain that the negotiators would have been aware of the problem. And perhaps hundreds of jobs would have been lost in the process, especially in Quebec.

Canada is now busy negotiating free trade treaties right and left. We approve of the opening up of this country to various markets, but it is absolutely necessary to review the process leading up to the signing of these agreements.

The bathing suit issue is only one example of the potentially negative consequences of an agreement negotiated without public consultation. Although the agreement with Israel has already been signed, there is still time to improve the process for future free trade agreements being considered by this government. We are thinking for instance of current negotiations taking place between Canada and Chile, which are to lead to the signing of an agreement on or about November 15 this year.

Officials at Foreign Affairs and International Trade have given us the assurance that information on these negotiations will be made available to us. We can only hope that the ministers responsible for Foreign Affairs and International Trade are prepared to give their approval for the release of such information.

It is imperative to prevent a recurrence of this kind of situation, so that the opposition can do its job properly. Such a cavalier attitude on the part of the government is troubling, especially because the government knew quite well it could count on the support of opposition parties. Why persist in infuriating opposition parties when we could have presented the picture of a solid consensus to our trading partners?

If the government really wants open and transparent debates, it should practice openness and transparency itself. Otherwise, we will have to conclude, as it is the case now, that it prefers secrecy and obscurity. I plan to demonstrate the extent of this government's pettiness and inordinate mysteriousness with the official opposition on this whole issue.

Last April 25, during a special session of the Standing Committee on Foreign Affairs and International Trade on Israeli bombardments in South Lebanon, I conveyed to department representatives my reservations concerning the negotiations on free trade with Israel when it was bombarding civilian populations and openly crossing the internationally recognized borders of another independent country.

One official of the department replied that negotiations were interrupted pending the election of a new government in Israel. That statement seemed confirmed later on by replies we received from the Office of the Minister of International Trade. In fact, in May and June, we called the office of the minister a few times to find out when the negotiations would end and when the agreement would be signed and we were always told that the agreement was to be signed only in January 1997.

And yet, a few weeks ago-on September 19, to be exact-the Parliamentary Secretary to the Minister of Foreign Affairs informed the committee members that the agreement had been ready to be signed since March, and that the official signing, which was to have taken place during a visit of the Prime Minister of Israel in Canada, had been postponed because of the elections in Israel. This is what we are criticizing.

It would appear that the agreement with Chile will be much more exhaustive than the one before us today. The agreement with Chile is supposed to be modelled on NAFTA. Since it will be more encompassing, there are many issues which would have been interesting to raise with Chile prior to promoting the agreement. Cases in point are standards regarding the environment, labour in general and child labour, in particular. The agreement with Israel is limited to goods and, as such, does not include services or investments.

Last week, we met with Oxfam Canada representatives who told us how concerned they were with the lack of protection on social issues negotiations seem to be leading to.

According to this organization, the agreement, the content of which will be made public when it is signed, around November 15, will undoubtedly not contain stringent enough rules on the environment and labour.

Even though Chile is undergoing tremendous economic growth, too many of its citizens still live in poverty as a result of the polarization of wealth. Therefore, it would have been desirable, both for Chile's sake and Canada's, that these issues be looked at more carefully. This is why it would be important to know how the negotiations are going prior to the House being presented with a bill implementing the agreement.

At least Bill C-61 before us today has the merit of stimulating exports and levelling the playing field for our companies competing with American and European firms, which have benefited from preferential access to the Israeli market for some time now.

The Bloc Quebecois, therefore, will support this bill to implement a free trade agreement with Israel, while condemning the fact that the elected representatives in this House were kept in the dark with regard to the negotiations and the issues raised during the discussions. It is not by hiding each of the negotiating steps leading to the conclusion of such important treaties that we will be able to reasonably debate the themes and issues that will affect the daily lives of our fellow contrymen.

That is why, as I said earlier, the Departments of Foreign Affairs and International Trade should keep the members of this House informed of the status of negotiations, if we are to have an informed and responsible debate. Our position regarding Bill C-61, which goes in the same direction as the government's, shows once again how serious our party is when it comes to the interests of our constituents and their willingness to promote entrepreneurship.

In conclusion, let me quote a short excerpt from the dissenting opinion the Bloc Quebecois gave in November 1994, during the review of Canada's foreign policy: "Quebecers are not protectionists. They have shown it by strongly supporting the free trade agreement, the North American free trade agreement and the Uruguay round of GATT talks. Must we remind the House that Quebec's determination was the spearhead of the free trade movement in the 1980s? Far from seeing Quebec's sovereignist movement as a withdrawal into itself in response to economic globalization, we perceive it as an openness to the world".

Canada-Israel Free Trade Agreement Implementation ActGovernment Orders

11:10 a.m.


John Bryden Liberal Hamilton—Wentworth, ON

Mr. Speaker, I would like to thank my colleague for some excellent remarks.

I would like to draw his attention to something that was said by the minister in his speech yesterday. I quote from Hansard . The minister said in reference to the free trade agreement: ``Why Israel? Israel and Canada have long enjoyed close relations. Our relationship is rooted in common values and shared democratic beliefs, the belief in freedom and the dignity of the individual''.

Yet we have a new regime in Israel under Mr. Netanyahu which has taken a very hard line with respect to the peace process, a very hard line with respect to the Palestinians. We have seen an outburst of violence on the West Bank.

I would like to ask my colleague whether he thinks, in supporting Bill C-61 which in essence ratifies the free trade agreement, we also endorse the policies of Mr. Netanyahu with respect to the Palestinians on the West Bank.

Canada-Israel Free Trade Agreement Implementation ActGovernment Orders

11:15 a.m.


Stéphane Bergeron Bloc Verchères, QC

Mr. Speaker, I think my hon. colleague has just asked me a very important question. I touched on this matter in my speech.

Last spring, we in the Standing Committee on Foreign Affairs and International Trade had a special meeting on the Israeli bombing in southern Lebanon. We were concerned at the time about the Canadian government beginning or pursuing free trade negotiations with the state of Israel, which was then bombing civilian populations in southern Lebanon and openly violating the internationally recognized borders of another sovereign state, Lebanon. We asked officials in these departments if they intended to suspend negotiations. All they said was that negotiations were suspended anyway, since they were waiting for the results of the Israeli election.

We then found out that negotiations had not been suspended, that the agreement was in fact ready for signing as early as March. This shows the government's contempt, if I may use this word, for the members of this House and the committee, as we should never have been told negotiations had been suspended when the agreement was in fact ready to be signed.

We did express reservations about the signing of this free trade agreement with Israel, given the Israeli government's somewhat intransigent attitude toward the Arab populations both within and beyond its borders.

This is why we ask that this agreement be extended to the Palestinian populations of the occupied territories, in the hope that this will eventually improve their economic situation. We also want to improve the social climate in the Israeli occupied territories.

Canada-Israel Free Trade Agreement Implementation ActGovernment Orders

11:15 a.m.


Jim Silye Reform Calgary Centre, AB

Mr. Speaker, I have a question for the Bloc member.

I have been dying to ask this member a question because I have a concern. This is a trade agreement and he knows full well that, as my colleague mentioned earlier, there is a protective tariff system in effect in this country, especially with subsidizing the dairy industry in Quebec.

We pay over and above the next lowest price we could get our dairy products for, 350 per cent supply management tariff. We subsidize that product in Quebec. It is a huge component of Quebec's economy.

The member was sent to this House by the people of his constituency to break this country up. The people in his riding say they want to go on their own and they want him to fight for that. They also say they will be better off once they leave and that they will not have to pay for this expensive overhead that Ottawa generates. They will be able to do it better themselves and economically they will be better off. The people his riding think they will be better off if they separate. A large component of their industry is the dairy industry which is subsidized by consumers across Canada, including Quebecers.

Does he believe that if Quebec separates we are going to continue to buy our product at a 350 per cent subsidized price from the province of Quebec, from the new country of Quebec or whatever it will be called?

I feel that the issue of trade, of economics and of separation can be reduced to a simple argument which may be a reality that might sink in to the people of his riding as to the cost of separation, to whether the burden of proof should be on the separatists to prove to the people of Quebec that they will be better off in trade after separation.

The Liberal member earlier asked why Israel. I ask, after separation why Quebec? We can get our product from ourselves. We can be the dairy industry to the rest of Canada. We can get it from the United States. They will become a competitor. Competition creates the best marketplace. The competition will reduce the revenue to the people in Quebec and Quebecers will have to compete. They will no longer be subsidized. The reality is they will be worse off. Would the hon. member like to comment on that subsidy?

Canada-Israel Free Trade Agreement Implementation ActGovernment Orders

11:20 a.m.


Stéphane Bergeron Bloc Verchères, QC

Mr. Speaker, I was wondering if the hon. member would finally give me the opportunity to answer the question which he has been dying to ask me for such a long time. Since he had several minutes to keep repeating his question, I hope you will give me a few minutes to keep repeating my answer.

First, I must point out that it is not proper to use the current debate on the free trade agreement between Canada and Israel to settle accounts relating to the constitutional issue. We will have ample opportunity, during other debates in this House and in other forums, to settle our accounts regarding the constitutional issue.

That being said, I am pleased to answer the hon. member's question. His question is not only inappropriate, it is also insidious and, in my opinion, it shows the member's lack of knowledge of the supply management system, in Canada and in Quebec, for agricultural products.

To be sure, Quebec's dairy industry is largely subsidized by the federal government, but the member should also know that the egg and poultry industries are also largely subsidized. And, while Quebec is a major producer of dairy products, it is not one of the major producers of eggs and poultry in Canada.

Therefore, should the supply management system be eliminated, Quebec would lose, but so would Ontario and other Canadian provinces.

Again, the member's question indicates a lack of knowledge of Canada's supply management system, but I will say no more.

Canada-Israel Free Trade Agreement Implementation ActGovernment Orders

11:20 a.m.


Jim Silye Reform Calgary Centre, AB

Mr. Speaker, I would like to point out that I do not fail to grasp this issue. I do understand this issue. It is the consumers I am talking about, the people who buy the product. They are the losers right now and they would be the winners. I understand the system.

Canada-Israel Free Trade Agreement Implementation ActGovernment Orders

11:20 a.m.


Stéphane Bergeron Bloc Verchères, QC

Mr. Speaker, I do not share this view, otherwise I would not have spent the last three years praising the virtues of sovereignty in this House. I feel that, in the middle and long term, Quebec would benefit from being a sovereign state, and that Canada and Quebec could mutually benefit from it.

Why continue to spend so much energy arguing on issues that divide us, instead of trying to work together, in a new partnership, on the issues that unite us? I put the question.

Canada-Israel Free Trade Agreement Implementation ActGovernment Orders

11:20 a.m.


Keith Martin Reform Esquimalt—Juan de Fuca, BC

Mr. Speaker, it is a pleasure today to speak on Bill C-61, the Canada-Israeli free trade agreement.

We in the Reform Party approve of bilateral trade agreements on the basis that they will strengthen the existing World Trade Organization.

I know my colleague for Peace River has some very good ideas on this and he would certainly be happy to advise the government on various new initiatives it should undertake.

A larger issue with respect to the Middle East is the security issue that threatens trade agreements and threatens the security not only between Israel and Palestine but the regional security which exists there which will have a huge impact on world economy.

Currently the peace process is in disarray. There is a possibility it will fall apart. The Israelis and the Palestinians are polarized. We have a very important window of opportunity to help build bridges between the two groups.

After Mr. Netanyahu was elected it seemed that the Likud Party was pulled away from the work which was done by Mr. Netanyahu's predecessor, Mr. Shimon Peres.

On the other side, it did not take much for Mr. Arafat and the Palestinian authority to pull away from the peace agreement.

Both groups have to realize that their fates are intimately entwined. History, geography and the future will not separate them.

The conditions in the Palestinian autonomous areas are absolutely appalling. It is no wonder that terrorism has stemmed from these areas. It reflects the sheer frustration, anxiety and fear of these people. For example, in the Gaza Strip unemployment is over 70 per cent. That breeds desperate people and desperate people often resort to violence.

I would humbly suggest that economics is partly responsible for this situation. We have an opportunity through the free trade agreement with Israel to place conditions on how the Israelis will engage with the Palestinians in Palestinian autonomous areas. It should not be done in a heavy handed way, but in a coercive way for the betterment of both groups. The outcome of that will be improved chances for peace for all people.

If we can do that we will cut the legs out from the radical elements of Hamas that are responsible for the bombings that took place in Tel Aviv. It will cut the legs out from grassroots support for Hezbollah. It will cut the grassroots support for the Islamic Jihad. The only way to do that is to offer the Palestinian people in the autonomous regions some element of economic emancipation. Hamas has received support by providing schools, medical care and economic opportunities for these desperate people who are crying for improvement in their appalling situation.

I would encourage the government to find ways to work with the Israeli and Palestinian authorities to improve their bilateral economic agreements.

I would also suggest that the closure of the West Bank and the Gaza Strip must end. It must end in conjunction with agreements from Mr. Arafat and the Palestinian authority that they will make swift, decisive and effective moves against terrorism in their areas. They cannot have it both ways. If the Palestinian authority is going to preach peace, it must act in a peaceful way. It will be painful, but it will have to act with its own people. Only by doing that will the Palestinians be able to achieve the respect and trust of the Likud Party and Mr. Netanyahu.

On the other hand, Mr. Netanyahu has to stop closing down the West Bank and the Gaza Strip so freely and, at times, unfairly. That polarizes the Palestinian people and grassroot support wanes.

We must also pursue avenues to improve the education system in the Palestinian autonomous areas, the economics and also the infrastructure development which will be required. In order to do this there has to be a radical shift. We cannot continue to have this polarization between both groups.

A few of the key players are going to have to be brought to the table. A key in the Middle East peace process is Hafez al-Assad of Syria. One of the great failings is that Mr. Assad has not been brought to the table with Mr. Netanyahu or his predecessor and with the King of Jordan and hopefully Mr. Mubarak of Egypt.

If these people can be brought to the table face to face then we are going to see some action. Mr. Assad controls Syria. He also has a huge sway in what happens on the northern border of Israel with Hezbollah. Israel is only going to feel secure on her northern boundary if the activities of Hezbollah are removed and the key to that is Mr. Assad.

Mr. Assad's intermediaries are not going to call the shots. We are not going to get any significant advancement in the peace process without Mr. Assad himself sitting down face to face with Mr. Netanyahu, King Hussein of Jordan, Mr. Mubarak and of course Mr. Arafat.

Another aspect is Jerusalem, an extremely sore spot. It eludes me as to why this area, the seat of so many religions of the world, this exquisitely beautiful area which all of us in this House and billions of people around the world have such a connection to, is the seed of such rancour and animosity and the root provocation of so much killing. It is completely opposed-I do not care whether they are Muslims, Christians or Jews, that is not what Jerusalem has ever been about or should be about. It is not what Jerusalem stands for.

A possible solution, because the groups are actually polarizing quite dramatically with Jerusalem, is to put it under UN protection. If the groups are not willing to share in Jerusalem, as right now they are not prepared to do, then the United Nations has to try to get tacit support from them to make Jerusalem a protected zone for the world, for all religions and for all people who follow those religions and have a spiritual connection with that beautiful city.

My other point is on the whole aspect of the Palestinian autonomous areas and settlements. It is an absolute provocation for the Israeli government to continue to support settlements in the Palestinian autonomous areas. It is a slap in the face to the Palestinian authority and a slap in the face to the Palestinian people. It polarizes them dramatically and is only an act of provocation.

The first thing the Israelis ought to do, and Canada can take a coercive role in this, is to: one, stop immediately all new building of Israeli settlements in Palestinian autonomous regions; two, remove some of those settlements out of the Palestinian autonomous regions and there will be some kind of trust again from the Palestinian people. The Palestinian authority must also provide assurances to the Government of Israel that terrorist activities are going to cease and desist. They will not but they must at least take an active role with the Israeli defence forces to come down on these extreme groups that are causing havoc in the whole peace process.

Another factor which not many people are talking about and which in the long run overshadows much of what can take place in the Middle East is water. There is very little potable water left in the Middle East. Those water levels are going down dramatically. It may not sound like very much but if human beings cannot drink water, they will not live there. If there is no water, they cannot grow crops. If crops cannot be grown in these areas, there are not going to be settlements. This is a problem that affects not only Israel and

the Palestinian people but it also affects Jordan and to a lesser extent Syria.

Here is an opportunity for Canada to get groups of hydrologists together with other hydrology specialists in the world to help the Middle East try to maximize the water available and to improve the conservation and the development of the water tables that exist there. No matter what we do, if there is no water in the future, there simply is not going to be any people who wish to live there.

I will close by saying that historically we have had two sides in the polarization. They have come together in a narrow window of opportunity and with great hope for the world in the peace process that took place in conjunction with the Americans.

Sadly, what has happened since the last election is that the two groups are polarizing. They must realize that their fates again are intimately entwined. Perhaps they cannot live together in the same country. I think that is probably what is going to happen, but at least let them live side by side in peace and then develop economic co-operation between both groups. If those economic bridges develop, then peace will develop and the decades of mistrust and hatred are going to peel away, albeit slowly.

There is a saying in the Middle East that peace is when a son buries his father and war is when a father buries his son. I hope for all the people of the Middle East that there will be far fewer fathers burying their sons. I also hope that Canada can take her role with the other members of the international community to develop in co-operation to bring peace to this much troubled area.

Canada-Israel Free Trade Agreement Implementation ActGovernment Orders

11:35 a.m.


John Bryden Liberal Hamilton—Wentworth, ON

Mr. Speaker, I thought the member wandered a little bit off the mark in the sense that the free trade agreement with Israel has already been signed. All that is left is for this Parliament to endorse that deal. It cannot be changed as it stands at the moment.

I am very proud of this country and especially this Parliament for the way in which we exchange very differing ideas in a spirit of tolerance of one another's views and a great respect for the dignity and rights of others, regardless that perhaps some of the members may even seek to break up the country. Yet, we respect the dignity of one another.

My problem is that there is a new regime in Israel that has set a new mark for Israel in terms of respect for human rights and human dignity by embarking on a hard line approach to the Palestinians. As the member has stated, it is a provocation and has led to deaths in the Middle East, mainly of Palestinians.

I would like to repeat a question for the member which I had put to the member for Verchères, who I did not feel answered it very directly. Does the member feel that if this Parliament endorses this free trade agreement, are we at the same time endorsing the hard line attitude of Mr. Netanyahu toward the Palestinians? Are we endorsing his view of human rights and respect for human dignity?

Canada-Israel Free Trade Agreement Implementation ActGovernment Orders

11:35 a.m.


Keith Martin Reform Esquimalt—Juan de Fuca, BC

Mr. Speaker, I thank my hon. friend from the Liberal Party for his very astute question.

Although we support this bill, I believe there is an inherent danger in the bill's being perceived as an endorsement for Mr. Netanyahu and the Likud party's hard line approach with the Palestinian people. That is why it is imperative for us to make clarifications.

We should through this bill strongly support and coerce the Israeli government to engage in serious economic activities to improve the health and welfare of the people who exist in the Palestinian autonomous areas and in particular the terrible and profoundly disgusting conditions that exist in the Palestinian camps. If anyone were to visit them, they would be absolutely shocked. Therein lies the danger and the opportunity.

That is why I would strongly encourage our government to make it very clear to the Government of Israel that we as a country do not support this hard line attitude; we do not support the prevention of Palestinians from moving into Israel from the West Bank and the Gaza Strip; and we do not support the continued atrocious and appalling conditions that exist in the Palestinian camps and in the Palestinian autonomous areas.

We strongly demand that, together with Mr. Arafat and the other Middle East leaders, Prime Minister Netanyahu engage in co-operative efforts to improve the economic situation that exists in these areas. Therein lies the hope for peace.

Canada-Israel Free Trade Agreement Implementation ActGovernment Orders

11:40 a.m.


Leon Benoit Reform Vegreville, AB

Mr. Speaker, I am pleased to speak on Bill C-61, the bill which implements the Canada-Israel free trade agreement.

This agreement should benefit many Canadian businesses and many Canadians. It means job creation which must be a top priority for anybody in this House. This agreement applies especially to the areas of agriculture and grain products, high tech communications, natural resources and the manufacturing sector. It is important for Canada to promote more open and fair trade with all countries around the world. We would not find much argument in this House with regard to that statement.

My concern lies in the fact that it seems like too much of this government's energy on balance goes to seeking out trade with other countries and too little energy goes to seeking free trade within Canada.

Canada's international trade amounts to about $160 billion a year. It is a large part of the Canadian economy, so it is important. I want to make it clear that it is important to encourage free trade with other countries. Since the Canada-U.S. trade deals have been put in place, our trade surplus with the United States has increased dramatically. It has been good for Canadians. Deals like the Canada-Israeli agreement, though much smaller, are still important.

My concern is the lack of balance in the government's policy. While foreign trade amounts to about $160 billion a year, trade between provinces amounts to $146 billion a year. How often have we heard this government or the official opposition talk about the importance of removing the barriers to interprovincial trade? The balance is not there.

Our Prime Minister goes on world tours to places like China, Chile and so on. He makes a big show of signing contracts in other countries. When he does this it probably plays well to the folks back home. I acknowledge it is important for the Prime Minister to perform this function but again, where is the balance?

The Liberals in this government, in throne speeches, in budget speeches, in reports from committees-I could mention many different key documents which this government has presented in the House and outside of the House-have stated that it is a top priority to deal with the problem of internal trade barriers, barriers in trade between provinces.

Last year the finance committee released a prebudget report on interprovincial trade which stated: "Trade in Canada must be placed on an equal footing with Canada-U.S. trade in terms of the free flow of goods and services". I am sure the committee would have expanded this statement to include deals between Israel and Canada. Government members acknowledge that interprovincial trade should at least be placed on an equal footing with international trade. Unfortunately, their words do not coincide with their actions.

There was only one action the government did take. In 1994 it signed the agreement on internal trade. It was a start but many different sections of that agreement were to be completed later by set dates in the future. Not one of these targets has been met.

While this government deals with agreements such as this to some extent, it has completely failed to do anything substantial to remove the barriers to interprovincial trade. Yet interprovincial trade amounts to almost as much as international trade. Where is the balance? It is important that that balance is restored.

The government, rather than follow the recommendations of its own throne speeches, its own budget speeches, has not treated with interprovincial trade with the kind of importance that it should have. As a result, some very unsettling situations are building in this country. We have, for example, the problem between Quebec and Newfoundland with the Churchill Falls hydro deal.

If the section on energy in the agreement on internal trade had been completed as was promised by the government, while it would not deal with the current Churchill Falls hydro contract, it certainly would allow the new lower Churchill Falls project, which is critical to the future development of Labrador and Newfoundland, to go through. I am not talking about renegotiating a current contract, I am talking about allowing the development of the lower Churchill Falls project, a brand new hydro contract, which would really help in the development of Newfoundland. It would provide much needed jobs not just from the development project itself but from the development of Voisey's Bay, for example, and other developments in Newfoundland down the road.

The neglect of this agreement has led to that kind of disaster. Quebecers are fair people. They are people of integrity. When they think of holding back Labrador and Newfoundland's development, the people of Quebec would not feel kindly about that. They want the best for Labrador and Newfoundland. That is just one of the areas that has been neglected. The balance is not there between internal trade and foreign trade.

Second is the dispute that has arisen between New Brunswick and British Columbia with the United Parcel Service workers moving to New Brunswick. If the agreement on internal trade had been completed on schedule and if the proper degree of importance had been placed on that deal, then this dispute would never have arisen.

If this dispute or another one had come up and a proper dispute settlement mechanism had been put in place then this dispute settlement mechanism could have dealt with this very serious problem, which actually threatens to take British Columbia out of the internal trade agreement altogether. That would be a very sad day for this country and for British Columbia.

The third major problem that has resulted from the lack of action on the part of the government in removing internal trade barriers is the dispute between Quebec and Ontario on moving labour and contracting back and forth between the two provinces. This dispute has been brewing and getting bigger and more threatening over the last few months. We saw sand, manure, other things dumped on bridges between Ontario and Quebec. Today, as I speak, a rally is being planned by the construction workers in Ottawa at the Delta Hotel-I am not sure about the location-and construction workers are not going to let this issue die. Ontario construction workers are concerned because while Quebec workers and contractors are allowed to freely come to Ontario, Ontario workers and contractors

are not allowed the same access to Quebec. I think it is very important for Quebecers to think about this situation.

The government of Ontario is threatening very serious trade action which would restrict the movement of Quebec workers and contractors into the Ontario market. The Ontario legislature is seriously moving in the direction of putting up a wall so that trade will not go freely either way. That means Quebecers, many of whom are now working in Ontario, will be denied access to Ontario jobs.

Why has this very serious situation arisen? It is because of the lack of action on the part of the government to finish the agreement on internal trade and remove the barriers to interprovincial trade. There is no leadership from the government in this area.

What does this lack of leadership cost Canadians? According to the Fraser Institute and other think tanks, it costs Canadians between $6 billion and $10 billion a year in lost income. This is very serious. According to the Fraser Institute it costs the average Canadian family about $3,500 a year in lost income, all because the government has not put the priority on interprovincial trade that it has put on foreign trade.

Bills such as this one today are important. I acknowledge that. But why on earth not have a bill tomorrow which will deal with the barriers between provinces in a serious and substantial way? This is very important. It is so important that the Canadian Chamber of Commerce came out with a substantial report on this issue. It estimated that a 10 per cent increase in interprovincial trade would add 200,000 new jobs in Canada.

Instead of moving in that direction, within a couple of blocks of the House of Commons a rally is being planned by construction workers who are frustrated because the government has not taken the action it should have to remove barriers to free labour movement and to be able to conduct business openly and freely between provinces. This is a serious situation.

It really surprises me that the industry minister who is in charge of the agreement on internal trade has been completely silent while right in his own constituency in Ottawa, Ontario workers are being denied access to jobs across the river in Hull and Gatineau because of the barriers thrown up by Quebec. It is a sad situation.

There are Liberal members in the government who represent people in Hull and Gatineau. Why are they not speaking out on this issue? If they do not act very quickly and very soon, the Ontario government will close the border, build a wall and there will be no free movement of labour or business between Ontario and Quebec at all. It has come to the point where that decision could be made very soon. Where is the government in dealing with the problem right in its own backyard?

The government should be ashamed. It has to focus on this. It has to look at the balance and the importance between interprovincial trade and international trade. It has to realize its importance to the Canadian economy are very similar, speak out on this issue, solve the problem that is being demonstrated very clearly right here in this city and finish the agreement on internal trade. It has to put in place a dispute settlement mechanism and at least give Canadians the same kind of freedom in doing business with another province as it has between Canada and other countries.

The sad reality for many business people in certain parts of the country is that they actually have easier and more open access to the United States than they do to other provinces. That is sad and action must be taken on this. It is very urgent right now because of the serious situations building across the country.

Pitting one province against another certainly does nothing to help national unity. Pitting Ontario against Quebec does nothing to help national unity. Pitting British Columbia against New Brunswick does nothing to help national unity. Pitting Quebec against Newfoundland and Labrador does nothing to help national unity.

Why has this issue of removing interprovincial trade barrier not been given the importance that it should be given? It is important to people in every single province in this country. It could mean a 10 per cent increase in interprovincial trade. According to the Canadian Chamber of Commerce it could mean 200,000 jobs or more, $3,500 added to each family household income, a $6 billion to $10 billion increase in income to Canadians. All of this could be achieved if the same importance were given to interprovincial trade as has been given to international trade and if these barriers are removed as quickly as possible.

I would like to more than encourage the government, I would like to push it, in particular the industry minister, to deal with the issue and allow the free movement of people, goods and services between provinces, and allow those 200,000 jobs to be added in Canada.

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11:55 a.m.


Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, I concur with the member that it is very important to deal with interprovincial trade matters. There are certainly some opportunities there but that is not the subject matter of the bill and it is not a bilateral agreement that we have with the provinces. We are talking here of a bilateral agreement and the speech was really not much

about the bill. If I may I would like to make a couple of comments about what bill this is and ask the member a question.

We are speaking on Bill C-61 put forward by the Minister for International Trade, an act to implement the Canada-Israel free trade agreement. In brief the main elements are: first, tariffs will be removed from industrial products of Canadian or Israeli origin beginning January 1, 1997; second, duty free access or low duties will be applied to a variety of agricultural and fisheries products exported to both countries; finally, to resolve any disputes under the agreement both countries have agreed to be governed by a binding dispute settlement process.

This bilateral trade agreement is extremely important to Canada. For many years Canada and Israel have had excellent relations based on shared values and strong political and social bonds. To give an idea of dimensions, in 1995 the two way trade exceeded $450 million, an increase of 37 per cent over 1994. Canadian exports totalled $216 million in 1995, up 49 per cent from 1994. In terms of the trade the other way, Canadian imports from Israel were worth $240.8 million in 1995, a 32 per cent increase on 1994. These are very significant.

Earlier this day the member from Peace River gave a speech in which he developed a theme which has been coming along about how the government has been slow and why is this such a secretive process and how come this government has not made this an issue and why is it not in the forefront of what is going on.

The facts are that in November 1994 the leaders of Canada and Israel announced the opening of negotiations for this bilateral free trade agreement. On January 12, 1996 Canadian and Israeli officials reached a tentative agreement leading to the formal signing of a free trade agreement in Toronto, during the visit of the minister of industry and trade, of both the state of Israel and Canada.

The facts are that the government has proactively pursued bilateral trade agreements for the benefits of Canada. This government has done its job in this regard.

Does the hon. member not believe that if interprovincial trade within Canada is such an important issue that it would be more important for us now rather than to deal with partisan issues and to ignore the bill to move this bill forward quickly so this House would have more time to talk about further important initiatives? It is time to get the priorities straight. I ask the member, could he stop wasting the House's time and start dealing with the legislation before the House?

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Leon Benoit Reform Vegreville, AB

Mr. Speaker, the member talked about the partisan use of time. If that was not just as partisan a statement as we could find, I would like to see the other one that comes close to matching it.

The day he calls the removal of interprovincial trade barriers a partisan issue it is a sad day in this House. It is an issue that affects

all Canadians. As I explained before, 200,000 jobs are lost because action has not been taken, six billion to ten billion dollars lost, $3,500 per family. In family week I would expect this member to acknowledge that and to accept that and to say yes, this is an important issue.

This agreement is an important agreement as well. We are supporting it. We are doing everything we can to push it along, so what he said is nonsense.

On the relative importance of this agreement, which involves $.5 billion in trade, to the agreement to internal trade, which involves $146 billion in trade, the comparison is pretty lopsided. The importance of removing the barriers through internal trade cannot be overstated. It is not a partisan issue. This member should not have presented it as that.

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Paul Szabo Liberal Mississauga South, ON

Mr. Speaker, I want to challenge the member on his assertions. I did not comment or take away from the importance of interprovincial trade and trade barriers. It is not a bilateral situation, though. We have 10 provinces and 2 territories.

The member has twisted the facts. I reiterate my point to him. This bill before the House is a bilateral deal which is good for Canada. It provides a further model of how important bilateral agreements are and it will provide the basis for further trade opportunities for all Canadians.

I would again suggest to the member that the important thing to happen now is let us deal with this bill quickly so that we can have more time in this House to deal with very important matters like interprovincial trade agreements.

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Leon Benoit Reform Vegreville, AB

Mr. Speaker, I am pleased that the hon. member did acknowledge the importance of removing these barriers to interprovincial trade. I just hope he can put some pressure on his industry minister and others in his government to deal with this issue.

The member said rightly that this is not a bilateral issue. In fact, interprovincial trade is a federal responsibility under sections 91, 92 and 121 of our Constitution. It is clearly the responsibility of the federal government to never allow interprovincial trade barriers to build in the first place and to remove them if they should.

This obligation has been put aside by Liberal and Tory governments for over 125 years. We have all kinds of barriers to trade between provinces which are causing the problem that is developing in Ottawa and which are causing the problem between British Columbia and New Brunswick. These kinds of problems are threatening to tear our country apart.

If we are going to keep this country together we need economic harmony between the provinces. That can only come if the federal government stops neglecting its responsibility under the Canadian

Constitution. It must show leadership in this issue and remove barriers to interprovincial trade.

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12:05 p.m.


Charlie Penson Reform Peace River, AB

Mr. Speaker, I have a question for my colleague from Vegreville.

During his presentation there were comments from the Liberal side asking what his speech on internal trade barriers had to do with the Canada-Israeli free trade agreement. I suggest that it has everything to do with free trade agreements, bilateral and multilateral.

Our Standing Committee on Foreign Affairs and International Trade has done a study on why small and medium size businesses are not exporting. As a point of reference, about 100 companies in Canada are responsible for 80 per cent of our exports. It is a sad commentary that we are not allowing opportunities for small and medium size businesses to explore this very important growth area. One of the biggest reasons which those businesses give for not getting involved is they say they cannot build economies of scale in Canada because of the restrictive trade barriers within Canada. That is hurting their ability to get big enough to launch into the international trade area.

I would like to ask my colleague from Vegreville if he sees this as an important restriction on the ability of Canadian companies to get into the export market.

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12:05 p.m.


Leon Benoit Reform Vegreville, AB

Mr. Speaker, a very well known Canadian was asked a few weeks ago what was the single largest problem in dealing with international trade. This very prominent Canadian, the hon. member for Peace River who just asked the question, said that the single largest factor which is preventing Canadian business from doing business around the world is the lack of interprovincial free trade. The hon. member has already alluded to why that is.

Canadian companies, in some cases, need the ability to build. They have to get the economics of scale so they can compete on the world market. In many cases they cannot build when they are operating within one province. There are so many barriers to doing business in other provinces which prevent the growth that is needed in order for Canadian business people to succeed in international trade.

This is almost unbelievable. It has become so bad that I have had business people tell me it is easier for them to do business with some states in the United States than it is with other provinces. Some of them say: "We are moving out. We do not want to move out. We love this country. But we are moving out of this country because if we do business in the United States then we have free access to all Canadian provinces and we do not have to jump through all the hoops which we would be required to if we were doing business with the provinces from within a Canadian province". That is a sad commentary, but it is the truth.

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12:05 p.m.


Herb Grubel Reform Capilano—Howe Sound, BC

Mr. Speaker, I rise to support my colleagues and the government in passing this bill. I believe it will increase trade between the two countries and generally will serve the interests of both the people of Israel and the people of Canada.

However, I wish to deal with two objections which are normally raised whenever there are bilateral agreements between states or when there are agreements for regional free trade.

The first of these objections is that it diverts resources away from the pursuit of overall free trade. This is true enough. No government has infinite availability of experts to engage in trade negotiations. It would in my judgment be the best of all possible worlds if all trade barriers between all countries were removed.

However, generally I believe that the two targets of pursuing both bilateral trade barrier reductions and universal reductions in trade are not mutually exclusive. Therefore, while I would in a perfect world rather have completely free trade, I am satisfied that the negotiations of the Israel-Canada free trade agreement have not slowed down progress on obtaining completely free trade throughout the world through negotiations at the World Trade Organization.

However, there is a very interesting and important other objection that is often raised to bilateral agreements. It arose in the post-war years when the club of Rome led to the integration of the European economies. It involved a very subtle but interesting counter intuitive argument.

If free trade is good then is it possible that free trade between just two countries or within a region might in fact be bad and reduce world output and welfare? This is a strange puzzle, one when it was first developed by Jacob Viner in the 1930s. It almost threatened to paralyze all economic research. Here we have a world full of regulations, tariffs, domestic regulations and taxes, all of which are distorting the free allocation and the efficient allocation of resources as they would be in a completely free economy. Yet people thought for a long time that if we could go slowly in the reduction of such barriers, one at a time, by ultimately moving toward a completely free economy we would therefore be on a progressive movement toward increasing the efficiency of allocation of resources and therefore living standards of people in the world.

However, as Viner pointed out, that is not necessarily so. This was his argument. He framed it in the context of trade between two European countries but I will do it for the case of Israel. Let us assume for a moment that right now the tariffs facing imports into Israel both from Morocco and from Canada are the same and as a result, because Morocco is the cheapest producer of this product, trade is now taking place from Morocco importing into Israel and Canada is left out. Let us now consider that when the tariff barrier on that product comes down only on trade between Canada and

Israel, it is possible that the imports from Morocco are replaced by imports from Canada into Israel.

By definition, if previously when they both faced the same tariff barriers, the production of that product in Morocco was the least cost production location, the one which served the world best because Israel got its product at the lowest price, therefore shifting the production to Canada would mean a loss in productive efficiency for the world. This is called trade diversion. It is a negative aspect of moving in this world the way Canada did with Israel by reducing trade barriers through bilateral agreement.

Of course, there is another side to it. It can also be that the reduction in the tariff barrier means that now the production will be taking place between Israel and Canada, whereas before only Israel was producing the product. There were no imports at all.

To repeat, the alternative is the lowering of the tariff barrier and will result in the creation of trade between Canada and Israel, trade which previously did not exist. By definition again, the product that used to be produced at high cost behind the tariff barriers in Israel will now be produced at a much lower cost in Canada and shipped to Israel. That is what the free market says is done.

We face an empirical question: Are the benefits from trade creation greater or smaller than the benefits from trade diversion? It is not clear on purely logical grounds which of these effects will dominate.

We can see why in the presence of such a puzzle in the post war years economists were very upset. Logically, they could not say anything any more about the benefits of any form of deregulation, like the removal of tariff barriers, unless they had the empirical evidence on how much more trouble was created rather than the benefits that were created.

It turns out in an examination of the experience of the European Economic Community, trade creation by far outweighed trade diversion.

One of my students at Simon Fraser University wrote his doctoral dissertation on asking whether the Government of Pakistan had a net benefit from the greater growth that took place in Europe as a result of unification of the common market, the removal of tariff barriers between Germany and France and Italy, than it had because some of its exports to Germany were replaced by exports that previously were taken from France.

A careful study of trade patterns has shown that typically, trade creation outweighs trade diversion. I am personally convinced that

this will be the case with Israel as it has been in Europe and almost any other country that has been studied.

This effect is especially strong if at the same time the removal of the barriers takes place, trade is created and wealth increases. As countries get richer because of the more efficient allocation of resources, they will trade more. This dynamic effect, as it is called, of trade creation provides benefits that empirically have far outweighed the effects of trade diversion.

Nevertheless, in my own mind there remain some problems. I raised them with the people from the Department of Foreign Affairs when they briefed us on this bill. There have to be very tedious provisions for certification of the origin of goods that are being traded.

For example, since there is free trade between Israel and Canada but not between Pakistan and Canada, it is possible that Israel could lend itself simply to taking products produced in Pakistan that are transshipped through Israel and then, as a result of that, are moved into Canada without having to face trade restrictions that we as a country have imposed on Pakistan. Personally I think we are so rich that we should remove them all.

We have to face the fact that in the wisdom of this House many years ago, some barriers were put up to trade with Pakistan. We must somehow ensure they are maintained and are not circumvented in a surreptitious way through the use of Israel as a base to ship. As a result, there needs to be a bureaucratic mechanism to assure Canada that all the products exported from Israel to Canada are Israeli products.

That sounds fairly easy but the question is: What if a shirt comes from Pakistan but it has no buttons and no buttonholes and an Israeli factory makes the buttonholes, attaches the buttons and packages the shirt? Is it now a Pakistani product, or is it an Israeli product? This is one of the issues. Strict rules have to be put in place, which are thought through, codified and enforced, as to what level of value added in a country makes it okay to call the shirt an Israeli product rather than a Pakistani product.

We can see how complex all of this is. Some products may be coming from Europe. Complicated products may contain not just Pakistani input but German input, and we have free trade with Germany. There are all of those issues. One of the fears of people who oppose bilateral free trade is that the amount of bureaucracy with enforcement mechanisms and dispute resolution mechanisms is very costly indeed.

What we really need is to remove these discriminatory tariffs as they now exist where we give concessions to Israel but not to

Pakistan. If we had given our benefit of free trade on these products to Pakistan as well, this problem never would have arisen.

After looking at the evidence on all of those matters, I have concerns over the growth of bureaucratic enforcement mechanisms throughout the world, as Canada has bilateral agreements not just with Israel but also with the European Community and Latin American countries such as Chile and with NAFTA. It is becoming a bureaucratic nightmare.

There are certain influential professions which have very good lobbyists that benefit from all of this. They are the lawyers. They are the organizations that certify this is the right kind of origin, that this is okay. They will completely oppose free trade and say to go ahead with bilateral free trade.

I will discount arguments of this sort and suggest that we should continue to push along with as many bilateral free trade agreements as we can obtain. When we are through and have a bilateral agreement with every country, maybe then the time will come to say: Why maintain anything at all? Let us move to total free trade. That is my hope and this agreement is a step in that direction.

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12:20 p.m.


Jim Silye Reform Calgary Centre, AB

Mr. Speaker, I would like to ask my colleague from Capilano-Howe Sound since he is an economist, what would some of the economic benefits be of applying the global model on free trade to interprovincial trade? In his speech, the hon. member for Vegreville mentioned protectionism from province to province, job creation and the value of eliminating barriers to interprovincial trade. Could the member enlighten me on this issue?

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12:25 p.m.


Herb Grubel Reform Capilano—Howe Sound, BC

Mr. Speaker, this is an excellent question. It is absolutely ludicrous that it is advantageous for a Canadian producer to set up shop abroad in order to have more ready, cheaper access to the complete Canadian market than it is if the same producer were located in Ontario or British Columbia. It is a scandal. I do not see where it is in the interests of anyone in Canada to encourage companies to do that.

We must get together and realize that everyone is losing. If a company in Ontario which specializes in the production of a good and can produce it really cheaply and sell it at a low price to a government in Quebec, we are all better off when this takes place rather than when a producer in Quebec which produces at a much higher cost gets to supply the government with that product. Why? Because we know there are also producers of specialized products in Quebec that can produce more cheaply than anybody in Ontario. So when the Ontario government wishes to buy that product, it too will then be required to buy the cheapest, not just from the local producer in Ontario.

Both Ontario and Quebec residents would be better off because the products consumed by the government of those regions in most cases would get the product at a lower cost. The employment effects in one province would be matched by the employment effects in the other province.

Why this simple idea has not penetrated the minds of politicians in Canada is beyond me, even though I have sat here now for three years and talked to politicians.

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12:25 p.m.

The Deputy Speaker

The member has magical powers that only an economist has.

Canada-Israel Free Trade Agreement Implementation ActGovernment Orders

12:25 p.m.


John Bryden Liberal Hamilton—Wentworth, ON

Mr. Speaker, does the member for Capilano-Howe Sound think that another country's current track record on human rights violations should have any bearing on the timing of Canada's signing of a free trade agreement?

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12:25 p.m.


Herb Grubel Reform Capilano—Howe Sound, BC

Mr. Speaker, my training is in economics. I must say that many other arguments are always advanced on why the principle of free trade should be violated. It is not just human rights. There are all kinds of other considerations. We hear in this Chamber all the time that we must protect our culture. The list is very long. I have always been very, very skeptical of the merit of such arguments.

We heard this same government say that we should trade with Cuba because the only way to stop its dictator, its gross violator of human rights from carrying out his crimes is to open up the society through trade, increased exchanges.

The Americans of course are criticized heavily for saying it has not worked and it will not work. The only thing that Castro will understand is if he gets hurt in the pocketbook. Who is right? I do not know. I have sat listening to American senators and congressmen for hours on either side making very telling arguments. And because of my difficulty of being able to make these judgments and quantify them, I would say let us go for free trade and let the chips fall on the other issues.

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12:30 p.m.


Pierre De Savoye Bloc Portneuf, QC

Mr. Speaker, it is always with great pleasure and interest that I listen to economic statements by my hon. colleague for Capilano-Howe Sound. A moment ago, I appreciated the way he explained that trade should be based on the most attractive price for the consumer. He said: "If the price is lower in Quebec, the Ontario government should buy from Quebec, and vice versa".

The question I want to ask him is: With the advent of a sovereign Quebec, would he maintain the same position?